Before considering the potential pros and cons of forming a business partnership with an OEM, it is important to clarify what we mean by OEMS, as the definition often has different interpretations. OEM is an acronym for original equipment manufacturer. It is defined as a company who has a relationship with the original manufacturer of a product that uses its product under its own name and branding. The VAR, or value-added reseller is the company that rebrands the OEMs product.
The use of an OEM has the potential to save a company time and money. The benefits are often great. Here are some of them:
The use of an OEM allows for another company’s resources to become their own. It opens up new worlds for the company geographically but also to different industries. Using an OEM can benefit the marketing and networking aspects of business, allowing for the creation of a much more popular brand.
It is important that the product you are getting is not going to break and that it is durable, as it is representing your own brand. This is the main benefit of using an OEM. It creates consistency and since it is their specialty, offers specific expertise on the product. This makes functionality a main concern.
Your relationship with your original equipment manufacturer is a tunnel to brand and marketing resources, as well as sales and physical distribution and manufacturing assets. This is a key benefit as it directly increases the profit of the VAR.
While the use of OEMs is a very important thing to consider using as a company, there are some negatives that you must consider before determining a OEM relationship.
While there is a lot to gain from these relationships, sometimes the manufacturer might be slightly controlling when it comes to product improvements. This can be driven by their own internal perspectives, which can lead to some misinformation.
While the pros of the OEM relationship might be that they increase sales in the long run, it is sometimes hard to see past the initial investment which can be pricier than using a individual seller. The original equipment manufacturer might ask for technical or sales support, which might cost more in travel and time expenditure. This can be especially frustrating when they only have their own interests in mind.
Part of making a product is understanding what the market and in turn, what the consumer wants. The OEM, since they might not have to deal with them directly, sometimes will hesitate to cater to this fact. This can cause frustration for the company since they are needing to constantly update and suit the real market.
Creating a relationship with an OEM can be a wonderful thing and often pays off in the end. However, it is important to consider all of the elements of the relationship before it is begun.