OEM (Original Equipment Manufacturer)

OEM refers to companies that produce parts and equipment that may be marketed by another manufacturer. The term also describes software or supplies initially bundled with computer peripherals.
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Definition

An Original Equipment Manufacturer (OEM) is a company that produces parts and components that are used in another company’s end products. While the OEM supplies products to other companies, the term is also used to describe software that comes bundled with a computer or the initial supplies that come with computer peripherals. OEM terms are used in various industries, most notably in computers, automotive, and electronics sectors.

Examples

  1. Automotive Industry: In the automotive industry, an OEM would produce components like engines or tires that are then assembled by another company to create the final automobile.
  2. Computers and Technology: A company like Dell may use motherboards from Intel, which is considered the OEM, in their desktop products. Similarly, OEM software such as Windows might come pre-installed on a new laptop.
  3. Consumer Electronics: In the consumer electronics space, an OEM might supply key components for smartphones, such as screens or chipsets, to major brands like Apple and Samsung.

Frequently Asked Questions (FAQs)

What is the main role of an OEM?

An OEM’s primary role is to supply parts and components or assemblies that will be used by another company to create a finished product.

How is an OEM different from an ODM?

An ODM (Original Design Manufacturer) designs and manufactures a product as specified, which will then be rebranded by another company. An OEM might produce parts designed by the purchasing company.

Can software be considered OEM?

Yes, OEM software refers to software that is sold to computer manufacturers who then bundle it with the hardware.

Why don’t software publishers typically support OEM software?

OEM software is often sold at a discount to hardware manufacturers, and the customer support responsibility generally lies with the hardware seller, not the software publisher.

What industries most commonly use the term OEM?

The automotive, computer hardware, and consumer electronics industries are primarily associated with the term OEM.

ODM (Original Design Manufacturer)

An ODM is a company that designs and manufactures a product as specified, which is then rebranded by another company for sale.

VAR (Value-Added Reseller)

A VAR modifies or adds features to a product and then resells it as a new product. Typically, VARs bundle OEM parts into more complex systems or provide additional services.

Aftermarket

Parts not made by the OEM but made to fit and function similarly to the OEM parts.

Contract Manufacturer

A company that produces goods under the label or brand of another company. They may produce items as specified without branding them as their own.

Online References

Suggested Books for Further Studies

  1. “OEM Principles, Practices, and Politics” by Michael S. Kunzman
  2. “Understanding the Manufacturing Process: Key to Successful OEM Transformation” by Joseph Berk
  3. “The Handbook of Logistics and Distribution Management: Understanding the Supply Chain” by Alan Rushton, Phil Croucher, and Peter Baker

Fundamentals of OEM: Business Basics Quiz

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