Original equipment manufacturer

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It is called original equipment manufacturer (in English: Original Equipment Manufacturer, acronym: OEM, literally "Original Equipment Manufacturer") to the company that manufactures products that are then purchased by another and sold at retail under the purchasing company's brand name (sometimes known as a repackaging company).

The initials OEM commonly refer to the manufacturer of the original product; For example, if Acme Manufacturing Co. makes power cords used in IBM computers, Acme is the OEM, and the cord is an OEM product (also called a "generic product"). Sometimes there are OEM products for sale directly to the public; They are characterized by not coming with the packaging or boxes typical of the sale to the public but with those of distribution to retailers, and they have a cheaper price.

The name of OEM can also be applied to the entire process of subcontracting the manufacture of a company's products. It occurs more and more in large multinationals that stop producing their equipment or goods themselves and order them from third parties. They make them with colors, shapes, logos, etc. specific to each company, with which the end customer will always see a product of the brand they are buying, as if it had been manufactured by the original company or company.

OEM companies can even manufacture the same product for different brands, and even competition, creating it in a personalized way. It is an increasingly widespread phenomenon in all areas of production, especially in industrial equipment, textiles, computers, automobiles, etc.

Computer Science

In the case of computing, OEM products can be both hardware and software.

OEM Software

In most cases, an OEM version of software is only sold in combination with some type of hardware.

The software is focused on a business-to-business (b2b) business model. Two companies join forces to offer the user a more complete final product. Therefore, you have to understand the OEM business model in this context. An end user will see that the product she has purchased has a higher added value.

There are two ways to implement an OEM:

  • Preinstalling software on hardware: for example, Microsoft Windows operating system on many of the personal computers or antivirus programs on laptops.
  • Delivering the software in a physical format (usually on optical disks) along with the hardware.

In the case of OEM software, the end user may receive technical support for issues related to this type of software, directly from the company that sold the hardware or from the company that developed the installed software.

OEM Hardware

It differs from the retail versions in that it lacks colorful packaging, accessories such as cables/screws or does not include software. Many industrial hardware manufacturers offer this option for customers to integrate equipment into their own packages, boxes, or systems.

Today, many companies like: Dell, HP, IBM, Lenovo, Acer, Toshiba, Cisco, sometimes use large OEMs to reduce the cost of their products and deliver a competitive product to their customers, even in factories from Latin America.

Automotive

In some countries, such as Mexico, the auto parts supply chain is quite complicated, controlled and highly demanding. Suppliers are categorized based on their distance from the OEM, who is responsible for bringing the product to market. The direct suppliers of the OEMs are known as TIER 1 and are strictly monitored in terms of quality, time and costs of all their components and subassembly parts. In this order, TIER 2 are the companies that supply components to TIER 1 and so on with TIER 3, which supply TIER 2.

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