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The full form of OEM is Original Equipment Manufacturer. It refers to a company that makes components or products that are purchased by another company and then retailed under that purchasing company’s brand name. To put it in easier terms, an OEM is responsible for the manufacturing of parts or products that are later used in the final product that a different company sells.
Fun Fact: The term OEM, originating in the late 1900s, is derived from the Dutch phrase ‘onder eigen merk,’ which translates to ‘under own brand’ in English.
Who Uses OEM?
Many industries and companies use OEM, such as:
- Electronics Manufacturers
- Automotive Industry
- Computer Hardware Companies
- Medical Device Manufacturers
- Telecommunications Companies
- Appliance Manufacturers
- Aerospace Industry
- Industrial Equipment Manufacturers
- Fashion and Apparel Brands
- Consumer Goods Brands
Also Read: What is the Full Form of VLTD?
What is the Importance of OEM?
Furthermore, the importance of OEM is as follows:
- Strategic Focus: The companies leverage OEMs to focus on outsourcing manufacturing to reduce costs, streamline operations, and enhance efficiency.
- Innovation and Design: This approach encourages businesses to focus on their product design, marketing, and innovation, thus relieving them from vast manufacturing responsibilities.
- Specialised Expertise: Moreover, OEMs contribute to assuring product quality and reliability by delivering specialised expertise in specific manufacturing processes.
- Symbiotic Relationship: The collaboration between the OEM and the brand owner is mutually beneficial since the OEM gains steady business and the brand owner expands product offerings without bearing heavy production investments.
Also Read: What is the Full Form of MAIT?
What is an OEM Example?
There is a classic example of OEM collaboration in the automotive industry. Car manufacturers usually depend on OEMs for different components such as engines, transmissions, or even entire vehicle frames. Additionally, these components are then incorporated into the final product, hence allowing the car brand to offer a complete, high-quality vehicle without producing every single part internally. This practice also helps companies leverage the expertise of specialized manufacturers, thus resulting in a win-win situation for everyone involved.
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