Conclusion Hopefully, this helps clarify some of the differences between the different entities in the supply chain. Curious to see how it can work for you? Request a Demo. What is supplier relationship management? Is a supplier a manufacturer?
What is vendor management? What is vendor managed inventory? What does OTD mean? This website uses cookies to personalize content and ads. We'll assume you're ok with this, but you can opt-out if you wish. Accept Reject Read More. Close Privacy Overview This website uses cookies to improve your experience while you navigate through the website. Out of these cookies, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website.
We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may have an effect on your browsing experience. Necessary Necessary. This is an necessary category. Non Necessary non-necessary. In either case, the wholesaler gets large discounts for buying large quantities of goods.
The wholesaler is rarely involved in the actual manufacturing of a product, focusing instead on distribution. Wholesale is buying on a large scale. The wholesaler can specialize in selling a wide range of different products to other businesses, governmental agencies, or hospitals. Then these institutions use those products for their own operations.
When companies buy products wholesale, it is important to track all these products for the success of your business. Where the waters get murky is when people try to discern the difference between the wholesaler vs the distributor.
A distributor works closely with a manufacturer in order to sell more goods and gain better visibility on these goods. Distributors find wholesalers who will resale their products. A wholesaler works more closely with retailers to match their needs through buying products in bulk at a discount. The distributor does perform some of the same functions as a wholesaler but generally takes a more active role.
Distributors also take a more proactive approach in educating resellers about new products. They are not responsible for having the products sold to the customers or whether the retailers would sell them all.
They have the advantage of being able to adjust their products to whatever the retailers need. Cutting out parts of the supply chain, like the distributors and wholesalers, can save money and time, but also alienates those entities.
It's important, then, to carefully determine which business model to use and why. Using market research, communications skills and established business relationships, wholesalers, distributors and retailers can create strategies for business success. Ray Cole has written professionally since and has designed dozens of Web sites. Cole writes for eHow and "SF Gate. Cole is currently writing a book about personal finance.
He has also studied and taught martial arts for over 31 years. By Ray Cole Updated February 04, Whether you decide to go down the tactical or strategic route, any partnership will work better if you play by the relationship rule book. Some will be tactical. Some will be strategic. Relationships are hard. They need a lot of work. You have to communicate often, check in, and make sure you are still on the right page. But, they are beneficial.
By working together, you are creating a new set of possibilities. They can share valuable POS data that can help suppliers understand the customer even better. On the other hand, knowledgeable suppliers can provide invaluable insights and support. You gain access to two different data sets, that can help both parties make more informed decisions.
Digital technology has made it easier for manufacturers and distributors to go it alone but combining forces can actually help both parties gain larger market share and challenge their competitors. The key is to find someone you can trust who wants to expand in a similar market and is ready to establish common goals. If you commit to working together and talking through issues and challenges as they come up, manufacturers and distributors can support each other and scale their businesses accordingly.
For more on this topic, check out our article on reselling vs manufacturing.
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