The Advantages and Disadvantages of OEM

One of the many challenges of managing an eComm store is acquiring the inventories we are going to use in our final products and selling them to end users eventually. It is indeed a challenge because we need to have an effective strategy in order to provide our consumers with the most efficient way to provide them with good services and quality products that will keep them satisfied and happy and will enable them to return to your store. Among the best strategies you can employ is referred to as OEM (Original Equipment Manufacturer). If you are looking to utilize the OEM method as well and integrate it into your own system, then you would be glad to know that the short but informative blog I prepared will especially suit your needs. So without any further delays, let’s get right into today’s discussion…

What is an OEM (Original Equipment Manufacturer)?

OEM (Original Equipment Manufacturer) is essentially a process whereby you acquire inventories used as components in the manufacturing of a new product of another company often called a VAR or Value-Added Reseller. To give you a better perspective of the idea of oem meaning, imagine the components used in the manufacturing of popular brands of smartphones such as Apple or Samsung. Remember that not all of the hardware inside the Samsung or Apple phones are from the said brand. They have been outsourcing some of the components to create their popular line of products.

The Advantage of Original Equipment Manufacturing

Just by referring to the OEM’s description, you will immediately surmise some advantages such as the privilege of exclusivity. Firstly, the great advantage of OEM is the prospect of customization based on the company’s device’s specifications. As a result, they are sort of creating a brand that uniquely sets apart your products from the rest of the competition. Furthermore, you’ll acquire intellectual property rights or trademarks for the designs even though they are manufactured by a third-party supplier or manufacturer.  You will enjoy the benefits of the customized components without having to worry about intellectual rights.

Another benefit of using OEM in your business is that it is very cost-effective. And this is the case because you have to bear in mind that if you make orders with a designated supplier, you have to make orders in bulk. It might seem costly initially, but it will provide you with a huge economic benefit in the long run since it takes away the necessity to incur additional expenses related to inventory management and shipment. In addition, what makes OEM cost-effective is that the prospect allows you to save money from labor costs as well. Since it is manufactured within the vicinity of the third-party supplier, quality control and shipment will be handled by them as well.

The Disadvantage of Original Equipment Manufacturer

With the advantages in mind–you also have to take note of the disadvantages of Original Equipment Manufacturers before fully committing to the system. Probably one of the biggest downsides of OEMs is selecting a third-party supplier or manufacturer and since it is possibly customized, it may take time for you to fully utilize or take advantage of the benefits of Original Equipment Manufacturer. As a result, you are not able to have a good opportunity to innovate or integrate them as fast as possible considering that you have to evaluate samples as well. You also have to bear in mind that you may open yourself up to intellectual property rights if the manufacturer sells the same component trademark to another end source.

Final Thoughts

I hope the short blog I prepared has provided you with the insights you need about the topic of Original Equipment Manufacturers. As you see, it can give you a lot of advantages that can benefit your business especially if you have a huge operation that involves the production of brands with the use of several components. However, you also have to take note of the disadvantages such as the slow progress when it comes to utilizing the system as fast as possible. But overall, Original Equipment Manufacturers can provide you the advantages you need in helping you manufacture the products you are going to sell to end-users.