Supplier definition
/What is a Supplier?
A supplier is an entity that provides goods and services to another organization. This entity is part of the supply chain of a business, which may provide the bulk of the value contained within its products. Some suppliers may even engage in drop shipping, where they ship goods directly to the customers of the buyer.
A supplier is usually a manufacturer or a distributor. A distributor buys goods from multiple manufacturers and sells them to its customers.
Example of a Supplier
A shoe manufacturer buys components for its shoes from a group of suppliers. One supplier provides it with rubber heels, while another supplier provides it with tanned leather. A third supplier provides it with the buckles to be used on selected shoe models, while a fourth supplier provides the thread used to stitch shoes together.
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The Difference Between a Supplier and a Distributor
As already noted, a supplier provides goods to another party. A distributor acquires goods from suppliers and then sells them on to retailers. A supplier that manufactures goods earns a profit from the transformation of raw materials into finished goods, while a distributor earns a profit by making goods more readily available to retailers through local warehousing. A supplier can take on the roles of both manufacturing and distribution.
Terms Similar to Supplier
A supplier is also known as a vendor.