Companies can save money by outsourcing the production of components to an OEM, rather than investing in the resources needed to produce the parts themselves. OEMs play a vital role in helping other companies lower their production costs, especially when those companies do not have the full capacity or expertise to produce all the items they need in-house. By partnering with an OEM, companies can leverage the specialized manufacturing capabilities and resources of the OEM to meet their component or subsystem requirements. Original Equipment Manufacturing (OEM) is a pivotal business model in which a company, known as the OEM, manufactures products or components that are purchased and retailed under another company’s brand name. This process differs from Original Design Manufacturing (ODM), where the manufacturer is involved in both the design and production phases, often providing greater control over the final product. This section outlines the distinctions between OEM and ODM, enabling readers to understand the strategic choices companies face based on their business goals and production capabilities.
See How ABM Improved Their Equipment Management With ToolSense
OEMs manufacture different components to be used in the products of other companies, and they play a crucial role in the manufacturing and supply chain ecosystems. By specializing in specific areas, OEMs can develop deep knowledge, expertise and advanced manufacturing capabilities in their chosen fields. This enables OEMs to produce components, products or subsystems at scale and with consistent quality, meeting the demanding requirements of their customers. With their focus, expertise and advanced capabilities, original equipment manufacturers contribute significantly to the success of countless final products worldwide. It is a term used in the manufacturing industry to describe companies that produce components or products that are sold to other companies to be integrated into their own products.
Effective communication is crucial for the success of any OEM partnership, especially when it involves diverse cultures and languages. Prometheus Group’s integrated EAM tools help operations managers solve boots-on-the-ground problems—while making your assets and ERP more productive. Join over 14,000 maintenance professionals who get monthly CMMS tips, industry news, and updates. Learn about the wide range of ways manufacturers are taking advantage of artificial intelligence.
Quality and Reliability of OEM Products
This strategy has empowered them to be able to have a large number of products at relatively lower prices, enabling them to grow and expand into new regions faster. Sparing the available ODM model in China seems to be the purpose of most companies willing to increase revenues through product development and gain a competitive edge. The original equipment manufacturer, or OEM, produces components other companies integrate into their products. Consumers can buy replacement OEM parts or use aftermarket manufactured parts that commonly provide a cheaper alternative. Take the first step towards transforming your production strategy by contacting us today.
Advantages for the Client
Streamline operations with Zebra’s healthcare technology solutions, featuring hardware and software to improve staff collaboration and optimise workflows. Transform retail operations with Zebra’s retail technology solutions, featuring hardware and software for improving inventory management and empowering teams. The purchasing company and the contracted manufacturer must be on the same page from an OEM perspective.
- Thereby allowing companies to do what they know best and depend on ODMs for their unique approaches in a dynamic industry.
- OEM is a company that manufactures products or components for other businesses according to their specifications.
- Zebra’s data capture devices are designed to be highly accurate and reliable, which can help companies improve their inventory management and supply chain operations.
- This doesn’t mean that there are no high-quality aftermarket parts available whatsoever, since the Certified Automotive Parts Association aims to ensure quality standards throughout the US.
Understanding Original Equipment Manufacturers (OEMs)
- Original Equipment Manufacturers (OEMs) play a critical role in the modern industrial landscape, impacting industries such as manufacturing, automotive, and technology.
- Whether you’re a seasoned professional or a newcomer to the field, grasping the concept of OEM (Original Equipment Manufacturer) is essential.
- Understanding where each model fits on the outsourcing spectrum enables engineers and decision-makers to align manufacturing choices with product complexity, IP considerations, and time-to-market objectives.
- An OEM may manufacture electronic components for a VAR that makes high-definition TVs, such as Samsung.
- The method allows the brand owner to focus on marketing and sales, leveraging their brand recognition.
- Using an OEM can also provide companies with access to new technologies and expertise.
Dell and Hewlett-Packard have accepted branded parts from external sources in their products over time. The phrase now can be used as an adjective, as in OEM parts, or as a verb, such as when a manufacturer says it plans to OEM a new product. A company may choose to work with an ODM to save on its own research and development costs. what does oem stand for in business And, ODM products usually have a low minimum order quantity, making them attractive to smaller clients.
The Original Design Manufacturer model offers a streamlined approach where the manufacturer is responsible for both the design and production of the product. Instead of relying on client-supplied technical specifications, Original Design Manufacturers develop products based on their own research and development (R&D), existing technology platforms, and market trend insights. This distinction becomes especially important when comparing the OEM model with the Original Design Manufacturer (ODM) approach, where the manufacturer is involved in both design and production. Every stage of the manufacturing process undergoes rigorous inspection to ensure compliance with industry standards and client specifications. From material sourcing to final assembly, quality control measures are meticulously implemented to uphold the company’s commitment to excellence. This dedication to quality assurance has earned Sureway Group the trust and loyalty of clients worldwide.
Industry Solutions
Companies that successfully manage these relationships can leverage the benefits of global manufacturing, including cost efficiency, access to new markets, and enhanced production capabilities. For example, the food and beverage industry uses OEMs for sourcing production and packaging machinery. Likewise, OEMs also provide hardware components, such as servers, storage devices, and networking equipment, to some of the world’s largest IT companies.
What Are the Advantages of Choosing Zebra as Your OEM Partner?
The scenario could involve a U.S.-based consumer electronics company partnering with a Vietnamese original equipment manufacturer (OEM) to produce smartphones. The case study would detail the decision-making process, the setup phase, the challenges encountered, and the strategic benefits realized from this partnership. Vietnam and China boast a skilled labor force that is specifically trained for manufacturing industries. Over the past decades, these countries have invested heavily in technical education to meet the demands of increasingly complex manufacturing tasks. Furthermore, technological advancements in these countries have kept pace with global standards, ensuring that OEMs can handle high-tech production without compromising on quality. Yes, OEM components are the original parts manufactured specifically for a product or system.
In this case, Microsoft is the original equipment manufacturer that supplies the VAR – famous computer manufacturers, such as Dell, HP, Lenovo, or others – with a version of Windows most suitable for their hardware. However, if bought from a legitimate seller, an OEM version of Windows can be purchased without the corresponding hardware, too. In industries where reliability is critical, OEM components are preferred over aftermarket alternatives due to their superior quality and compatibility.