INTERNATIONAL MANAGEMENT CONSULTING AND INNOVATIVE ENGINEERING SOLUTIONS
OEM (Original Equipment Manufacturer)
Consumers replacing damaged vehicle components may choose to purchase OEM parts in order to ensure replacement parts are fully compatible with the vehicle and produced at the same quality standards. As the original suppliers of a vehicle’s components, OEMs often have their products sold by branded car dealerships and available for order through the automaker directly. OEM products are endorsed by the automaker and are often significantly more expensive than aftermarket parts. OEM products and aftermarket products both have distinct benefits and disadvantages for the customer. In the future, new technologies such as 3D printing may transform OEM supply chains and improve competitiveness.
An OEM is different from a value-added reseller (VAR), which is a company that purchases the original or component product from the OEM and then adds to its value by adding features or services to the product, or by incorporating it into a larger product, before finally reselling it, most commonly to end users.
OEMs most commonly sell their products business to business, while VARs most commonly sell to consumers or other end users. One of the most basic examples of the relationship between original equipment manufacturers and VARs is the relationship between an auto manufacturer and makers of auto parts. Various parts needed for the assembly of a car, such as exhaust systems or brake cylinders, are manufactured by a wide variety of OEMs. The OEM parts are then sold to an auto manufacturer, which adds value to the original product by making it part of an automotive vehicle. The automotive vehicle is then sold to individual consumers or other end users.
It’s also possible for a company to be considered a VAR of the products of a company that is itself already considered a VAR. This most commonly occurs with companies that primarily provide services rather than goods.