Difference between Vendor and Subcontractor
Last updated: January 17, 2024 Read in fullscreen view
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Customers and vendors are the two most vital members of every company's extended stakeholder community. Corporations rely heavily on their many suppliers because they enable the creation of reliable supply networks. Suppliers come in many forms, but two common ones are vendors and subcontractors. Though both may be categorized as providers, there are significant differences between them.
Who is a Vendor?
This group represents those that sell and provide services to a wide variety of customers, including both regular people and large businesses. The market is a cutthroat environment for vendors, and consumers routinely weigh several factors—including price and quality—when making purchasing decisions. While such providers are more common in low-volume situations, big corporations may seek them out in an effort to keep their supply chains running smoothly when other vendors fall short.
Who is a Subcontractor?
There are several subcontractors that aid a prime contractor. Subcontractors are usually brought in to fulfill tasks inside larger projects that have a set deadline. Construction projects often include the hiring of specialized third parties, known as subcontractors, to complete specialized tasks. Some examples of such fields are plumbing and drainage, landscaping, and electrical work.
The following are examples of common subcontractors −
-
Subcontractors are those hired by the main contractor to assist with in-house tasks.
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When a client chooses a subcontractor and gives them instructions to work under the supervision of the prime contractor, the subcontractor is deemed to be nominated.
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A named subcontractor is one who was hired through a competitive bidding process and reports directly to the main contractor.
Differences − Vendor and Subcontractor
Both are vital to guarantee a smooth flow of goods from one point to another in the supply chain. The following table highlights how a Vendor is different from a Subcontractor −
| Characteristics | Vendor | Subcontractor |
|---|---|---|
|
Selection process |
In most cases, the people that hire vendors are either customers or contractors. |
Tendering is the process through which the client, the general contractor, or a third party chooses the sub-contractor for a certain project. |
|
Products and services |
Products that are "off-the-shelf" are those that can be purchased by any consumer from the seller. |
It is the subcontractor's job to carry out the work specified by the main contractor. |
|
Performance goals/Penalties |
Goods from a vendor can be rejected if they don't make the cut in terms of quality, timeliness, or specification. |
Subcontractors must deliver work that meets the requirements laid out in the contract, or face financial penalties or even legal action. |
Conclusion
A vendor is someone who works in the field of selling and supplying items to customers of all sizes, from individuals to multinational businesses. However, a subcontractor is someone or anything that performs work for another business under the direction of the main contractor. Despite the many ways in which they differ from one another, both are crucial to the smooth functioning of the supply chain.
Partnerships between vendors and subcontractors are crucial to the economy because they allow companies to split the costs, risks, and benefits of new product creation, including research and development, production, distribution, and retail.
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