Original equipment manufacturer (OEM)

What is OEM?

OEM stands for Original Equipment Manufacturer. It refers to a company that produces parts or equipment that are then marketed and sold by another company that's known as a value-added reseller (VAR). The OEM parts or OEM products are designed and produced to the original specifications and standards set by the company that originally designed the product.

Where is OEM used?

OEM parts and services are used across various industries, including automotive, electronics, aerospace, healthcare, and consumer goods. Businesses prioritizing quality, reliability, and performance often prefer OEM parts due to their guaranteed compatibility and adherence to the original specifications. Below are some examples of how OEM is used in different industries.

How is OEM used in different industries?

OEM's role and relationship are different from industry to industry, let's review with examples:

• Automobile industry: OEMs provide essential components like engines, brakes, and electronic systems. Companies like Bosch and Magna International (opens in new tab) supply crucial parts to car manufacturers such as BMW and Ford. These parts ensure that vehicles meet safety and performance standards.
  • Example: Bosch supplies various components like fuel systems and safety electronics to automakers. When you buy a Ford with a Bosch fuel pump, Bosch is the OEM for that part.
• Electronics industry: OEMs supply key components such as semiconductors, display panels, and memory chips. For consumer electronics products, companies like Samsung and Qualcomm provide these components to brands like Apple. 
  • Example: Qualcomm provides smartphone processors like the Samsung Galaxy series, making Qualcomm the OEM for those processors.
• Pharmaceutical industry: OEMs in the pharmaceutical sector manufacture active pharmaceutical ingredients (APIs) and other components used to produce drugs. These OEMs ensure that pharmaceutical companies can create effective and safe medications. 
  • Example: A company like Lonza manufactures APIs that pharmaceutical companies like Pfizer use to produce medications.
• Food and beverage industry: OEMs produce equipment and machinery for food and beverage processing and packaging. These machines are critical for maintaining food safety and quality standards.
  • Example: Tetra Pak produces packaging equipment used by food and beverage companies like Nestlé to package their products.
• Skincare industry: OEMs provide skincare brands' formulations, packaging, and manufacturing services. This allows brands to focus on marketing and distribution while relying on OEMs for high-quality products. 
  • Example: A skincare brand might rely on an OEM like Kolmar Korea to produce its lotions and creams, which are then sold under the brand’s name.

What is the role of OEM in maintenance?

OEMs play a key role in maintenance by providing original parts specifically designed for the products they support and maintain. Using OEM parts ensures compatibility, reliability, and longevity, which is critical for maintaining equipment's performance and safety. Let's review the role of OEM in three key maintenance areas: Field service support, lifecycle management, and customized maintenance solutions.

1. Field service support: Involves on-site maintenance and repair services provided by the OEM or authorized service partners. This is crucial for complex equipment that requires specialized knowledge and tools. For example, during field service visits, OEM technicians use genuine OEM parts, ensuring that repairs maintain the equipment's original performance and reliability.
2. Lifecycle management: Involves overseeing the entire lifespan of a product, from initial deployment through to end-of-life disposal. OEMs play a significant role in this process by providing guidance and support at each stage. For example, OEMs offer scheduled maintenance services to prevent unexpected breakdowns. This includes routine inspections, part replacements, and system updates.
3. Customized maintenance solutions: OEMs can tailor maintenance solutions to meet their clients' specific needs. This customization ensures that the maintenance strategy aligns with the business's operational requirements and goals. For example, OEMs work with clients to develop maintenance schedules that fit their unique operational needs, considering usage patterns, environmental conditions, and regulatory requirements.