Meaning of Vendor: Definition, Function, Task, and Type of Vendor

What is meant by a vendor? In general, the meaning of a vendor is a party (institution or individual) that provides / sells raw materials, supporting materials, services, or products that are processed or resold by other companies to support the company’s performance.

Another opinion said that the understanding of vendors is companies or individuals who sell a product (goods or services) to other parties (companies or individuals) to support the performance of other companies or raw materials to produce finished products that will be sold to end consumers.

In this case, vendors not only sell raw materials but can also be semi-finished products or important components to make a finished product. In addition to selling materials, there are also vendors who sell certain services or expertise that are not owned by other companies.

Also read: The Meaning of Reseller

Vendor Function

Referring to the meaning of the vendor that has been explained above, the vendor’s function is as a party that ensures the availability of goods or services needed by a company for its operational activities.

In other words, a company needs a vendor when certain raw materials or jobs cannot be provided by themselves so it requires another party to provide it. Products purchased from vendors can be raw materials, auxiliary materials, semi-finished goods, or services to do certain jobs.

The existence of a vendor is very important for the smooth operation of a business. That is why every company always pays attention to and oversees the quality of work of the vendors that become its partners.

Any problems that occur to the vendor will have an impact on the partner company. For example; distribution problems will have an impact on the timeliness of delivery, have an impact on the quality of materials, have an impact on the quality of the products produced, and so forth.

Also read: The meaning of Dropship

Duties and Responsibilities of Vendors

Basically the vendor’s job is to ensure that the needs of goods or services of a company can be available properly. In accordance with the meaning of the vendor described above, the vendor’s duties are as follows:

  • Fulfill every request from the company that becomes its partner in accordance with the agreement.
  • Ensuring that every product (goods or service) sold to consumers is a quality product.
  • Ensuring delivery of goods / services in accordance with predetermined deadlines.
  • Providing the best service at competitive prices to consumers.

Also read: Understanding Distributors

The Meaning of Vendors and Their Types

Vendors can be distinguished based on the types of products sold, namely goods and services. There are vendors that specialize in selling products in the form of raw materials, semi-finished goods, and supporting materials. There are also vendors that specialize in selling products in the form of services.

1. Vendor Provider of Goods

A supplier of goods vendor is an institution or individual that sells products in the form of goods to a company to support the company’s operations.

Example; A fabric factory needs machines that can produce cloth. So the fabric factory will look for vendors who sell fabric-producing machines.

2. Service Provider Vendors

Service provider vendors are institutions or individuals who sell services in the form of certain expertise to other companies.

Example; Fabric companies need expedition services to send their products to retail companies. So the fabric company will work with vendors who specialize in shipping goods.


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