Prime Vendor Program Logistics Explained

Who is a prime vendor? It is a single large supplier [vendor] who procures goods and services from different sources for redistribution to a customer within a geographical area. Prime vendors usually purchase and store items required by the customer from a cluster of pre-approved suppliers, referred to as ‘preferred suppliers’.

A customer places purchase orders with the prime vendor as and when required, subject to contract clauses. The prime vendor is responsible for fulfilling all the orders thus placed following the terms and conditions of the contract between the two parties.

How does the prime vendor program help the customer? In a nutshell, it helps customers in the following ways:

• The customer holds minimum inventory in such cases. The prime vendor delivers directly to the customer’s preferred locations and hence, it does not have to worry about redistribution systems.
• The high volume of such contracts often requires the prime vendor to purchase in bulk from their suppliers. Bulk purchasing fetches them better rates, terms, and conditions