Difference Between Vendor and Supplier

Vendor vs Supplier

We frequently encounter words like vendor and supplier in a supply chain, and many times the words are used interchangeably to refer to a person or anyone who supplies goods or services to an organization. A supplier may be the manufacturer of goods, while a vendor may or may not be the manufacturer. Whatever their differences may be, it is common to see people confusing between vendors and suppliers because of many similarities between their roles. This article attempts to highlight the differences between a vendor and a supplier based upon their roles and responsibilities.

If you look at the etymology, a supplier is the person supplying goods and services to a company or a person, whereas a vendor is one who vends products to customers. Vendor thus, appears to be much closer to the end consumer, and in fact is often the last person involved in the supply chain, and after him it is only the end consumer who uses the product or utilizes the services.

There is another way to look at a vendor and a supplier. A vendor gets the products from the supplier or the manufacturer, and sells them to companies. He normally gets products on a consignment process, and has the liberty to return all unsold products. His risk is thus, lesser than that of a wholesaler as he can return unsold items and thus, has no headache of any dead stock. A vendor, when returning back some products, clears his account as he pays for the products he has sold retaining his commission or profit percentage as has been fixed beforehand.

A supplier, in most instances is also the manufacturer, but sometimes he procures products from the manufacturer and sells to retailers. A supplier is also a vendor in cases, where it supplies parts or accessories to a company. The most popular example is that of suppliers of car parts to a car manufacturer though many a times, car manufacturers refer to such suppliers as their vendors.

There are companies who feel that relationship with suppliers is much stronger than that with vendors. It means that, it is easier to switch away from particular vendors, while it is difficult to end relationship with suppliers. Separation from vendors after completion of a task or contract is easier in case of vendors than suppliers.

What’s the difference between Vendor and Supplier?

• The terms vendor and supplier are commonly encountered in businesses that procure goods and services from outside.

• Both vendors and suppliers can provide goods and services to a company

• A vendor is more close to the end consumer than a supplier who appears to be earlier in the supply chain

• Vendor is a more generic term and applies to anybody supplying goods and services

• A vendor is rarely a manufacturer and gets products on consignment basis from the manufacturers. He can return unsold items and get his commission

• A supplier is many a times manufacturer also.