OEM: Original Equipment Manufacturer Explained | ToolSense Glossary
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What Is an Original Equipment Manufacturer?
OEM stands for an original equipment manufacturer — the term refers to any company that produces parts or products designed to be incorporated into end products produced by other companies. The most common examples of OEM parts include computer manufacturers, who create the central processors and hard drives used in a finished product, such as a desktop or laptop computer.
KEY TAKEAWAYS
- Original equipment manufacturer applies to any company that manufactures parts or products that are intended to be incorporated into end products of other companies, working closely with the seller of the finished product, known as the value-added reseller (VAR).
- OEM lowers production costs for other companies that may not have the full capacity to produce the items they need.
- Typically, OEMs have focused on business-to-business sales, while VARs have targeted the general public or other end users.
Why Is OEM Used?
People are always looking for ways to make their lives easier, where original equipment manufacturer comes in. OEM plays a huge role in production by first reducing the cost of production for the other companies who may not have the full capabilities of producing the items they need.
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Importance of OEM
When it comes to OEM, the truth is that you get what you pay for. The basic rule of thumb is the higher the price, the better the quality of the product. High-quality packaging will ensure your products are safe during transport and storage. That’s why choosing an original equipment manufacturer supplier with a strong track record in high-quality manufacturing products is important.
When you buy a new PC, your options for upgrades are limited. You can change out the hardware, but if you want to customize or modify the software that came with it, then you’re often stuck with whatever version of Windows comes on your computer.
When it comes to your brand’s growth, OEM is an important factor to consider. Choosing the right manufacturing partner and utilising their production capabilities can directly affect your bottom line and market positioning.
Original equipment manufacturer is the best way to get the latest version of Windows at a lower price. Software companies let you buy your products directly from them, rather than resellers like Amazon or Best Buy. This means you can save money and avoid dealing with salespeople.
OEM Software
Companies can obtain many different types of software for free or at very low costs. One of the most popular methods is using OEM software. You may have heard about this before, or maybe you’ve seen it advertised in magazines, but what exactly is OEM software?
Original Equipment Manufacturer software is computer software made by one company and sold to another. OEM software can also be called “white box” software. When buying this type of product, though, you don’t just get the CD-ROM or DVD containing the program; instead, you get a licence for it. The licence will contain instructions on using the program and may include support information such as phone numbers.
An Original Equipment Manufacturer (OEM) software can also be pre-packaged software that comes with new computers or other products. It’s also used to refer to the act of buying commercial software in bulk and then re-selling it, often packaged with other items. This kind of software can be both good and bad for users, depending on the company that sells it and whether you buy it legitimately or not.
Moreover, this type of software is built to be used with hardware devices. It does not have a separate brand identity, and it is sold by the manufacturer of the device or system rather than another company. OEM software can sometimes be seen as being less effective than its counterpart, but this depends on the quality of the software and whether or not it was made for a specific application.
OEM Software Benefits
It is a blessing for small businesses which are short on budget. It comes with prearranged design, logo and colour scheme. This brand of computer program is similar to the customized software but costs less because it does not require skilled developers to build it.
OEM software is a lot less costly than original computer programs. The cost of branded items generally depends on the amount of money spent on their development and production. At the same time, companies can acquire OEM software at cheaper rates because it does not require research or development.
There are several benefits to buying this kind of software from a reputable company. One of the most important is that you get an item that has been previously proven to work effectively without going through all sorts of usability testings that consume a lot of time.
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OEM Hardware
If this is the first time you hear about OEM hardware, what does it mean? OEM hardware refers to a company that designs and manufactures its brand of computer hardware. However, it is also common for companies to offer different levels of branded hardware and unbranded (OEM) variations of their products for resellers to purchase and rebrand with their name.
An OEM is a company that produces goods in large quantities and then sells the goods directly to another business that will apply their brand name or other marks on the product. For example, suppose you buy a PC from Dell. In that case, you’re not buying a computer from Dell – you’re buying a computer from Hewlett Packard (the maker of your CPU), Microsoft (the maker of your operating system), Intel (the manufacturer of your motherboard), etc.
One of the most common questions are, “Why should I buy OEM hardware?” The answer, in short, is that it’s a smart business decision. For starters, many businesses are not equipped to handle software support for each computer being used by employees, so they opt for purchasing multiple computers with pre-installed software. Each one can be set up identically or easily customized with the same programs and files on each system.
Who Is Using Original Equipment Manufacturer?
OEM is a constantly changing and growing industry. There are many different types of companies in this sector, from small businesses to multinational corporations. The main goal of all these companies is to make a profit by manufacturing or assembling a product for another company, that product will sell under that other company’s name.
When working on a large-scale project, it is not uncommon to find yourself needing additional resources. This is why outsourcing can be so helpful. Many industries need bulk production of goods. For example, the hospitality industry may need OEM for their utility production, like towels and uniforms.
