Original Equipment Manufacturer (OEM) - Explained
What is OEM?
Written by J. Mance Gordon
Updated at April 21st, 2024
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What is an Original Equipment Manufacturer (OEM)?
An original equipment manufacturer (OEM) is referred to as the company producing components to be used in the final products manufactured and sold by another company. The company purchasing from an OEM manufacturer is called the value-added reseller (VAR), since by acquiring the goods or components or services from OEM, it adds value to its original item. The VAR and OEM work collaboratively. The OEM can also customize the goods/components designs as per the requirements of VAR company.
How OEMs Work?
OEMs provide sub-assembly components for VARs. Consider a common example of the relationship between the OEM manufacturing electronic components and a business like Samsung or Sony that assembles these parts to make its HDTVs.
OEM means something made particularly for the original product, while aftermarket means the equipment manufactured by another company that a customer might use as a substitute.