Difference between manufacturer supplier distributor relationship

difference between manufacturer supplier distributor relationship

Usually, distributors partake in collaborative relationships with clients and The right distributor enhances a company's exposure in the product market and up your distribution strategy, you need to know the different levels of distribution. Do you know the difference between Wholesaler vs Distributor vs Supplier? who have a direct business relationship with manufacturers, and sometimes, they . For a beverage company, the distributors are wholesalers, who sell to a in the most effective supplier-distributor relationships, suppliers don't.

Suppliers and distributors belong in the higher part of the supply chain and they need to work together to meet the product demand and supply of consumers within a particular area. What is the difference between supplier and distributor? Suppliers and distributors are two different parts of the market because they serve functions that allow them to play key roles in the market — and one of them is to meet the product supply and demand.

Without suppliers, there would be no one to supply the demands. The difference between a supplier and distributor is that the supplier is the provider of the product or service coming from the manufacturer themselves sometimes, the manufacturer is dubbed as the supplier while the distributors are those that purchase products from the supplier and then resells them to retailers and wholesalers.

Differences Between Wholesalers, Distributors and Retailers | avesisland.info

To understand the difference between Wholesaler vs Distributor vs Supplier, one needs to understand that a supplier may not supply the product directly. They can only manufacture or produce, but not forward it. What do I mean by this?

difference between manufacturer supplier distributor relationship

They do not have the means to sell their goods directly to the stores or even to the customers. Suppliers can produce, manufacture, and import them from other sources while distributors work with channels to distribute the products, as well as having the right marketing strategies that allows them to link themselves between the market and consumers.

The role of a supplier and distributor are often confused as one and the same thing, but in reality, they are two different roles with two different functions in the market. To make things simpler — suppliers supply and distributors distribute. Suppliers provide products to distributors, distributors buy products from suppliers, distributors sell products to retailers and wholesalers.

Distributors and wholesalers are two peas in a pod that often get confused as similar parts of the market. Au contraire, distributors and wholesalers are two different parts of the market having both same and different functions.

A wholesaler is the middleman between retailers and customers and assumes the role of none other than satisfying retailer demands. Sometimes, though, distributors work directly with retailers. Wholesalers Buy from Distributors Wholesalers buy a large quantity of products directly from distributors. Many distributors provide discounts for a certain number of items purchased or the total amount spent on merchandise. Wholesalers acquire all types of merchandise, ranging from phones, televisions and computers to bicycles, clothing, furniture and food.

The goods are frequently destined for retailers, than can be either brick-and-mortar stores or online e-commerce enterprises. Retailers Sell to Consumers Retailers consist of small and large for-profit businesses that sell products directly to consumers. To realize a profit, retailers search for products that coincide with their business objectives and find suppliers with the most competitive pricing.

However, by monitoring the performance of the distributor, the manufacturer becomes involved and interacts with the distributor in order to ensure the proper development of tasks by the distributor Y.

Zhou, Zhang, Zhuang and Zhou showed that relational governance combines relational norms and collaborative activities. This interactive process, in turn, helps the knowledge transfer processes from the manufacturer to the distributor, which may increase the knowledge base of the distributor and improve its performance.

Knowledge-sharing activities between manufacturer and its distributors can be an important factor affecting overall supply chain performance, as found by Hult, Ketchen and Slater in their study about how information-sharing and face-to-face discussions can improve supply chain performance. Figure 1 illustrates our proposed model.

difference between manufacturer supplier distributor relationship

The reasons are explained by certain activities that demand investments and efforts, and are not perceived as useful or worthwhile by the distributor. At the same time, the manufacturer can invest in activities, such as monitoring the distributor's performance or training its team Y.

In the case of the manufacturing-distributor relationship, the manufacturer can be viewed as the principal actor and the distributor as the agent.

Differences Between Wholesalers, Distributors and Retailers

Although the manufacturer and the distributors share the same goal of maximizing sales of the manufacturer's products and the distributors may diverge in the way that these products are sold. In this case, for example, distributor may "carry insufficient inventories of the manufacturer's products, carry and promote competing products, set prices above or below the preferred range, advertise and promote the product inappropriately, train sales personnel improperly, fail to provide after-sale services, etc.

difference between manufacturer supplier distributor relationship

In both cases, monitoring distributor performance may be a required activity conducted by the manufacturer to ensure proper distributor behavior, especially in the case of intensive technology products, which incur high investments in production and distribution.

