The Ultimate Guide to Suppliers
How exactly does one define Original Equipment Manufacturer?
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. The reason why an increase in selling price is necessary is because these components that original equipment manufacturer create are often times customized.
A good example would be car companies since cars have various parts in them and these parts are not all made by one company. There is a wide variety of car parts that original equipment manufacturer custom made for reputable companies. 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.
Now let us dig deeper on how the OEM really works.
As you might have already realized, VAR and OEM companies are those companies that cannot stand alone on their own but rather, they work together to make a profit. The production of certain parts is an important aspect in the finish product and in making a sale, which makes EOMs very valuable to VARs. The EOMs has specific responsibilities on create parts but they have no say on how the final product will be made.