Have you ever wondered who’s behind the tech you use every day? The correct answer involves several key players, such as OEM and EMS. OEMs are the creators designing the gadgets, while EMS companies focus on assembling them. Let’s take a closer look at how these entities contribute to the making of the end product for the customer.
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What is OEM?
An OEM (original equipment manufacturer) is a company that designs a product and owns the rights to sell it under its own brand. OEMs create the ideas, make detailed plans, and usually keep the legal rights to their products.
OEMs are everywhere—in industries like cars, electronics, and computers. Apple Inc. is a good example, designing its gadgets and selling them under the Apple brand.
But designing doesn’t always mean making. Even though OEMs own the designs, they might not build the products themselves. This is when they team up with EMS companies to actually make the items.
What is EMS?
EMS (electronic manufacturing services) can mean either the whole industry or a group of companies that help make and assemble electronic products. These companies do everything needed to take a product from an idea to a real item you can use.
EMS providers take over after an OEM designs a product. They handle the nuts and bolts of manufacturing, assembling the pieces, testing to make sure everything works right, and even taking care of repairs if needed.
Think of EMS as the behind-the-scenes force that helps reduce costs and speeds up the time it takes for a new product to hit the shelves.
Differences between OEM and EMS
- Equipment choices: OEMs typically use equipment designed for mass production of their specific products, meaning setups take time but are efficient once running. EMS providers prioritize flexibility. They opt for machines that allow quick changes between projects, albeit sometimes at slower speeds.
- New product introduction (NPI) process: OEMs introduce new items less frequently and have less need to share detailed manufacturing instructions. EMS companies, dealing with a variety of OEMs, must have a refined and robust NPI process to handle the diverse and frequent product launches.
- Test design expertise: With a wide range of products to test, EMS companies possess a broader scope of testing expertise compared to OEMs, who typically focus on a narrower product range.
- Supply chain expertise: Unlike OEMs, which often focus on sourcing for their specific product lines, EMS providers manage a global supply chain to support the production needs of diverse customers.
In essence, OEMs and EMS companies differ in their manufacturing focus, with OEMs concentrating on their own products and EMS providers offering flexible, broad-ranging manufacturing solutions.
How OEM and EMS Providers Complement Each Other
EMS and OEM share a symbiotic relationship. OEMs enable EMS to thrive by outsourcing manufacturing tasks. With this collaboration, the industry benefits from streamlined processes and increased efficiency.
For OEMs, partnering with PCBA companies eliminates the need for costly in-house production units, which can be difficult to manage. Additionally, leveraging the expertise of EMS providers allows OEMs to focus more on their core competencies (such as product development and brand marketing).
The Role of Distributors
Electronic distributors are pivotal for both EMS and OEM processes. While large OEMs partner with semiconductor suppliers for continuous supply and early technology access, small OEMs rely on distributors for cost reduction and product design support.
During component shortages, EMS providers often intensify their collaboration with distributors, despite facing competition for products sourced directly from suppliers.
Strategic alliances with distributors offer extended payment terms and global expansion opportunities, enhancing the business prospects of both EMS and OEMs.
The Role of ODMs
People often struggle to distinguish between OEM (original equipment manufacturer) and ODM (original design manufacturer) and understand their implications for EMS providers.
OEM involves using existing molds and equipment to manufacture products with minor customizations, like logo placement or color changes. On the other hand, ODM entails creating new products from scratch, requiring the setup of new equipment and tooling.
Conclusion
As you can see, OEMs and EMS providers both play crucial roles in electronics manufacturing. While OEMs focus on product design and branding, EMS providers handle manufacturing, testing, and more. With OEMs, EMS providers gain access to a steady stream of manufacturing orders, while OEMs benefit from streamlined production processes and reduced overhead costs. Expect to work closely with both OEMs and EMS solution providers when ordering products for your business.