Original equipment manufacturer (OEM)
Reviewed by Dasha ShakovVP Marketing, Proton
Updated
What is OEM?
An original equipment manufacturer (OEM) is a company that makes finished products or equipment, such as machines or vehicles, under its own brand. In distribution, an OEM customer is a manufacturer that buys parts to build into what it makes, and an OEM part is a genuine replacement part from the equipment’s maker rather than an aftermarket copy.
How it works
In some industries, electronics among them, “OEM” is also used for a company that makes components sold to other manufacturers, so check which sense is meant. An OEM customer buys the same production parts, such as fasteners, bearings or electrical components, repeatedly and on a schedule, so price, consistent quality and on-time delivery matter most. A plant buying MRO supplies, by contrast, buys a wide and unpredictable mix of items to keep its building and equipment running.
OEM example
A fastener distributor ships 20,000 screws a month to a furniture maker that builds them into office chairs. That customer is an OEM account, with deliveries scheduled weeks ahead on a blanket order.
Related terms
- Maintenance, repair and operations (MRO)Maintenance, repair and operations (MRO) supplies are what a business uses to keep its buildings, equipment and people working, not what it makes or sells.
- Industrial distributionIndustrial distribution is the part of wholesale distribution that supplies factories, plants and utilities with the parts, tools and supplies they run on.
- Blanket purchase orderA blanket purchase order is a long-term order in which a customer commits to buy a set quantity or value of items over a period at agreed prices.
- SupplierA supplier is any business that provides products or services to another business.
