It’s a question that comes up more than you might expect:
“Is this a vendor or a supplier?”
“Are contractors third parties?”
“Should we assess them all the same way?”
On paper, these distinctions may seem innocuous - maybe even academic. But when it comes to building a Third Party Risk Management (TPRM) program that works, confusion over terminology often leads to confusion in process. Which is how risks can potentially slip through the cracks.
So, let’s untangle the terms - and explore why being aligned on language, scope, and ownership is more important than ever.
What’s the Difference?
Depending on who you ask, you’ll likely get a different definition of who counts as a vendor, a supplier, or a third party.
- Vendors are typically thought of as companies you pay for goods or services – such as SaaS platforms, outsourced IT providers, or software tools.
- Suppliers, on the other hand, are often seen as those involved in delivering or enabling your product or service - like infrastructure providers, logistics partners, or upstream contributors.
- Third parties is the broadest term of all. It includes vendors, suppliers, contractors, consultants, partners, essentially any external organisation that has access to your systems, data, operations, or customers.
Some teams use these terms interchangeably. Others treat them as separate groups, with different processes and owners. Neither approach is inherently wrong, but inconsistency across departments can create blind spots. For example, if your procurement team is referring to “suppliers” and the marketing team assumes they mean “vendors”, it’s possible that the freelance graphic designer they’ve been using gets overlooked.
Why It Matters
Is it really that big a deal? It can be. When teams use different language to describe the same relationship, or apply different rules based on unclear classifications, things tend to fall apart.
One team might onboard a tool without realising it needs a security review. Another might treat a seemingly minor supplier as “low risk,” not knowing they host critical data. And a third party that should’ve been continuously monitored might only get reviewed once – when they were onboarded.
These aren’t hypothetical issues. They’re exactly the kind of missteps that lead to audit failures, breach exposure, and operational disruption.
Which is why getting aligned on what’s in scope, and why, is more important than what you call it.
Function Over Labels
Instead of debating whether someone is a vendor or a supplier, it’s more useful to ask:
- What do they have access to?
- What could go wrong if that access were compromised?
- How dependent are we on them to operate, deliver, or serve customers?
- Would their failure trigger regulatory obligations, customer impact, or reputational harm?
If the answers indicate a significant financial, operational or reputational risk, then it doesn’t really matter whether they’re called a vendor, supplier, or anything else - they belong in your third-party risk process.
Which is where our Supplier Risk Tiering Guide comes into play. It gives you a consistent way to classify and assess external parties based on business impact - not just their job title in your procurement system.
A Unified View of Risk
The most effective risk management teams aren’t wasting time sorting suppliers into arbitrary buckets. They’re building a unified inventory of external parties, applying consistent criteria, and tailoring controls based on what matters most: the risk they represent.
That might mean a CRM vendor and a freight provider both fall into your “high-risk” tier, but for very different reasons. And that’s fine. What matters is that your risk model recognises their differences but still gives you the clarity to respond appropriately when things change.
This kind of approach also supports better collaboration across functions. IT, Security, Procurement, Legal, and Ops can all work from the same framework, even if they use slightly different terminology day to day.
Consistency Over Perfection
You don’t need to rewrite your procurement policies or retrain every team on precise definitions. What you do need is shared language and aligned expectations.
If you’ve already built a supplier tiering model (like the one in our guide), there’s no need to start again. In fact, it’s probably already flexible enough to handle all your third party relationships. What matters most is how you apply it, and whether everyone across the business understands how and when to use it.
The goal isn’t perfect classification. The goal is to make sure the right parties, with the right access and risk profile, are being assessed and managed appropriately.
A Framework You Can Start Using Today
We’ve put together a practical supplier tiering template that helps you categorise third parties based on their access, importance, and impact - no matter what you call them.
In addition, we’ve created a handy Supplier Criticality Scoring and Weighting template that can be used by the business owner to assess the risk associated with each supplier.
For more detail on our Managed TPRM service and how it supports a centralised, repeatable and auditable Third Party Risk Management program, visit the website.
In the end, the labels don’t matter so much as the actions taken.
Whether you call them vendors, suppliers, or third parties, the important thing is making sure their risks are seen, assessed, and managed — before their risk manifests itself as a potentially devastating incident for you.
