Original Equipment Manufacturer (OEM) is one of the important factors that has started gaining momentum in the manufacturing industries these days. It is a concept that was brought into practice to assist large organizations, to help them maintain their demand and supply curve. Before, we move ahead let us first briefly understand what OEM means and why is it so important.
Original Equipment Manufacturer (OEM) is referred to as the firm that is responsible for producing byproducts for the parent firm which in turn, assembles those components into one complete finished product and sells it in the market to the end consumers. The parent firm or the second firm that converts those byproducts into finished ones is referred to as Value-added Reseller (VAR), because, it augments those components into the end product and adds value to the base items. The value-added reseller works closely with the original equipment manufacturer to produce these end products.
To better understand the concept of OEM solutions let us look at an example. The age-old firm, which is very close to each one of us, Maruti Suzuki has been outsourcing the manufacturing of most of its automotive parts. This has become a common fact today but, was unknown a few years back. Maruti Suzuki gets the bumpers, exhaust, tailgate, banjo beam and many other parts manufactured by Jay Bharat Maruti (JBM). They have been in a collaboration with one another for forever now, so much so that the manufacturing of cars by Maruti Suzuki seems impossible without JBM pitching in.
Similarly, if we look at the computer industry, Hewlett Packard gets all the software from Microsoft and incorporates them into their PCs and laptops before selling the computer in the open market. When we talk about a computer, we find it impossible to even think of it without software or RAM. Had it not been for Microsoft and Intel, we wouldn’t have probably been able to get such high-quality products.
The emergence of OEMs has undoubtedly brought in a lot of employment opportunities for people of all hierarchies. They have contributed largely towards the growth and development of the economy, both monetarily and in terms of infrastructure. Apart from employing more and more people, the OEMs have also given hope to the already existing firms. They have been instrumental in their growth and have hence facilitated the growth of the economy in turn. The OEMs have been very promising in terms of cost-efficiency, quality, and timeliness. They have helped the bigger companies in meeting their targets in the stipulated time along with greater profits. They have eased their management process and have taken the burden on themselves.
With the growth in the number of consumers and with the growing purchasing power of people, the OEMs have evolved, to support the VARs. There is no doubt in the fact that the OEMs are instrumental in helping the VARs acquire more profits. Also, with the coming of OEMs, the VARs can think of expansion and practice the same with ease. Since the OEMs already have the desired set up for manufacturing the base products, the VARs do not have to spend additionally.
The day when the OEMs will become the backbone of the VARs is not far. The pace at which they have been growing and have created a dependency in such a less time span is commendable. It is because of the OEMs that the VARs have also been growing at a rapid pace and have been able to generate such huge profits. The reason behind the success of VARs is the time they save and the consistent quality they serve under the shadow of the OEMs.
