What is a vendor? How to distinguish between vendor and supplier in detail

What is Vendor? Vendor and Supplier often confuse many individuals and businesses because these two concepts both mean supplier. However, in reality, Vendor and Supplier have completely different characteristics. In the article below, let's find out exactly what Vendor is and how to distinguish Vendor and Supplier right away!

1. What is a Vendor?

In supply chain management, Vendor is simply understood as individuals, organizations or business partners that provide products/services to consumers, this is considered the final link to transport goods from the place of production to the customer. In some cases, Vendor can produce products for sale without importing from suppliers.

Through this, Vendor seems to have become important in connecting manufacturers with consumers, they do that through the following jobs:

• Collaborate with consumers to ensure products/services meet their needs. This may include consulting, suggesting solutions, offering suitable products/services, and answering customer questions and requests.
• Perform activities such as order processing, invoicing, shipping, and inventory management.
• Analyze and evaluate business performance. From there, propose appropriate solutions and adjustments.
• Maintain customer relationships, resolve complaints and develop policies to retain customers.

Depending on the role of the Vendor in the supply chain, different types of Vendors are identified. Below are the 4 main types of Vendors:

• Manufacturer
• Retailer
• Wholesaler
• Service Provider

2. What is a Supplier?

In business, Supplier is a partner that provides products/services to a business. Supplier can be a small and medium-sized enterprise or a large enterprise. Thereby, Supplier plays an important role in the supply chain, providing raw materials, components or services necessary for business operations.

Suppliers can be classified in many different ways, such as by the type of product/service provided, by geography, or by importance to the business. To bring about business efficiency, businesses need to build close relationships with suppliers, sign contracts to ensure the quality, quantity, and price of the products/services provided.

Suppliers may include:

• Raw material suppliers: Provide the raw materials needed to manufacture products.
• Component Supplier: Provides the components used for assembly.
• Finished goods supplier: Provides finished products to businesses.
• Service provider: Provides services for business operations such as insurance, marketing, transportation, etc.

3. Distinguish between Vendor and Supplier

Vendor and Supplier are two important concepts in the product supply chain, each with completely different roles and characteristics. Below is a specific comparison table of these two concepts:

4. Distinguish Vendor and other components

Vendor, Manufacturer and Distributor are all important components in business operations. However, when applied to the supply chain management process, businesses can easily see the differences between these components through the specific characteristics below:

4.1 Seller

Vendor and Seller are at the same level in the product supply chain and are both responsible for bringing products/services to customers. However, these two terms still have the following differences:

• Vendor: An individual, company or organization that provides products/services on a large scale to consumers or other companies. Vendors have the ability to manufacture, or purchase from other sources and resell to consumers.
• Seller: Individuals or organizations that sell products/services directly on a smaller scale to consumers. This could be an agent, retailer or any individual who sells products to customers.

4.2 Manufacturer

In terms of meaning, it may be difficult for businesses to distinguish between Vendor and Manufacturer, but when placed in the supply chain process, the difference in the roles of Vendor and Manufacturer will become clear through the following characteristics:

• Vendor: Provides products/services to businesses and customers and usually does not own or manage manufacturing plants.
• Manufacturer: Focuses on producing products/services directly for customers or through retail agents. Manufacturer owns manufacturing plants and creates a large number of products.

4.3 Distributor

Compared to Vendor, Distributor also plays an important role in the supply chain model. However, there are still differences between these two concepts as follows:

• Distributor: Has multiple distribution channels and focuses on delivering products/services to retailers or customers. Distributor has multiple channels to distribute products/services.
• Vendor: Produces or purchases products/services from other sources and resells them to customers. Vendors do not have many channels to distribute their products/services.

5. Ways to choose the right Vendor

A thorough evaluation process helps businesses select the right Vendor, ensuring product quality and keeping the supply chain running smoothly and efficiently. Here are some important methods for selecting a Vendor for your business:

5.1 Needs and requirements analysis

To choose the right Vendor, businesses need to clearly identify the quality needs of the product/service they need and provide appropriate evaluation criteria.

At the same time, the process of analyzing the size of the Vendor helps businesses understand whether they have the capacity to provide products/services or not. If the Vendor is too small, ensuring the ability to provide products/services will be difficult. On the contrary, if the Vendor is too large, it will be difficult to ensure quality and there will be many risks for the business.

5.2 Consider Potential Vendors

The process of reviewing potential Vendors includes: Learning about the product/service, competing Vendors, evaluation criteria of quality, price, supply capacity, delivery time and some related requirements. This is extremely useful for businesses in finding the right Vendor.

In addition, businesses can also rely on information on the Vendor's website and reviews from previous customers to consider whether the Vendor meets their requirements or not. Many businesses will test some sample products before deciding to sign a long-term contract with the Vendor.

5.3 Proceed to select Vendor

In the journey of finding a Vendor, analyzing and evaluating Vendor performance is very important, helping businesses find quality Vendors that meet business standards and minimize risks.

After evaluating the quality of the Vendor, the business needs to consider the price and service packages of the Vendor. If the Vendor's price is too high, this can affect the business's performance. If it fits the budget, the business can proceed to sign the contract immediately.

6. Effective Vendor Marketing Guide

In the marketing strategy for products/services, businesses need to research and understand factors such as preferences, colors, designs, etc. to approach and attract customers.

Vendors are not the direct users of products/services, they only focus on the agreement and profit for both parties. Therefore, to effectively market to Vendors, businesses need to follow the following directions:

• Approach and attract suitable Vendors by participating in domestic programs and exhibitions. Because this is where many Vendors are looking for partners.
• Set up preferential policies specifically for Vendors so that they prioritize choosing the business's products/services. For example: Discounts for the first cooperation and rewards for Vendors achieving sales targets. On the other hand, businesses can reduce product/service prices to stimulate demand and increase revenue for Vendors and distributors.
• Offer higher commissions than competitors so that Vendors will prioritize introducing their products to customers.
• Show Vendors the unique features and benefits of your products/services compared to competitors in the same industry. Prices, quality, and incentives for Vendors are all exclusive.

To attract and retain customers, businesses can consider applying software with powerful tools and utilities. 1C Vietnam would like to introduce to businesses 1C:ERP software with the following outstanding features:

• Integrating open logic: The software is designed with open logic, allowing businesses to master the technology and software solutions. From there, businesses will limit their dependence on suppliers and improve their ability to adapt to business changes.
• Rapid customization: 1C:ERP allows businesses to quickly customize specific requirements and easily integrate specialized solutions within the 1C and third-party solution ecosystem.
• Accounting standards ready: The system provides international accounting standards (IFRS) and Vietnamese accounting standards, ready to prepare consolidated financial statements and support report development for Group models, multi-enterprise models and General Corporation models.
• Full functionality: 1C:ERP software provides full functionality and functionality to apply to business operations, trade, services and production models.
• Cross-platform compatibility: With the ability to leverage existing business platforms, 1C:ERP is compatible with most popular database management software, operating systems, and browsers.

In particular, the 1C:ERP solution provides extremely useful CRM features for businesses in managing relationships with current Vendors. For example: Storing information and tracking interactions with Vendors; monitoring and analyzing Vendor complaints based on product orders and collecting Vendor interaction cycles (from the beginning of contact to the completion of common goals)...

The article has clarified the concept of what a Vendor is, how to distinguish between Vendors and other components in the supply chain, and important criteria for choosing the right Vendor. It can be seen that Vendors play an important role in helping businesses make decisions, control product quality, increase productivity and manage risks. 1C Vietnam hopes that the above information will help businesses choose the right supplier for themselves.