This monitoring activity gathers information that can be used to qualify distributors in a close-looped process. In this aspect, knowledge transfer is central. It implies a constant process of evaluation and feedback between manufacturers and their distributors, maintaining the information flow between the companies involved in this process and stimulating information-sharing behavior. Monitoring distributor performance helps manufacturers to keep track of flaws in distributor activities related to the product and consequently to prepare actions to deal with those flaws.

A next step in performance evaluation is cooperation. Cooperation helps to develop trust and at the end to improve performance Huemer, Tacit knowledge acquisition Tacit knowledge acquisition is dependent of the activities conducted by manufacturers that require interaction and direct involvement with their distributors.

difference between manufacturer supplier distributor relationship

Lloria and Peris-Ortiz stated that network configuration influences knowledge transfer. Within this focus, Tseng showed that manufacturer's knowledge capability, supplier relationship management and corporate performance are related. Similar situations may occur when the relation between manufacturer and distributors is explored. Influenced by lean management andkeiretsu configuration, transferring employees between companies is a common practice in Japanese organizations.

This practice seeks to create a supply chain identity and mechanisms for knowledge transfer from manufacturers to suppliers. As an example, Toyota transferred more than employees per year to the suppliers throughout the 90s J.

Toyota also employs this practice with its partners through monthly meetings in order to allow a knowledge transfer that includes dissemination of the best practices among the plants J. As suggested by Siguaw, Baker and Simpsona good relationship with distributors may increase distributor commitment and trust. Thomas, Thomas, Manrodt and Rutner showed that an increase in levels of interdependence between manufacturers and suppliers might increase information exchange, communication quality, and operational knowledge transfer activities.

Such interactions allow transfer of good practices from the manufacturer to the distributor J. Performance monitoring is positively associated with tacit knowledge acquisition by distributors from the manufacturer. Explicit knowledge acquisition The definition of explicit knowledge acquisition is related to the activities developed by the manufacturer to formally transfer information and knowledge to the distributor.

These activities can be formal long-term technical courses, short training sessions, sales promotion campaigns to educate the distributor's sales team, and all other forms of formal educational programs.

These programs can be viewed as explicit knowledge transfer mechanisms, since knowledge is codified and transferred in more tangible forms e. Modi and Mabert consider these activities as part of the operational knowledge transfer process.

Wholesaler vs Distributor vs Supplier

In doing so, the manufacturer can propose and provide formal educational training sessions to the distributor that will increase the knowledge accumulated by the distributor. Knowledge about products, services and customers can be useful for distributors in attracting and maintaining a long-term relationship with customers by offering products and services that best match their needs.

Performance monitoring is positively associated with the explicit knowledge acquisition by distributors from the manufacturer. In addition, the tacit knowledge acquired by the distributors can be turned into explicit knowledge after the assimilation process, defined by Nonaka and Toyama as the externalization knowledge creation process.

Wholesaler vs Distributor vs Supplier – Here’s What You Need to Know!

Thus, they might align their own policies with those of the manufacturer. Routines and practices can be formally changed once employees and managers update their manuals, reports, performance indicators, and use them in future training sessions.

Therefore, the implicit knowledge acquired by employees and managers can improve the bulk of the explicit knowledge acquired by the distributors. Tacit knowledge acquisition is positively associated to explicit knowledge acquisition. A manufacturer may establish goals for the evaluation of the distributors' performance. At the same time, these goals may contribute to the development of the distributors' capabilities. Fugate, Stank and Mentzer analyzed the impact of the operations personnel's knowledge of logistics on operational and organizational performance.

Their findings show that processes that stimulate knowledge creation, dissemination, shared interpretation, and responsiveness, have a positive impact on operational and organizational performance. This happens because these processes allow the operations personnel to share knowledge and interpretation of their routine tasks.

difference between manufacturer supplier distributor relationship

For similar reasons, all these processes may, to some extent, also enable knowledge transfer between the manufacturer and the distributors, increasing the amount of knowledge acquired by the distributors, which, in turn, helps them to perform their activities better. Prahinski and Benton stated that performance measurement can be both financial and operational non-financial.