You probably have a favorite pair of shoes. Your footwear—especially the most comfortable pair in your closet—was designed with a purpose; construction, hiking, backpacking, running, walking, dancing, etc. But, the person who designed those shoes didn’t create the materials—the rubber, fabrics, treatment, materials, etc.
Each of the product’s integral pieces is created by another part of the industry.
That’s the difference between a contract manufacturer and an original equipment manufacturer.
Contract Manufacturing vs. Original Equipment Manufacturing
The rubber, textile, and fabric treatment components that go into your favorite kicks are all examples of products manufactured by original equipment manufacturers (OEM).
According to Tech Target, by definition:
“OEM (original equipment manufacturer) is a broad term whose meaning has evolved over time. In the past, OEM referred to the company that originally built a given product, which was then sold to other companies to rebrand and resell. Currently, the term is frequently used to describe companies in the business of rebranding a manufacturer’s products and selling them to end users.”
So what does this mean?
It means that an original equipment manufacturer, ignoring certain nuances, is the company that originally makes different parts. Say, the rubber soles on your shoes. They then sell those rubber soles to the bigger brand company (let’s say Nike) who attaches the soles to the shoe and sells the whole thing as a singular product.
An OEM is a fully integrated firm that designs, manufactures, and sells its brands under registered trademarks. An example: your waterproof rain jacket or hiking shoes might be denoted with the label, “Gore-Tex” protection. W.L. Gore & Associates, Inc. is best known for its GORE-TEX waterproof/breathable fabric, and the corporation contracts a long queue of technical apparel and footwear solutions to countless other brands and companies in the market.
The product provided needs to reach a consistent quality and standard, and the expectations of the customer must be met, much like the equipment created by General Kinematics.
Comparatively, contract manufacturers produce proprietary products for other companies. Contract manufacturers provide in-house designs, formulas, or specifications and then the contracted manufacturer completes the production process.
The Evolution of Contract Manufacturing
Back in the day, contract manufacturers supplied standard parts and components. As manufacturing evolved, the process advanced with assembly equipment and testing capabilities. Contract manufacturers were then able to increase the output, produce components that were more advanced, and tailor products to meet particular market or client needs. And, when a product is developed based on consumer needs—similar to a pair of work shoes or rain jacket—the value increases substantially.
This market evolution has also led to a decrease of cost production for U.S. market-based firms, as well as other markets around the globe that partner with contract manufacturers in a high-volume, low-cost model, according to Alternative Manufacturing Strategies.
General Kinematics Is an Original Equipment Manufacturer
General Kinematics is set apart through its OEM because we gain expertise by remaining focused on our designs. We are the GORE-TEX of the foundry world. We also make sure that every single piece of vibratory and rotary equipment manufactured reaches a consistent and high standard, and that we completely fulfill the needs of the customer.
General Kinematics Corporation, incorporated in 1960, was established to market, design, and custom fabricate innovative vibratory materials handling and processing equipment. Today, the company is one of the world’s largest suppliers of vibratory processing equipment, having held more than 200 worldwide patents, and is a significant contributor to vibrating equipment design and application technical advancement. General Kinematics serves a worldwide customer base through a network of engineering-oriented independent sales representatives who cover major industrial markets throughout the United States. International markets are serviced from subsidiary operations and through a combination of representatives, licensed manufacturers, and strategic alliances with leading industry-specific organizations in other strategic locations. Today, more than 50,000 General Kinematics units have been installed in virtually all of the world’s industrialized countries. As new process and efficiency challenges emerge, General Kinematics is qualified to address these needs with advanced technology, innovative engineering, new materials, and manufacturing techniques. All applied to improving customer productivity and profitability while meeting ever more stringent requirements.
In the hardware industry, the original equipment manufacturer (OEM) usually refers to a company that builds a product designed for end-users, like a PC, laptop, or printer. Apple, HP, Dell, Canon, and Brother are all examples of original equipment manufacturers.What does Nike OEM mean? ›
Original Equipment Manufacturer (OEM) vs.
An OEM refers to something made specifically for the original product, while the aftermarket refers to equipment made by another company that a consumer may use as a replacement.
OEM stands for original equipment manufacturer. In the business world, this means a company that makes a product to be sold by another company under its own name. For example, an OEM computer manufacturer might make computers for a brand like Dell or Lenovo, who then sell the products under their own brand names.What does OEM quality mean? ›
OEM stands for Original Equipment Manufacturer, and OEM parts are branded with the automaker's name and/or logo. They also come in the automaker's packaging. Many consider OEM parts to be the best choice. They're built with high-quality materials and to the automaker's specifications.What is an example of an ODM? ›
ODM (Original Design Manufacturer)
Since the ODM designed the product, it owns the “rights” to it. Example: Consumer electronics like phone cases and chargers are examples of ODM-created products, which are more common in the food industry (think of the term “generic” and “store brand”).
