This article may not find full alignment with reader. There are several definitions, way of using vendors and suppliers, geographies, native speakers, company slang… If you start to go across the web, you will find quite opposite definitions of vendors and suppliers. Like for instance mentioning that one is at the beginning of the Supply Chain and the other at the end of the Supply Chain. But what is the begin and the end of a supply chain in a world where goods go from B2B2B2B… dozens of time? Or for instance mentioning key differences such as B2B (Business to Business) and B2C (Business to Customer) or B2G (Business to Government). So it means a screwdriver manufacturer is becoming a supplier or a vendor several times the same day, depending on its customers? Not really convincing…
Both are commonly used terms, both have their fan clubs, and it’s quite common to hear them used interchangeably. I do it myself, even if I tend to prefer supplier. As to whether there is really a difference, and this difference is anything more than just theory, let’s check this…
This blog is not about theory, is about practice: in real-life, there is no difference worth noting, as we are going to discover together.
What is sure, I will not make all readers happy. But who cares about complex business concepts when they do not reflect everyday life? Nonetheless, let’s dig to the bottom of it. Both suppliers and vendors provide goods and services to a company, but some details make each one a stand-alone concept. Let’s have a look.
Semantic check – Oxford Dictionary & Wikipedia
Vendor vs supplier definition from the academic sources:
Let’s have a look at Oxford dictionary, both English and American:
Definition of Vendor: a company that sells a particular product.
Definition of Supplier: a person or company that supplies goods.
Wikipedia, though in a longer way, does not make much difference either, probably even less.
So it comes to sell vs supply. If someone sells me something but does not supply it to me, it won’t last long. And if a company is supplying something and is not selling it, it won’t last long either. OK, we could argue about business model such as Google, being a provider of maps for free, and lasting quite long. But in fact, Google is not providing maps for free, because we are not the customers. To its customers, Google is selling adds. Or supplying a service of adds.
So selling and supplying not to be told apart. In software not a all. In Brick&Mortar business, one could see the difference in point of time. But in the end, if A&T is one of my vendor, it makes it as well my supplier. Left hand / right hand of the same body.
So judgement will not come from Dictionaries & Encyclopedia, or even common sense, but from shop floor or business.
SAP Check – How this leading Business software differentiate vendor vs supplier:
Let’s focus together on the difference between vendor and supplier in SAP. They can’t be fully wrong with so many brains on the payroll…
Vendor: A business partner from whom goods (or services) can be procured, as the global entity.
Supplier: A business partner from whom goods (or services) are delivered, as real point of origin of delivery.
Let’s imagine your vendor is SpareParts Holding Ltd, in Ohio. They have a couple of subsidiaries and locations, one of it being the BlueParts Ltd, in Arizona, a company they purchased some years ago. The chain of supply may look this way:
- you place a purchase order to SpareParts Holding: Vendor
- Blueparts is delivering you the goods: Supplier
As long as it remains within a state, there are not many implications. It can become more tricky across states or even across countries. But that is not the topic here.
So SAP has a very specific distinction between the two concepts. But this is not changing the face of the Universe either. Here some more Details from SAP Helpdesk.
Here again the subtle difference between sell and supply.
Vendor vs Supplier, diggin’ deeper
At the bottom of it, let’s segment the aspects. You will find two slight differences:
Customer: if you consider that B2C and B2B transactions are fundamentally different. If a customer is different if this is a person (then use Vendor) or a business entity (then use supplier). If you think a customer is a customer, whatever, then welcome to my side of the table.
Usage: if you consider than using a product as it is (like you purchase an ice cream to eat it) is fundamentally different from using a product for further trading (like you purchase an ice cream to sell it on the street) or for further integration (like you purchase ice cream to mix it in an ice-cake that you then sell). If you think a good (or service) supplied is the very same entity if you purchase it to digest it in your stomach or to mix it in your ica-cake in your bakery, then welcome to my side of the table.
You will see things such as “Vendors sell goods to the customers for using purposes”. It would mean that “suppliers provide goods to the customer for NOT using purposes“? But trading is a usage*. Mixing in a cake is a usage. I personally do not buy it. Even if I see the explanation and the slight differences, I do not see any interest in it, in real life.
*Oxford dictionary again, usage: the fact of something being used; how much something is used. And what is more general than the word “use”?
Let’s look at vendor and supplier difference:
Vendor vs Supplier
|Branch||More B2C tainted||Trade (B2B, B2C), more B2B tainted for manufacturers|
|Scope of supply||cannot make a difference|
|Relationship Management||SRM is englobing all aspects|
Vendor vs Supplier, the peak view
Practice & usage:
The purpose of this article is not to make theory, but real practical advice. In my life, there has not been a single situation, not a single one, where the difference between supplier and vendor was needed ; or even when the usage of either or the word led to any misunderstanding.
You cannot expect any of your colleagues, customers, vendors, suppliers, CEO, boss or whoever to see the subtile difference and to apply it. This is one melting-pot concept. So let’s use it as it is.
Supplier Relationship Management vs Vendor Management or Vendor Relationship Management
Why am I writing this article at all? Because it helps to understand the concept of SRM. And SRM is the art of englobing everything, to have the full view. To embrace the relationship with a provider in its entirety and several layers. So in the end, no point in separating it, as our main purpose is unity.
Supplier Relationship Management = Vendor Relationship Management
They all share the same:
Conclusion: is a vendor the same as a supplier?
Yes, there is a difference between Vendor and Supplier
This is all about the subtle difference between selling and supplying. How come we usually mix them then? Because when having a global approach such a SRM (Supplier Relationship Management – Vendor Relationship Management), the two concepts merge into one coordinate approach to your service/goods provider.
No, it does not make any sense to stress this difference
Tell me how to discuss about selling without mentioning delivering what is to be sold? This is not really practicable. Those are 2 sides of the same coin.
- Only down at the most operative level of delivery, when customer Logistics Platform is alignment with vendor Logistic Platform, one could argue and insist on using supplier.
- Only down at the most operative level of procurement and placing orders, one could argue and insist on using vendor
But what for?
So, let’s keep using vendor and supplier in an indifferent manner!
Because we are professional, wanting to optimize the whole aspect of SRM, and not just the tip of the iceberg which are vendor or supplier in the most restrictive meaning.