The supplier type indicates either the supplier system you want to be returned when used in a request. Or, when parsing the API results, supplier type indicates the system that is returning availability and where that reservation will be sold.
Hotels can participate on a variety of online inventory systems. Each one they contract with broadens their global reach to fill and sell more empty rooms. When participating on a supplier system, they enter the number and type of rooms they are willing to sell through that system and include any pricing rules that will apply to increasing or decreasing availability, dates, and occupants.
If a property sells out of inventory on one system, they may still have inventory on another system they contract with. Differing systems also have differing ways of returning info and pricing on the available rooms they return. For that reason, it's critical to pay close attention to the supplier type returned in the API so all pricing is accurately displayed.