An Original Equipment Manufacturer or OEM is a company that manufactures and sells products or parts of a product that their buyer, another company, sells to its own customers while putting the products under its own branding. OEMs commonly operate in the auto and computer industries.What is better OEM or original? ›
OEM parts are just as reliable as genuine parts, but you get them for a better value. Aftermarket. Once a car is built, companies can manufacturer parts that will work for that vehicle. To do this, they buy the rights to make the parts.Why is the Original Equipment Manufacturer important? ›
Owing to economies of scale, OEM products significantly reduce the cost of production. Moreover, the company purchasing these products can use them to build systems without running their own factories. Another advantage is that you can have the best-of-breed components built into your system.What is the difference between OE and OEM? ›
OEM stands for original equipment manufacturer. OE stands for original equipment. OE parts are the components of the vehicle as it's made in the factory – all of the original parts that the car was first built with. Once the car comes out of the factory, everything else is not an OE part.Is OEM the same as factory? ›
Manufacturer. OEM parts are made by the car manufacturer's factory, not by a third party. They tend to fit perfectly because the car manufacturer backs them.
OEM products are going to match what's being replaced and that guarantees function and quality. You'll be getting the same performance you expect and need from your equipment with an OEM replacement part because it was designed and tested under the same rigorous manufacturer standards.Are OEM parts good quality? ›
OEM parts are manufactured to fit your vehicle and work like they're supposed to with your car's systems. Longer life. Because they are made in the same way as genuine parts, OEM parts tend to be more reliable than aftermarket parts and last for longer.Is OEM same as replica? ›
Replica Wheels are “non-OEM” wheels designed by private third-party manufacturers. A Replica Wheel is “deliberately” designed to look just like the “Real” OEM wheel.Is OEM same as authentic? ›
Is OEM Authentic? Yes. An OEM product is an authentic product sold to the consumer market under original branding. If you want to purchase genuine products from specific manufacturers, you should look for OEM products.Does OEM Mean authentic? ›
OEM, Original equipment manufacturer part is a part made by the manufacture or made for them to their specification but an external company. A genuine part is a part supplied by the vehicle manufacturer in their packaging. Aftermarket parts are parts produced by any other company.What is difference between ODM and OEM? ›
COMPONENTS AND COMPLETE PRODUCTS: OEM OR ODM? OEM products are sold by the manufacturer based on the buyer's specifications. ODM products are finalized or are pre-designed products that are sold under the brand name of the purchasing company. ODM products are complete and finished products, unlike OEM products.Which is better OEM or ODM? ›
When deciding to use an OEM vs an ODM, it really comes down to available resources. If a company has a research and development budget, along with a reasonable time-to-market plan, then using an OEM is a good fit. If time and resources are scarce, then ODM is the route to go to launch a product.What is the principle of ODM? ›
The ODM approach to data gathering reflects the principle that a domain model can only be validated relative to explicit documentation of the information sourcesfrom which it wasderived.What is an OEM system? ›
An Original Equipment Manufacturer (OEM) makes components of another company's products. An OEM component might be a part, a subsystem, or software. Examples include operating systems (OS) and microprocessors in computers. Typically, the computer manufacturer makes neither the microprocessor nor the OS.
High-quality materials, quality checks, and global standards (i.e. manufacturing facilities that meet ISO 9001, ISO 13485, and ISO 14001 certifications) are crucial to protect you from costly trial and error due to defects, variability, and lot-to-lot conformity.
OEMs provide service that aligns with their warranty standards. An OEM also will have a track record of service that demonstrates your preference for their service. The drawbacks of OEM service are cost and inflexibility. Typically, OEM service is expensive because much of the risk mitigation is built into the price.Is OEM original or fake? ›
OEM stands for Original Equipment Manufacturer. If they are manufactured by the same company, and to the same specifications as the “original”, then they are original. If someone else puts the same label on them, then they are counterfeit.Why does OEM mean original? ›
OEM stands for original equipment manufacturer. The original manufacturer of the auto parts sold at Penske Chevrolet of Cerritos is GM. Aftermarket auto parts are parts made by third party companies based on OEM part designs.Who are the biggest OEM? ›
Volkswagen AG, Toyota Motor Corp, Stellantis NV, Mercedes-Benz Group AG, and Ford Motor Co are the top 5 automotive OEMs in the world in 2021 by revenue.What is OEM and why is it important? ›
An original equipment manufacturer (OEM) makes systems or components that are used in another company's end product. Computer manufacturers, for example, commonly bundle or integrate OEM parts – such as processors and software – into the solutions they sell. OEMs can save time and money.What is the importance of OEM? ›
Original equipment manufacturers make it easier for businesses to turn a profit with their products. OEM parts are specifically designed from the ground up to fit their applications. This means the functionality and lifespan of OEM products are usually excellent.What is the benefit of working with OEM? ›
By going to the OEM you can be sure that the response will be quicker, as less time is required to identify and produce the part due, in a large part, to access to the original drawings. We aim to turn every enquiry around in the minimum time, and monitor our own on-time delivery performance very closely.What does OEM standard mean? ›
If your vehicle has ever been in the shop for maintenance or repairs, you've likely heard of the term OEM in reference to replacement parts and components. OEM stands for “Original Equipment Manufacturer” and these types of components offer a number of advantages and benefits compared to aftermarket parts.Is Tesla an OEM? ›
While it still may be almost-certain that EVs can take the auto industry by storm, the investment case in EV OEMs such as Tesla, Lucid, Rivian, and others, and ICE leaders transitioning to EVs, looks bleak at the moment.Does insurance cover OEM parts? ›
Insurance companies may write repair estimates that include OEM parts depending on the make, model, and year of the vehicle and type of repairs needed. However, you generally need to have specific OEM parts coverage on your auto policy for your insurer to fully cover using only OEM parts for repairs.
