OEM or Original Equipment Manufacturer refers to a company that manufactures goods used as components to assemble products for another company which ultimately produces the goods sold to consumers. The term OEM is quite common in the automotive parts industry and electronic products manufacturing.
OEM in the automotive industry
In the automotive industry, the relationship exists between the car manufacturer and the company that produces the parts. Some of the most common parts that OEMs make for car companies include brake cylinders, exhaust systems, and a wide variety of position sensor devices which are vital for feedback and control.
These position sensors, along with other components required to assemble an automobile come from OEMs often because the products are highly compatible and are also produced using the highest standards of quality which meet the needs of the car manufacturer.
OEMs in the computer industry
There is a different definition for OEM in the computer industry. It often refers to companies that buy electronic parts and rebrand them. For example, Microsoft supplies Dell with software which they use in their computers. The companies that enhance and incorporate OEM parts into their products are called value-added resellers, but in this scenario, the product guide on computers sold by Dell will indicate that Dell is the OEM.
How does an OEM work?
Regardless of the interchangeable definitions, there is no denying that VARs and OEMs are dependent on each other. In some cases, an OEM company may produce a complete product for a VAR, but this rarely happens. The ideal scenario is that OEMs only produce small components that become vital parts of the finished product, which are then marketed under the company’s brand.
In the past, OEMs usually conducted business to business transactions only, and the VAR assembles products for the consumers. These days, however, many OEM companies sell their products directly to consumers. If you want to build your own personal or gaming computer, for example, you can buy processors, graphics cards, and other parts directly from OEMs like Intel and Nvidia.
What is ‘aftermarket’ and how does it differ from OEM?
Aftermarket suppliers work differently from OEMs because these companies manufacture replacements for original products. To further illustrate, imagine buying a part to fix a broken car transmission. The transmission was initially produced by an OEM company specifically for that car’s make and model. If you can find a replacement made by the same OEM company, then it is an OEM part; otherwise, if you find a replacement made by a different manufacturer, the part is then labelled as an aftermarket replacement part.
Aftermarket parts are usually considered as generic and cheaper than OEM parts. But there are instances when an aftermarket manufacturer produces high-quality products that rival those made by OEM companies. Nevertheless, if you are repairing a car or a computer, it is best to consider the source since not all aftermarket products have the same quality as OEM or original parts. Fortunately, it is easier nowadays to get your hands on OEM parts because most of these companies have authorised resellers that distribute their products to the general public.
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