The IT sector, on the other hand, may need OEM in software and hardware production, as we have mentioned. The list is endless; in short, anytime you think of bulk production of any goods, OEM is the way to go for cooperations that consider achieving this at a lower price and timely.
Over the years, OEM has become a staple of the automotive industry. From luxury vehicles to sports cars, many consumers expect a certain quality and craftsmanship from their vehicles. It’s been reported that more than eighty per cent of vehicles sold in North America are manufactured with OEM parts.
These manufacturing firms create products with specific qualities and features — sometimes including proprietary designs — to meet your needs as closely as possible without infringing on the intellectual property of the original designer.
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Original Equipment Manufacturer Example
You know you want to start your own business. You have the idea, the passion, and the energy to make it happen. But do you know how to turn your idea into a real company? What does it take to become an entrepreneur? An OEM is not simply someone who wants to be in business for themselves — it’s someone who has taken that step towards creating their brand or product. It’s also someone willing to put in all the work needed throughout all stages of the product production.
OEM in the Auto Industry
As the world moves from manufacturing to service, many businesses outsource to get more for their money. One of the most outsourced segments in the auto industry is the design and manufacturing of car parts. Automotive companies have found that outsourcing allows them to cut costs while maintaining high-quality standards and innovation in design.
Automotive parts manufacturers (OEMs) are very interested in the idea of keeping their production close to home within certain geographical limits. After all, it makes sense to keep your supply chain as short as possible.
OEM in the Electronics Industry
OEM means that a company manufactures products sold by another company under its brand name in the electronics industry. For example, company Y is an OEM in the smartphone and tablet market: it develops these products and sells them to other companies (such as AT&T and Verizon) who rebrand them before selling them to consumers under their brands.
The same can be said about the home or office usage goods like fridges or printers. A company produces different components on behalf of company X and sells them lower than the retail price.
This often creates batteries and other components sold to electronic companies for inclusion in their final products in the electronics industry.
What Is an OEM Partner?
An OEM partner is a company that manufactures products for another business. The manufacturer is the original equipment manufacturer because they manufacture the product for use in other brands. For example, an electronics company uses another company as an OEM partner to build their phones and computers while keeping in perspective the design and quality of the product.
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What Is the Difference Between OEM and ODM?
OEM is a major business in the electronics industry. It’s also a very common practice for many manufacturers, both big and small. When purchasing electronic devices from a company, you should know whether they are OEM or ODM products. So what’s the difference between OEM and ODM?
OEM describes a product produced by the company that will eventually sell it to consumers or re-sell it to other companies who will do so. ODM, on the other hand, stands for original design manufacturer and refers to a company that has created a design and hires another manufacturer to produce the product using its design specifications.
OEM vs Aftermarket Parts
OEMs stand in contrast to aftermarket products, which offer replacement parts that are generic and cheaper than an OEM’s parts. Original equipment manufacturer parts are made by the same company that makes the original equipment the part is being put on. When you purchase OEM parts, you’re receiving a whole part made by one company. This means that if something goes wrong with your car after installing the OEM part, you can go back to the company who made it, and they will fix it for free under their warranty.
Let’s look at the automotive industry to understand aftermarket parts. Auto parts manufacturers rely on aftermarket parts to support the replacement of their products. Aftermarket parts are produced for all vehicles, including automobiles, trucks, marine and farm equipment. Any other company can use aftermarket parts to replace their faulty parts.
Benefits
When it comes to business, no matter how big or small, there is always a need for efficiency and effectiveness. When you’re a company that provides services or products, your main goal is to be as efficient as possible. Moreover, you want to have your customers the best experience possible. That’s where original equipment manufacturers come in.
The OEM helps the company save you money and time by dealing with production and product registration. While also making sure they meet all the standard requirements for the particular industry they are producing in.
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Conclusion
When you are looking for ways to make your life easier, look no further than the benefits of outsourcing production. By finding an OEM factory, you can be sure that your products will meet deadlines and standards. With the help of OEM, companies can focus their energies on being innovative and bringing new products to market. This is a much better option than manufacturers creating items from scratch.
FAQ
What Does OEM Mean?
OEM stands for original equipment manufacturer. In the business world, this means a company that makes a product to be sold by another company under its own name. For example, an OEM computer manufacturer might make computers for a brand like Dell or Lenovo, who then sell the products under their own brand names.
What Is an Example of an OEM?
In the computer world, this generally refers to a company that makes parts and components for computers. They may also make complete PCs and laptops to be sold under another brand name.
Does OEM Mean Fake?
No, OEM simply means getting quality products from a company that can do bulk production for you promptly, meeting all market and quality standards.
What Is OEM and ODM?
Original equipment manufacturer (OEM) stands for companies that do the bulk production, while original design manufacturer (ODM) stands for the company that designed the product.
