Electronics manufacturing is one of the most competitive industries in the world. This is because our lives depend on various types of electronic equipment made of several complex and intricate components and accessories. You may be surprised to know that in many cases, these accessories and components may be outsourced to a third party by electronic equipment manufacturers. If you are new to this industry and plan to partner with an experienced third-party manufacturer, you may tend to hear terms like OEMs, CEMs, ODMs, and EMS. However, you need to understand the roles of each of these manufacturers to make the right selection. This post offers you insights into each of these manufacturer roles and how they can add value to your electronics manufacturing project.
What is Original Equipment Manufacturer (OEM)?
An OEM is a manufacturer that designs the product based on client specifications. The relationship between the OEM and the customer is that of a typical buyer and manufacturer. The only difference is that the product will be finally marketed with the buyer’s logo. Outsourcing the project to OEM helps companies save on their product development and production expenses. The clients may possess product designs, but they may not have manufacturing expertise, which OEMs take care of.
OEMs can design components or sub-systems. They can allow other companies to use the product. Microsoft is the perfect example of OEM that specializes in Windows Operating System. This system is used by many technology and hardware companies like Acer, Dell, and HP. Another brilliant example of OEM is Foxconn, which works as the manufacturing partner of Apple. The latter is known for its innovative products, and there is a large R&D department to back up their innovation. However, Apple has no manufacturing facilities, so it works with Foxconn to build the products. It works with many other OEMs to build components, which are sent to Foxconn for the final product assembly.
Many original equipment manufacturers (OEMs) possess intellectual property rights to their products. Nowadays, many OEMs outsource their workload to other manufacturers.
What is Original Design Manufacturer (ODM)?
Original Design Manufacturers differ from OEMs because that they do design in-house. Many companies partner with ODMs to reduce their research and development costs. ODMs help clients design products and sell them as a private label product. If they do so, most times, they will retain the IP rights of the product. In some scenarios, ODMs may lease their original designs to customers who may slightly alter them to suit their business requirements and rebrand them with their brand logo. This type of manufacturing is also referred to as white label manufacturing. Generally, an ODM performs R&D, product testing, manufacturing, and white label or private label offering. For instance, phone chargers are one of the popular ODM products. Many mobile phone manufacturers lease them from ODM and use them after white labelling.
What is Electronic Manufacturing Service (EMS)?
Electronic Manufacturing Service (EMS) providers play a larger role than the other two types of manufacturers described above they can perform everything, from design to manufacturing to testing and even distribution in-house. Many EMS providers also provide repair and maintenance services for their products. Is that all? No, their role is vast. These service providers also offer support in procurement, supply chain management, and customer support.
Many tier 1 electronic manufacturing service providers deal with low complexity products in high volumes. LG Electronics, Honeywell, Mitsubishi, and Hitachi are some brilliant examples of tier 1 EMS.
What is Contract Electronic Manufacturer (CEM)
As the name suggests, these manufacturers work on contracts and support OEMs. They can partially or wholly manufacture products based on OEM requirements. It is quite common to see CEMs in oil, gas, defense, computing, and other mission-critical industries as they support OEMs. Some industries have stringent requirements, and sometimes OEMs are unable to meet them single-handedly due to a lack of resources, budget or investment. This is when they partner with CEMs who may possess advanced industry certifications that comply with industry standards. Many CEMs make huge technology investments to meet the changing customer requirements, which is an advantage for OEMs. A CEM may serve several industries at a time, making them dynamic. One of the brilliant examples of CEMs are PCB assembly services and electronic assemblies. Some PCB CEMs can serve multiple industries like medical and healthcare, automotive, military and defense, and so on.
Once you understand these electronic manufacturer acronyms, it is important to decide who is more suitable for you. If you have been considering a CEM partner, then Suntronic is the best choice. The company has facilities in Houston and Dallas and has been delivering manufacturing and design services to its clients in communication, oil and gas, infrastructure and electronic OEMs for several years now. Suntronic offers a full range of manufacturing services, including pilot-run and prototyping to full production of printed circuit board assembly, cable and wire harness assembly, box build assembly, and more. The company’s expertise in high mix, high reliability, and mission-critical environments is widely appreciated by clients.