Original equipment manufacturer

related topics
{company, market, business}
{system, computer, user}
{language, word, form}
{car, race, vehicle}
{law, state, case}
{food, make, wine}

An original equipment manufacturer, or OEM, manufactures products or components that are purchased by a company and retailed under the purchasing company's brand name.[1][2][3][4][5] OEM refers to the company that originally manufactured the product.

When referring to automotive parts, OEM designates a replacement part made by the manufacturer of the original part.[6]

Contents

Confusing and contradictory definitions

OEM may also refer to a company that purchases, for use in its own products, a component made by a second company.[7][8][9] Under this definition, if company A purchases optical drives from company B to put in A's computers, then company A is the OEM.

An even more confusing, contradictory definition is a company that sells the product of a second company under its own brand name.[10][3] For example, if Ford sells replacement parts (spares) made by TRW Automotive, both Ford and TRW may be called the OEM company, depending on whose definition of "OEM" is being used. Many of the parts in a new car are not made by the automotive company whose badge is on the front. Instead, there is a commercial ecosystem of suppliers (such as TRW) that participate competitively in a supply chain process whose end result is new cars. (Even entire makes and models may be rebadged.)

The companies who buy the suppliers' parts and then resell them with some amount of additional value added along the way (such as assembly and customer support) may be better termed value-added resellers (VARs) or resellers. In countries with value added taxation (VATs), the way the tax accounting is done tends to keep the concept clear in the minds of the public; whereas in the U.S. (which doesn't use VATs), the public is not used to terms such as "value-added reseller".

Economy of scale

OEMs rely on their ability to drive down the cost of production through economies of scale. Also, using an OEM allows the purchasing company to obtain the needed components or products without owning and operating a factory.

Full article ▸

related documents
Society for Worldwide Interbank Financial Telecommunication
Material Requirements Planning
Telewest (former)
Maxtor
Adobe Systems
Clive Sinclair
Software Engineering Institute
Quality management system
Communications in South Korea
James H. Clark
Communications in Pakistan
Engineering Research Associates
UNIVAC
France Télécom
Psion
Cash register
Sperry Corporation
Taligent
National Institute of Standards and Technology
Red Hat
RealNetworks
Gratis
Regional Bell Operating Company
John Roth
Lockheed Martin
Alfred P. Sloan
Economy of Niue
News Corporation
Aetna
Economy of Tonga