As a business owner, it is important to understand oem meaning. Original Equipment Manufacturer or an OEM is a manufacturer that produces and sells products or parts of a product that the purchaser or another company sells to its customers. The sale is carried out after putting the products under its branding. It refers to all the parts that constitute the final product.
The majority of OEMs operate in the computer and auto industries. There are many different suppliers who produce for different companies. These components are a part of the finished product, which are computers or vehicles.
Let us understand oem meaning. OEM is usually the direct client of a retail company that will sell products directly to the customers. For example, a laptop’s parts will not entirely be manufactured by the laptop company. There will be some parts like the memory module or the processor which will be the products of an OEM. Examples of OEM are Dell, ASUS, Sony, and Hewlett Packard.
OEM parts are of high quality as compared to aftermarket parts. They have a thorough quality insurance process because the client is a well-known company. They want the original pieces to be of the highest quality. Many suppliers also sell OEM parts directly to the consumers due to the high demand.
Original Equipment Manufacturer Vs. Value Added Reseller
A Value Added Reseller will sell the products from an OEM but they will add some features before doing it. There exists a mutually beneficial relationship between the two. Value Added Resellers will help the OEM sell their products and OEMs trust that the resellers will sell them with enhanced features that will improve the efficiency and performance of the products.
Original Equipment Manufacturer Vs. Aftermarket
The original equipment manufacturer will produce original equipment. The aftermarket manufacturer makes the products which look alike and can work interchangeably with those of the OEM. It is important to mention here that the parts are not original products as they have been manufactured by companies without the approval from the OEMs to manufacture the products. They are usually cheaper and of slightly lower quality as compared to the OEM product.
OEM Meaning Vs. ODM Meaning
There is a difference between the original equipment manufacturer and an original design manufacturer. If you are a manufacturer with a product idea and need help developing the product, you can bring an OEM on board to manufacture a part or all of the product. You can then brand it and sell the product.
If you have a design in mind but not the money to manufacture the product, an original design manufacturer will take control of the research and development, testing, design, and manufacturing of the product. An ODM will allow you to hire a product designer who is aware of how to build the product. They have experienced product developers and assembly lines that help design the product and this is something an OEM does not do.
Example of OEM
Company XYZ is into the manufacturing of memory cards. Now they will not only produce a single type of product but will have several versions of it. They are then sold to different computer manufacturers and retailers who use the memory card as a part of the final product.
Need for OEMs
Now that you are aware of oem meaning, understanding why they remain in demand. Many companies turn to OEM partners for a couple of reasons:
- An OEM has the expertise that is required to build the device, component, or product that the company requires for its product.
- An OEM has the capacity to mass-produce the product on a regular basis.
- OEMs can manufacture a part, device, or component in an inexpensive manner as compared to the company that purchases the OEM product for their final products.
- An OEM creates a precise product component that meets the demands and requirements for the company in terms of production, management, and delivery.
- OEM offers a quick response time for the product delivery request, given their experience and expertise.
Benefits of buying from OEM
- Quality: When it comes to quality, an OEM is the best choice. The product is the same as the product that is manufactured by the original manufacturer. You might come across many cheaper versions but the price of OEM shows the high quality.
- Lifespan: OEM products have a longer lifespan than any aftermarket product.
- Durability: OEM products are of high quality and are durable. Whenever you buy a product to replace the current one you are using, an OEM product will be of better quality and high durability.
OEM is an integral part of the economy and helps several well-established companies in procuring high-quality parts in a cost effective manner.