What is a Value Added Distributor?
Are you familiar with the term “value added distributor”? If not, it’s time to understand what it means and why it is important in the distribution chain. A value added distributor (VAD) is a third-party supply chain participant who takes on a more specialized role between a manufacturer and an end customer.
A value added distributor offers services that serve to add value to products or services. This most commonly includes product customization and technical support. Distributors typically add more than just price-related benefits; they also add solutions such as assembly, integration, configuration, testing, installation, and maintenance services – often in addition to basic shipping and warehousing operations.
How Does a Value-Added Distributor Help?
As an intermediary between manufacturers and resellers in a distribution chain VADs play an important role in bridging gaps in communications and complex relationships between stakeholders. Providing valuable services, they help increase revenue share while minimizing overhead costs through economies of scale. An example would be helping accurately forecast future demands when buying large quantities of goods allows for better pricing by leveraging discounted rates offered by suppliers who require higher upfront purchases.
In addition to cost savings advantages provided by VADs, manufacturers benefit from their industry knowledge. This enables them to remain competitive in dynamic markets through market intelligence updates that include competitor pricing strategies for key industry players and trends relevant to their business model. Resellers, on the other hand, can benefit from access to products at wholesale prices which further maximizes their profits.
A VAD also plays an important role in the tech community by distributing valuable products and providing essential customer service that can be hard for vendors to provide. They offer expert advice from experienced specialists in networking, security architecture, cloud analytics, data centers, etc. This helps avoid risks associated with investing large amounts of money in new technologies without proper knowledge or understanding of their associated risk factors.
At the same time, customers benefit from lower costs due to higher efficiency associated with value-added activities executed by the VAD itself instead of requiring different resources within their process flow. In addition, customers can expect reliable technologies backed with VAD installers providing comprehensive support for more complex integration projects.
A VAD also serves as a problem solver for enterprise-level businesses looking for quick solutions. They provide better technical support, event monitoring, risk assessment, and proactive services that offer customers the required tech solutions to improve their business processes in a concise time frame.
Some have evolved into powerful technology-driven distribution channels among the many types of VADs. VADs that have undergone major changes include
The focus of value-added distributors today is on improving performance by providing more effective technological solutions and real-time monitoring tools that help manufacturers achieve higher productivity without high labor costs.
Value added distributors play an important role in ensuring efficient processes for suppliers and end users in today’s business landscape. They offer extra features that traditional supply chain participants may not be able to provide by increasing delivery speed while guaranteeing manufacturers’ required quality levels. They also offer a complete set of services ranging from design to delivery, so end users don’t need additional resources apart from VADs.