Short Course on Suppliers – Covering The Basics

April 11, 2018 | By s3m4ng4t | 0 Comments

Definition of Original Equipment Manufacturer And The Benefits It Brings

What exactly is Original Equipment Manufacturer and how can people benefit from it?

There are products that are composed of several components and not all parts are made solely by the company and this is where original equipment manufacturer comes into the picture because they are the ones that produce the other components of the final product. The reason why companies do this is because this type of practice actually adds value to the final product. As you might have already figured out, these products made by an original equipment manufacturer would be custom made parts of a final product and this is the main reason it becomes quite expensive.

A good example would be car companies since cars have various parts in them and these parts are not all made by one company. It is not uncommon for brake cylinders or exhaust systems of cars to be produced by an OEM. The sole role of OEM is to produce components because other tasks such as assembly or incorporation of these components to the final product would be the job of the company they are working with.. If the final product did not have parts made by other companies then you would expect it to be cheaper.

The computer industry is one of the industries these days that is booming faster than the rest and they have made a new definition for original equipment manufacturers. The OEM is the one that would create a product, another company would buy the product, rebrand it by incorporating it into their product, and then sell it off under their company name. A good example of this would be computer software being made by one company while other companies that sell computers would buy these software, use it in the computers they produce, and then sell them of under one brand name, their very own brand name. Because the buyer of the software is the one that does the rebranding, they would be the company that is considered to be the OEM.

How does an OEM operate?

It cannot be denied that the OEM and the VAR would always be companies that work hand in hand. It is the OEM that helps the VAR make a sale by producing parts for them. It would be very rare for you to see an OEM asked to be a part of the decision-making process on the final product because they just usually make parts and sell them to VAR companies, nothing else.

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