In the supply chain, is there a key difference between the terms vendor and supplier?
Both are commonly used terms when discussing supply chain management, roles, and duties, and it’s not uncommon to hear them used interchangeably. As to whether there is a difference worth noting (and how that difference is defined), it largely depends on whom you ask.
Both suppliers and vendors supply goods and services to a company, but there are minute details that make each one a stand-alone term. Let’s clarify.
Supplier vs. Vendor: A Brief Breakdown
Some sources define the term supplier as a business or person that make goods available to another business or service. Suppliers are often referred to as the first link in a supply chain, existing strictly in a B2B relationship. By contrast, a vendor is a business or person who purchases products from a company, then sells them to someone else. They’re often considered the last supply chain link and can participate in business-to-business (B2B) or business-to-consumer (B2C) relationships.
Another notable difference is that vendors are typically in the business of providing items that can be inventoried, while suppliers deal more in raw materials that will be turned into something else. In this comparison, vendor relationships are usually focused on price comparisons, while supplier relationships are more attuned with how the supplier influences the quality of the product.
Illustrating the Vendor vs. Supplier Relationships
Let’s put these definitions into perspective with some examples.
You own a restaurant and serve several types of soda. You order your soda from a vendor instead of a supplier because mixing, canning or bottling, and storing your own soda is too much of an expense and hassle to justify doing it all yourself. You probably have a contract with a particular vendor to supply your restaurant with all its soda.
Now, let’s say you’re a health-focused restaurant that specializes in high-quality, organic, made-from-scratch meals. You’ve partnered with several local farms to supply you with ingredients that you use in your kitchen. These farms would be considered suppliers, as your company is directly connected to the integrity of their products. The supplier is considered a partner in the business, helping to enhance your company image while providing a mutually beneficial business relationship.
Specification Data Management: A Common Link with Vendors and Suppliers
Regardless of whether you use vendors or suppliers (or both), companies need an easy way to track their relationships with each, along with what they’re buying and how much it costs.
In either case, Specification Data Management software can provide a direct link to your entire suite of strategic partnerships. Managing your relationship data at the spec level can help you track materials and identify opportunities to save money and improve efficiency across the supply chain.As is the case with many industries, better data management is the future of the supply chain. Learn more about how it can help you improve the way you work.
In The Evolution of Products and Packaging, Specright CEO Matthew Wright provides a first-hand account of the trends that ushered in an explosion of SKUs and an increase in supply chain complexity that plagues manufacturers, brands, and retailers still today.
Over the course of Wright’s journey, the answer to this complexity seemed simple: to keep up, the professionals would need to embrace data to make better, smarter, more sustainable products and packaging. You’ll recognize stories of the common pitfalls organizations slip into when it comes to managing their most important data and get a glimpse into the future of how data can drive the answers to some of our most pressing supply chain challenges. Download the eBook now.