WallStreetMojo

WallStreetMojo

WallStreetMojo

MENUMENU
  • Blog
  • Free Video Tutorials
  • Courses
  • All In One Bundle
  • Login
Home » Full Form » Full Form of OEM

Full Form of OEM

By Madhuri ThakurMadhuri Thakur | Reviewed By Dheeraj VaidyaDheeraj Vaidya, CFA, FRM

Full Form of OEM – Original Equipment Manufacturer

The full form of OEM is an Original Equipment Manufacturer. In the computer industry, Original equipment manufacturer is a misleading term which actually doesn’t mean the original manufacturer but refers to a company that buys equipment from other manufacturers, customizes products, sells it in its own name and brand, and offers a warranty, license, and, support in its own name. However, it normally means a manufacturer who produces goods that are used in other company’s products. The other company here is referred to as the value-added reseller.

How Does it Work?

Full Form of OEM - Working

The value-added reseller (VAR), referred to above, and the original equipment manufacturer works in tandem. Original Equipment Manufacturer makes articles or equipment or parts and then sells them to the VAR. The VAR then makes necessary changes, customizes the products, does some rework job on the product so supplied by the OEM. After all such tasks are performed, the product is sold in the market.

Examples of OEM

Example #1

Let us first consider the example of Hewlett Packard.

Many enterprises have OEM Partnerships with Hewlett Packard, such as C3, Cohesity, GRC, etc. Hewlett Packard Enterprise has almost 6 decades of experience as an OEM. It acts as a supplier that provides support offering products of high quality globally. It is said to understand the customer needs, provide high quality customized solutions and products to its customers over the lifecycle, and helps in third-party integration.

Example #2

Let us take another example of Panasonic TVs.

Panasonic purchases electronic components and assembles those parts and makes TVs and sells them to customers.

Full Form of OEM

Advantages

  • Customization: The products supplied meet the specified needs and demands of the customers to the components. They are made with high precision.
  • Support: There is after-sale support that is provided by the manufacturers. The staff will provide technical and engineering support for all the parts related needs.
  • Response: The response will be quicker. There aim to ensure the delivery on time and check the performance closely.
  • Quality: They shall give VARs the confidence that they would be provided with the original products and the products that meet the original specification if they require a part replacement.
  • Warranty: If a product is received with any defects, the manufacturer of the parts will replace the part because usually, they come with this feature called warranty of spare parts.
  • Valuable Products and Longevity: The products manufactured and sent by OEMs are usually of high value than that of the aftermarket and are durable.
  • Single Option: The VARs are provided with only one option of parts replacement, so they need not select a brochure full of options.

Disadvantages

  • Price: The price mentioned by OEMs is usually much more than that of the aftermarket body parts.
  • Delays: Original Equipment Manufacturer body parts are usually subject to availability. The manufacturers and dealers may usually create delays in delivery or delay in manufacture.
  • Partnership Relations between OEMs and VARs: Its partnerships should be entered into after giving much though; otherwise, the relations may be faded easily. In any partnership, all the parties’ interests must be protected, and the expectations must be met, so is the case with OEM – VAR partnership. Due to a change in personal goals or a lack of understanding, the relationship may be affected.

Difference between OEM and Aftermarket

Original Equipment Manufacturer and aftermarket are opposite to each other. Aftermarket uses reverse engineering on OEM original products to attain the same quality and better technology at better prices. The following are the other differences between OEM and Aftermarket:

OEM Aftermarket
They make products to be used specifically for the original product. They are used as a replacement by another company as spare parts.
Products are costlier compared to the aftermarket. Products are cheaper.
Since original products are obtained, it may be less convenient. More convenient to obtain and available in lots.
A single option, i.e., an original part from the manufacturer, is available to the VAR. There may be multiple choices available in the market for a single part.
These products come with after-sale service and warranties. Such facilities may not be available in aftermarket supplies.
Quality is guaranteed while purchasing from OEMs as the original product is delivered. Because of the low price, there may arise situations where the buyer has to compromise with the quality.

Conclusion

In simple terms, for a vehicle repair, if you reach out to the dealership of the vehicle’s brand, you are opting to get it repaired by an OEM, whereas if you go to a vehicle repair shop, you are opting the aftermarket. It all depends on individual preferences and choices. If premium quality is preferred, Original Equipment Manufacturer would be the best choice, whereas if the best price is preferred, the aftermarket may be the best option. With all that said, it is not implied that the aftermarket products do not have good quality. A wide range of products are available, and one must make sure the right products are used.

Recommended Articles

This has been a guide to the Full form of OEM – Original Equipment Manufacturer and definition. Here we learn how does it work along with examples, advantages, and disadvantages. You may refer to the following articles to learn more about finance –

  • Full Form of UIDAI
  • Full Form of CAG
  • Full Form of MRP
  • Full Form of WTO
  • Full Form of CFO
0 Shares
Share
Tweet
Share
Primary Sidebar
Footer
COMPANY
About
Reviews
Contact
Privacy
Terms of Service
RESOURCES
Blog
Free Courses
Free Tutorials
Investment Banking Tutorials
Financial Modeling Tutorials
Excel Tutorials
Accounting Tutorials
Financial Statement Analysis
COURSES
All Courses
Financial Analyst All in One Course
Investment Banking Course
Financial Modeling Course
Private Equity Course
Venture Capital Course
Excel All in One Course

Copyright © 2021. CFA Institute Does Not Endorse, Promote, Or Warrant The Accuracy Or Quality Of WallStreetMojo. CFA® And Chartered Financial Analyst® Are Registered Trademarks Owned By CFA Institute.
Return to top

WallStreetMojo

Download Coursera IPO Financial Model

By continuing above step, you agree to our Terms of Use and Privacy Policy.
WallStreetMojo

Free Investment Banking Course

IB Excel Templates, Accounting, Valuation, Financial Modeling, Video Tutorials

* Please provide your correct email id. Login details for this Free course will be emailed to you

Book Your One Instructor : One Learner Free Class
WallStreetMojo

Free Investment Banking Course

IB Excel Templates, Accounting, Valuation, Financial Modeling, Video Tutorials

* Please provide your correct email id. Login details for this Free course will be emailed to you

Let’s Get Started
Please select the batch
Saturday - Sunday 9 am IST to 5 pm IST
Saturday - Sunday 9 am IST to 5 pm IST

This website or its third-party tools use cookies, which are necessary to its functioning and required to achieve the purposes illustrated in the cookie policy. By closing this banner, scrolling this page, clicking a link or continuing to browse otherwise, you agree to our Privacy Policy

Login

Forgot Password?

Special Offer - All in One Financial Analyst Bundle (250+ Courses, 40+ Projects) View More