When you want to replace a part in your car, you should ask whether it is OEM or aftermarket. OEM parts will be the same as the part you are replacing. An aftermarket part may be similar but will not be from the same manufacturer or supplier who originally provided the part. Does it matter?

Overview: What is OEM?

Original Equipment Manufacturer (OEM) refers to a company that produces parts or components that are used in the manufacturing of products by another company. The OEM company typically produces products or parts to the specifications and requirements of the company that purchases the products or components, which are then incorporated into their final product.

Here are some advantages and disadvantage of OEM:

Advantages of OEM:

Consistent quality – OEM products are designed and manufactured to meet specific requirements and specifications, which ensures consistent quality.

Cost savings –  Purchasing OEM products can be less expensive than developing and manufacturing parts or components in-house.

Expertise – OEM companies often have expertise in producing specialized components, which can be difficult or expensive to produce in-house.

Time savings – Outsourcing the manufacturing of components to an OEM supplier can save time and resources.

Brand recognition – Using OEM products can help enhance brand recognition and reputation by associating with reputable and trusted suppliers.

Disadvantages of OEM:

Limited customization – OEM products are typically produced to meet specific requirements and specifications, which may limit the ability to customize or modify the products.

Dependence on suppliers – Companies that rely on OEM suppliers are dependent on their reliability, quality, and ability to deliver products on time.

Risk of supply chain disruption – Companies that rely on OEM suppliers face the risk of supply chain disruptions, which can impact production schedules and result in delays and increased costs.

Lack of control – Companies that use OEM products may have limited control over the design and manufacturing process, which can impact the quality and performance of the final product.

Intellectual property issues – Companies that use OEM products may face intellectual property issues if the OEM supplier uses proprietary technology or designs without permission.

An industry example of OEM 

For example, Dell Computer may purchase motherboards, hard drives, and other components from an OEM supplier such as Intel, Taiwan Semiconductor Manufacturing Co. and AMD to assemble their computers. The OEM supplier would produce these components to the specifications required by Dell, who would then incorporate them into their final product. The OEM supplier does not sell the final product to end-users, but rather sells the parts or components directly to the manufacturer who assembles and sells the final product to consumers. If you need a computer repair, the service center may replace the original Intel chip with a similar one from AMD due to unavailability of the Intel chip or to help reduce the cost of repair. 

Frequently Asked Questions (FAQ) about OEM

Here are some frequently asked questions about OEM:

What is the difference between OEM and ODM?

Original Equipment Manufacturer (OEM) refers to a company that produces parts or components that are used in the manufacturing of products by another company, whereas Original Design Manufacturer (ODM) refers to a company that designs and manufactures products that are sold under another company’s brand name.

What are the advantages of using OEM products?

The advantages of using OEM products include:

• Consistent quality: OEM products are designed and manufactured to meet specific requirements and specifications, which ensures consistent quality.
• Cost savings: Purchasing OEM products can be less expensive than developing and manufacturing parts or components in-house.
• Expertise: OEM companies often have expertise in producing specialized components, which can be difficult or expensive to produce in-house.
• Time savings: Outsourcing the manufacturing of components to an OEM supplier can save time and resources.

Are OEM products better than aftermarket products?

OEM products are typically designed and manufactured to meet specific requirements and specifications, which ensures consistent quality. Aftermarket products, on the other hand, may not meet the same standards and may be less reliable. However, aftermarket products can be less expensive than OEM products.