EMS vs. OEM is a complementary rather than competing concept in supply chain management, and today, we aim to demystify everything for you while highlighting other related practices.
The success of any venture in the electronics industry is fundamentally anchored on the firm’s business model.
At present, the concept of manufacturing partners is more prevalent than ever as companies become more specialized than ever.
So what does this mean for the electronic components industry? Let’s elucidate it all below.
What Is OEM?
An OEM (original equipment manufacturer) is a firm with the expertise and capacity to make either part of an electronic device/component or the full devices for another company.
The products for OEMs never reach the market under the designer and manufacturer’s name.
Instead, an OEM is a facilitator and operates under the instructions of a buyer.
Therefore, OEMs will brand the products in the names of the buying company, and the latter will deliver the products to the end users.
OEM is akin to contract manufacturing; it helps the buyer focus on marketing and other more profitable processes while leaving the burden of design on the OEM.
What Is EMS?
An Electronics Assembly Setting.
Electronic manufacturing services (EMS) are the primary support system for OEMs as they create everything (specifically electronics manufacturing) from scratch to the end for these firms.
Aside from the ideation, design, and manufacturing, an Electronics Manufacturing Service company performs the following additional tasks:
- Procurement assistance
- Electronics Products repair
- Shipping management
EMS companies are at the heart of manufacturing most high-end electronic products that we use today.
For instance, the iPhone design and improvement are made by an EMs creator for Apple, ensuring that the latter company focuses on organizing marketing.
We don’t have many EMS firms owing to the billions of investments required to fulfill that role. Some of the most renowned EMS firms include Hitachi and Panasonic.
What Is CEM?
Chip factory.
Contract electronics manufacturing (CEM) involves the design and assembly of electronic components under instructions from an OEM.
Usually, contract manufacturers are also directed by the OEMs to brand these parts in their logo.
Generally, this is because CEMs are support systems for delivering high-quality electronic components that comply with the latest technologies and demands.
It means the CEM never sells a final product to the end user.
Also, the liability for the functionality and reliability of these parts lies with CEM.
Most can fulfill the OEMs’ demands as established CEMs have the latest technologies and infrastructure to produce quality parts in bulk.
What Is ODM?
Think of a generic product that retails under different brand names, yet it is designed/made by one manufacturer.
For instance, a Type C charger by firm ‘X’ can charge phones and laptops made by different companies.
Also, phone/laptop companies may choose to have the chargers branded in their names or sell the product as a general part without their logo.
A charging cable.
Again, this device can charge different devices and is a generalized product.
A firm specializing in creating such a product is the perfect example of an original design manufacturer.
Therefore, an ODM makes generalized products that they can sell as generic electronics or enter into a create-and-brand contract with a company that wants to sell them as their own.
A buyer who wants such value-added services must nonetheless agree to enter into contact with the ODM.
EMS vs. OEM: Differences between OEM and EMS
Automated electronics assembly.
Economics of Production
OEMs lack the capacity and the core skills to set up systems for manufacturing all the parts, as this could be pretty uneconomical if they did everything by themselves.
Conversely, EMS is focused primarily on manufacturing various parts and is, therefore, fully equipped.
They also operate on a large scale and sell the parts in bulk to OEMs; thus, their production is economical.
Products Range
OEMs are limited in their product range as they specifically focus on making a few parts/devices as per their available market.
They are also not too invested in introducing new products into the market.
EMS serves a large customer base and is thus more open to increased investment in new parts and the latest technologies.
Testing Capacities
Analytical laboratory testing in OEMs is less advanced than in EMS.
On the flip side, product testing capacities for EMS firms are top-notch thanks to their bulk and varied product manufacturing.
How to Choose the Right Manufacturer
A quality control inspector.
What are some of the factors companies should consider when considering the ideal electronic parts manufacturers?
Manufacturer Reputation
How experienced is the manufacturer in the trade, and how many projects similar to the one you’re looking for has the company participated in?
This should be the core concern for any company looking for high-quality electronic parts or product manufacturing.
An experienced manufacturer can also produce in bulk primarily because the company has already invested in high-level systems for the most common products.
Cost
Do the manufacturer’s charges align with your budget, and do they reflect the product’s quality?
Most companies fall into the trap of going for cheaper parts to save on costs.
Nonetheless, cheap may prove expensive in the long run, and although the cost should be a key consideration, it should never precede the experience and quality of the manufacturer.
Product Quality and Compliance
This is tied to the manufacturer’s reputation and the EMS’s investment in streamlining its product lines.
Therefore, demand for quality certifications when engaging a manufacturer to ascertain their adherence to industrial standards.
Communication
How good is the manufacturer in customer service?
Customer design requirements keep changing during the production process, which means the manufacturer should keep an open ear.
Opt for an electronics manufacturing service company keen to listen to customers and give frequent updates on product development.
Summary
Hacking the electronics assembly services supply chain is the first step towards making immense profits in the multi-dollar industry.
This is what the most successful electronic product firms have managed to do.
We now hope that you fully understand the workings of OEMs and EMS. Thanks for your time.