Most companies rely on a combination of wholesalers or distributors. However, there is confusion that is centered around what those two types of providers do. There is a lot to understand about the small differences between the two. Before we start, let's look at some key parts of this.
Supply Chain
This is an entire network of various entities that are either directly or indirectly linked in serving the same consumer. This is made up of:
1. Vendors that supply raw materials.
2. Produces who convert these materials into products.
3. Warehouses to store the products.
4. Distribution centers that deliver to retailers.
5. Retailer who brings the product to the customer.
What is a Distributor?
When talking about the supply chain, a distributor is a person or entity that keeps in touch with the manufacturer of products. That means that the distributors are the intermediary between the manufacturer and the retailer or consumer.
This means that the distributors play a vital role in keeping the supply chain lines running smoothly between the manufacturer and users. Due to this role, they are able to enhance a company's reach, shorten their response time, and create various packages to add value. A distributor is not just relegated to selling products to vendors, they can also sell straight to consumers or businesses.
Today, it is critical to be able to respond to customers quickly. If the customer is not able to find what they are looking for from one source, they will look towards a different source to get what they need. Distributors are typically able to meet a customer's needs quickly due to the fact that they are generally a localized businesses. Due to their relationship with the manufacturer, Distributors are typically able to package items together to make the buying process more streamlined and cost-effective.
This also helps to decrease the inventory storage for both the manufacturer and user. This also allows them to be able to provide aftermarket services, optimization strategies, cost reduction, and inventory management, which help provide value by creating value by providing complete solutions for the consumer.
What is a Wholesale?
A Wholesaler is someone who is able to sell products to retailers in bulk to allow them to take advantage of the best possible prices. They normally purchase goods directly from the manufacturer, but could also purchase from a reseller. However they purchase the products, they are able to get large discounts for purchasing large quantities of product. Wholesalers are rarely involved in the manufacturing of products and are typically just focused on reselling.
When a company wholesales products, they buy in large quantities. This allows them to specialize in selling large quantities of different products to governmental agencies, hospitals, and other businesses.
It is extremely important for wholesale companies to be able to track all their products to be successful. These companies are able to combine using asset tracking systems in conjunction with mobile devices, barcode scanners, and other electronic devices to help streamline management of their inventory. This helps bring increased productivity, simplicity, and accountability to everyone across the company.
Wholesale vs. Distributor
The issue that arises most of the time is when people try to discern the difference between the two. Here is the easiest way to look at it.
Distributors work with the manufacturer so that they can sell more of the products and gain a better visability on them. They the sell the products to the wholesaler for resale. The Wholesaler then works closely with the retailers so that they are able to buy the products in bulk.
Distributors do perform a lot of the same functions a a wholesaler; however, they generally take a more acitve role. They also take the approach to educate the resellers about the products.
The main difference betweent the two is the fact that the Wholesaler's goal is to satisfy the needs to the retailers. They are not responsible for selling to the consumer, or if the retailers sell all of the product. Wholesalers have an easier time adjusting their inventory to the needs of the retailers, and only fulfills the orders that are places with them.
Distributors, aside from filling passive orders, acts as a sales rep for the producer. They actively look out for orders in their market, then execute the orders and manage the returns.
There is now a need to track the various suppliers that companies are using. Due to this, the need for a management system to keep track of all of these suppliers has arisen. Your suppliers are critical to the success of your company.
Here are some features you should look for when looking at a platform to manage your suppliers.
- Manage approved and qualified vendors
- Manage onboard processing for new vendors
- Host reliable data regarding qualifications, locations, pricing, and vendor tiers (preferred, etc.)
- Easily identify qualified vendors for specific projects.
- Enable restricted access for vendors to submit their own bids
- Manage communication with vendors, sending of bids, etc.
- Create contracts within the application and have vendors place bids
- Manage the procurement process, tracking market rates per vendor, etc.
Check out this article for more information about the differences between Wholesalers and distributors.
For more tips and information on asset management, check out more of our articles.