What is Original Equipment Manufacturer (OEM)? – Definition | Meaning | Example

Definition: Original Equipment Manufacturer (OEM) refers to any product or part that is specifically designed and produced to fit an original product. In other words, it is a component specially manufactured for a final product—not an after market product.

What Does OEM Mean?

What is the definition of OEM? This term is mostly used in the computer and automobile industry referencing all the parts constituting the final product. Tech companies use OEM products to assembly their original products. This is also true with auto manufacturers. They use many different suppliers to produce all the different components for their finished products, which are vehicles.

OEM parts, as oppose to aftermarket parts, are normally high quality and have a more thorough quality assurance process since the client is a big company that wants their original products to be of the highest quality. Nonetheless, many suppliers are now selling OEM parts directly to consumers because of the high demand for do-it-yourself models. This is commonly seen in the computer industry where many professionals are interested in assembling their own devices by using original components.

Let’s take a look at this brief example.

Example

Vista Electronics INC is a company that manufactures wireless electronic devices for both final consumers and computer manufacturers. The company is now working with Monkey Computers LLC, providing them with wireless keyboards for all the computers they produce. Monkey Computers asked Vista to produce high quality parts for their keyboards. Each batch delivered will be reviewed thoroughly to make sure they meet the expected quality level. Which kind of product is being asked for here, OEM or Aftermarket?

According to the concept we explained above, OEM products are top quality products manufactured specifically for an original product. In this case, Vista Electronic is manufacturing a component for Monkey Computers’ original keyboards. Since this component will be commercialized within the keyboard as a whole, it must meet the quality standards set by Monkey. This means the keyboard components are OEM parts.

Summary Definition

Define Original Equipment Manufacturer: OEM means parts produced by the original company that designed and marketed them.