An Original Equipment Manufacturer (OEM) is a company that produces parts, components, or subsystems that are used in another company’s end products. The term also extends to software bundled with new computers or supplies provided initially with computer peripherals. In this context, OEM can carry several nuanced meanings and applications.
Role in Manufacturing
OEMs are integral to the manufacturing process because they supply essential parts necessary for building finished goods. Companies like automobile manufacturers use parts from myriad OEMs to assemble a complete vehicle. Here’s how OEM plays a pivotal role in the manufacturing ecosystem:
Types of OEM Contributions
- Components: Supplying vital parts essential for the total product build. For example, car engines, semiconductors for electronics, and hardware for computers.
- Sub-systems: Offering complex modules or sub-assemblies such as a braking system for vehicles or motherboards for computers.
- Raw Materials: Providing the necessary raw materials that undergo further processing to become part of the assembly.
OEM in Software Bundling
The term ‘OEM’ also applies to software that is sold in conjunction with hardware. This kind of software is typically pre-installed on a device, like a laptop or desktop.
Characteristics of OEM Software
- Bundling: Often bundled with the hardware at the point of purchase.
- License: Comes with a specific licensing structure, usually tied to the hardware.
- Support: Typically supported by the hardware manufacturer rather than the software publisher.
For example, a new laptop may come with an OEM version of Microsoft Office, which means the software is pre-installed, and the license is usually non-transferable to other PCs.
Special Considerations
OEMs can sometimes disassociate themselves from post-sale support responsibilities. This often creates confusion among consumers trying to obtain technical support.
Customer Experience
- User Responsibility: Buyers often must contact the hardware manufacturer for support, not the OEM.
- Warranty Constraints: OEM warranties can be limited, emphasizing the need for understanding the terms of purchase.
Historical Context of OEM
OEMs have evolved alongside the industrialization process. Initially, the term was more commonly linked with automobile manufacturing and hardware industries. However, over time, its application has broadened to include software and other technological products.
Industrial Revolution Impact
- Automotive Industry: The term gained ground as carmakers began using parts from specialized manufacturers.
- Technological Advancements: With the advent of computers and consumer electronics, OEMs began supplying increasingly complex and integral components.
Applicability Across Industries
OEMs are not confined to technology and automotive. They span various industries, including:
- Medical Devices: Supplying critical components such as imaging devices and surgical tools.
- Aerospace: Providing parts for aircraft, satellites, and defense systems.
- Consumer Electronics: Essential components for smartphones, tablets, and wearable technology.
Examples of OEMs
- Intel: Produces processors that are used in various brands of computers.
- Delphi Automotive: Supplies components that are used in cars built by different manufacturers.
- Foxconn: Manufactures electronics and components for companies such as Apple.
Comparing OEM with Related Terms
OEM vs. ODM (Original Design Manufacturer)
- OEM: Concentrates on producing parts or subsystems for use in another company’s product.
- ODM: Designs and manufactures complete products that are then marketed by another company.
OEM vs. VAR (Value Added Reseller)
- OEM: Focuses on manufacturing components or products.
- VAR: Enhances existing products by adding features or services and resells the end product.
FAQs
What is the difference between OEM and aftermarket parts?
- OEM Parts: Manufactured by the original producer and guaranteed to fit and function perfectly with the original product.
- Aftermarket Parts: Made by a third party and may vary in quality, performance, and compatibility.
Are OEM products always better?
References
- Kaplinsky, R. (1994). The globalisation of technology.
- Cusumano, M.A., & Takeishi, A. (1991). Supplier relations and management: A survey of Japanese, Japanese-transplant, and US auto plants.
Summary
Original Equipment Manufacturers (OEMs) are central to the manufacturing and technology landscapes, providing essential components and software that form the backbone of various end products. Understanding the role and implications of OEMs can help consumers and businesses make informed decisions related to product purchasing and support.
This makes OEMs a versatile, significant aspect across multiple sectors, not just limited to manufacturing but extending to technology and beyond.
