Businesses often encounter a variety of vendor types, each serving distinct purposes and functions within the procurement process. Among these, two significant categories are Regular Vendors and Fixed Vendors. While they both contribute to the acquisition of essential materials and services, they differ in their scope, implications, and application. In this article, we go through what is regular vendors and fixed vendors and the differences between them.
Regular Vendors
Regular Vendors refer to suppliers who provide materials or services to a company on a consistent and ongoing basis. These vendors are a reliable source of procurement for the company's requirements and are often engaged at the client level, catering to the needs of the entire corporate group. The relationship with a regular vendor is frequently established through an Info Record (Information Record), a procurement document that contains details such as the vendor's contact information, pricing terms, and delivery conditions.
One of the key aspects of regular vendors is their involvement in the Purchase Info Record (PIR). The PIR maintains a comprehensive record of procurement data associated with a specific material and vendor combination. In cases where a different vendor is attempted to be added to the source list or quota arrangement, the system triggers a warning message, ensuring adherence to the established regular vendor.
Fixed Vendors
On the other hand, Fixed Vendors are suppliers strategically chosen for specific materials or services that are of low value but high volume in nature. These vendors are designated as the preferred source of supply for these materials within a specified timeframe and are typically tied to a particular plant or purchasing organization (P.org). The preference for fixed vendors is primarily maintained in the Source List.
A notable feature of fixed vendors is that their designation is often accompanied by a procurement contract or a predetermined understanding regarding pricing, quality, and delivery. This contractual agreement helps streamline the procurement process for the identified materials, ensuring a seamless supply of high-volume essentials.
Key difference between Regular Vendors vs. Fixed Vendors
Scope of Supply:
- Regular Vendor: Supplies materials or services to the entire corporate group at the client level.
- Fixed Vendor: Supplies specific materials of low value and high volume, often at the plant or P.org level.
Designation:
- Regular Vendor: Designated through the Info Record, ensuring consistency in procurement.
- Fixed Vendor: Designated in the Source List, with contractual agreements for specific materials.
Applicability:
- Regular Vendor: Applicable when consistent procurement is essential across the corporate group.
- Fixed Vendor: Applicable when specific materials require strategic sourcing due to their nature.
Procurement Relationship:
- Regular Vendor: Nurtures a long-term, consistent relationship.
- Fixed Vendor: Tied to contractual agreements and optimized procurement for particular materials.
Warning Mechanism:
- Regular Vendor: Triggers a warning message if an attempt is made to deviate from the established vendor.
- Fixed Vendor: Ensures procurement adherence within the specified timeframe and for designated materials.
Conclusion
The difference between regular vendors and fixed vendors lies in the scope of supply, procurement strategy, and the mechanisms that enforce their respective roles. Regular vendors ensure consistency across the corporate group, while fixed vendors facilitate strategic procurement for specific materials.