- Complex Custom Products. Your OEM supplier can prove their capabilities by providing evidence of producing complex products. ...
- Number of Products Produced per Year. ...
- Production Capacity. ...
- Manufacturing Capabilities.
Differences Between OEM Parts and Aftermarket Parts
The original equipment manufacturer that provides OEM parts is the company that produces the parts used in the vehicle when it's new. In the auto parts world, OEM refers to the company that manufactured the original parts used when the vehicle was newly constructed.
OEM (Original Equipment Manufacturer) warranties are designed to protect the end user from unplanned costs due to premature component failures. These guarantees are one of the best ways to maximize the value of your equipment investments, and ensure that any deficient parts are replaced quickly and efficiently.Do OEM parts come with warranty? ›
OEM auto parts is how we talk about the “Original Equipment Manufacturer” parts. They are created for specific car or truck models by the OEM. These are the exactly-matching parts that your vehicle has. They come with a manufacturer's warranty.What is better than OEM? ›
Aftermarket parts can be a favoured choice. This is because they are typically readily available since many different manufacturers interchangeable parts. They're also usually cheaper than OEM parts without sacrificing quality; usually.How can you tell the difference between OEM and aftermarket parts? ›
OEM stands for Original Equipment Manufacturer, which means the parts are made by the same company that makes the vehicle. Meanwhile, aftermarket parts are produced by a different parts company and are often designed to be compatible with as many makes and/or models as possible.Does body shop use OEM parts? ›
Key Takeaways. When your car is repaired by an auto body shop, there are three main types of parts they'll choose from: original equipment from the manufacturer (OEM), aftermarket parts, and used parts. Both body shops and insurance companies like to use used parts in repairs.What are equipment manufacturers? ›
Equipment Manufacturer means an individual or entity engaged substantially in the business of developing, manufacturing, distributing, selling, installing, or launching with respect to communications or information technology products, primarily hardware.How can I find the Original Equipment Manufacturer? ›
- Telephone research may be the most direct way but whether the company would divulge this information could depend on why you want to know. ...
- You could try finding articles in industry-specific trade journals and newsletters, from our business databases.
- When purchasing IT products, you may encounter the term “Original Equipment Manufacturer” (OEM). ...
- In the IT world, OEM companies are of two major types: hardware OEMs and software OEMs.
- Microsoft is a classic example of a software OEM.
The primary types of manufacturing are make to stock (MTS), make to order (MTO) and make to assemble (MTA). With make to stock, manufacturers build products based on demand forecasts. With make to order, they build products based on orders they receive.What are the three 3 types of manufacturing? ›
There are three types of manufacturing production process; make to stock (MTS), make to order (MTO) and make to assemble (MTA).What is the difference between original and OEM? ›
OEM (Original Equipment Manufacturer)
In other words, OEM parts are the same as Genuine, except they come in a box that is branded with the outsourcing company's logo rather than the Vehicle manufacturer's logo.
OEMs provide service that aligns with their warranty standards. An OEM also will have a track record of service that demonstrates your preference for their service. The drawbacks of OEM service are cost and inflexibility. Typically, OEM service is expensive because much of the risk mitigation is built into the price.What are the 5 types of manufacturing? ›
- Repetitive manufacturing.
- Discrete manufacturing.
- Job shop manufacturing.
- Process manufacturing (continuous)
- Process manufacturing (batch)
Workhorse Group Inc posted a revenue decline of 161.2% in 2021. The United States of America-based Ford Motor Co is the leading automotive OEM in the US (by revenue).How can you tell if an aftermarket is an OEM? ›
OEM parts are made by the car manufacturer's factory, not by a third party. They tend to fit perfectly because the car manufacturer backs them. Aftermarket parts are often manufactured by a company other than your car's manufacturer.What does OEM stand for in equipment? ›
OEM stands for original equipment manufacturer. The original manufacturer of the auto parts sold at Penske Chevrolet of Cerritos is GM. Aftermarket auto parts are parts made by third party companies based on OEM part designs. Which is better?