A vendor is called a participant of the supply chain who provides the access to goods and services for enterprises and customers. Usually, the term is applied to characterize the entity that raises funds for the rendered products. Nevertheless, the vendor is able to perform both functions: as a supplier and manufacturer.
Pursuit of activities as a Vendor
The vendor, alternatively referred to as the supplier, is a private or legal entity who puts the goods up for sale. A case in study can be Target with a major chain of vendors. The corporation purchases merchandise from various vendors at wholesale price, while the following disposition process is carried out at retail price.
In fact, particular vendors are able to sell the goods directly to the customers, acting as retailers. For instance, Boeing. The enterprise suggests its products straight to the prospective buyers, i.e. airlines. Another example contemplates the vendor that performs a function of commercial organization for a B2B market segment. It means that the vendor renders product elements for another business in order to receive a final output.
Types of Vendors
As a rule, the notion “vendor” can be used in a great number of contexts. Let’s consider several of them:
- Manufacturer. This type anticipates vendors, at the same time combining the function of producers. Notably, new goods are made of raw materials. Then the supply chain reaches wholesalers and retail dealers who acquire manufactured products.
- Wholesaler. Usually, these vendors purchase a great quantity of goods in bulk directly from the manufacturer. The type presupposes keeping the products, then adding a markup, and selling them to the retail dealers.
- Retailer. In turn, these vendors acquire goods from the wholesalers. After that, a markup is expected. As a result, retailers put the products up for sale to their client base.
Note: large scale retailers frequently procure products from various vendors.
There is no doubt that vendors are met all across the supply chain, which comprises entities, institutions, resources, procedures and practices in the overall production and disposition process. First, manufacturing and raw material input should initiate the supply chain. Then vending and ultimate delivery comes into play.
Every link in the supply chain adds value to the final product. And this is the reason for its reduction. A standard supply chain includes three participants: a manufacturer, a vendor and a reseller.