When we think of precision products such as MacBooks or iPhones, we often tend to mistakenly attribute the manufacturing process to the brand owner – Apple. However, the hundreds, possibly thousands of components that make each of these devices, from semiconductors to LED displays, are built by Original Equipment Manufacturers or OEMs.
OEMs are companies that manufacture parts based on design specifications provided by another company. This is itself an example of outsourced manufacturing. In the case of the electronics industry, Foxconn is an OEM for Apple, Samsung, Blackberry, and Xiaomi, amongst other multinationals.
For a highly specialized industry such as electric transit, power distribution, and utility, Mac Products is an example of an electrical OEM that designs, manufactures, and supplies high-precision parts.
In exchange for manufacturing these specialized products that require much industry experience, investment, and expertise, OEMs allow firms to do what they do best. For example, in the case of electrical transit, rail operators can focus on service excellence and providing a great passenger experience.
In this feature, we will dive into how OEM benefits firms, not just in the electrified transit sector but in other industries and the supply chain in general.
- Reliable Products
The most attractive OEM benefit that comes with working with an established industry supplier is the fact that most of these companies have a solid record of quality. Manufacturing complex products and machine parts that are built to last is something that takes repertoire and years of experience.
It makes more sense as a manufacturing firm to source products from, say, China-based OEM suppliers than trying to custom-build each of the various parts you need. Not only might you lack the technical expertise and design experience to manufacture a highly complex part, say, an electrical splice kit. You might also not have the CAPEX to do research and prototyping and invest in innovative technologies or production facilities to meet quality requirements.
More importantly, you will not be able to mass produce high-quality products at scale and to factory specifications that meet all international standards.
Here is where established OEMs benefit companies that lack the budget, expertise, and time to manufacture their products. Unlike aftermarket manufacturers that might lack a solid industry record, original manufacturers are always bound by trust and a record of quality.
For example, Mac Products has a 50-year history of manufacturing precision products and equipment specifically for electrical power transmission and distribution. Such a record speaks quality.
Projects ranging from the New York City Transit to the Milwaukee Streetcar are a testament to the quality that an OEM supplier such as Mac Products can bring to the table.
- Excellent Product Support
Customer service is the backbone of OEM manufacturers. How successful an OEM supplier is at providing a good customer experience will determine how long the company survives.
OEM manufacturers are often located in other states or countries within different time zones, legal jurisdictions, or even where different languages are used. Therefore, they must provide excellent product support for their customers scattered globally.
The last thing you want is to reach out to product support regarding an issue with your product only for your queries to go unanswered or for your issue to remain unresolved for days.
Since OEM products are designed and manufactured in-house, product support within OEMs is usually faster at resolving customer issues than in other types of firms. Additionally, each OEM supplier may provide a dedicated service manager or support technician for each account they run.
- Return on Investment
Building new production facilities or expanding your existing production facilities comes with considerable financial pressure. You might need to seek extra funding from lenders or investors to expand your current production capabilities.
Expanding your production comes with several types of costs:
- Research and development are a prerequisite for creating high-quality, precision products.
- You will need to invest in a new production facility or production line, which adds a hefty cost to your CAPEX.
- R&D plus product development, and manufacturing all need highly specialized staff that are not cheap to hire.
- Establishing quick supply chains in time to meet your production schedule and with quality materials might fail terribly and come at a great cost.
Going the “alone” route for new production will eat into your profits in terms of lost equity to investors such as venture capital firms or interest paid on capital loans.
You can cut your manufacturing costs with an OEM supplier while benefitting from greater production capabilities and economies of scale. Thus, you can offer your final product at more competitive prices and experience a tidy ROI faster than if you were running the conventional business model of building everything yourself.
- Quick Response Times
If you are operating a complex system, such as the third rail with specialized components provided by an OEM supplier, it is imperative to access quick support.
This is because equipment can malfunction, or you might get errors and exceptions that require fast resolution. Downtime might lead to lost revenues, and faulty equipment might cause injuries or worse.
Your team might lack the proper expertise to handle such exceptions. However, with an OEM support engineer or technician available to solve your problems 24/7, you can breathe a little easier.
In the case of Mac Products, our Field Service Technicians are always on hand to assist, on-site or online, in case of emergencies.
OEM benefits firms that have some level of production in their value chain in a variety of ways. With OEM partnerships, you can access high-quality products that are put through rigorous testing standards to meet all quality expectations.
OEM products are not only built to your exact design specifications and industry standards; they are also more affordable, translating to lower production costs for you. With the financial burden of investing in a new production facility and specialized tech and staff eliminated, your firm will benefit from an increased ROI.
Finally, OEM suppliers have excellent product support and respond quickly to customer queries. This provides a great customer experience, not to mention undergirding your investment by eliminating downtime.