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Definition

vendor

A vendor, also known as a supplier, is an individual or company that sells goods or services to someone else in the economic production chain. 

Vendors are a part of the supply chain: the network of all the individuals, organizations, resources, activities and technology involved in the creation and sale of a product, from the delivery of source materials from the supplier to the manufacturer, through to its eventual delivery to the end user.

Parts manufacturers are vendors of parts to other manufacturers that assemble the parts into something sold to wholesalers or retailers. Retailers are vendors of products to consumers. In information technology as well as in other industries, the term is commonly applied to suppliers of goods and services to other companies.

A tier 1 vendor is a large and well-known vendor, often enjoying national or international recognition and acceptance. Tier 1 vendors may be both manufacturers and value-added resellers (VARs). A tier 2 vendor is a smaller and less well-known provider that is often also limited in its geographic coverage as well. As a consequence, a tier 2 vendor is generally regarded as a secondary source rather than the preferred source.

Some organizations implement internal units known as vendor management offices (VMO) dedicated to evaluating third-party providers of goods and services, supervising day-to-day interactions and managing longer-term relationships.

The word vendor comes from the French verb vendre, meaning to sell.

This was last updated in March 2015

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