CNA Explains: Original equipment manufacturers or OEMs, and why companies rely on them

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It's not uncommon for a company to buy a component or an entire finished product from OEMs.

, including about how some of its devices were produced in Singapore or Korea when they actually originated from China.

Many local Singaporean retail brands - especially those in electronics, appliance, and fashion - also use OEMs, said Nanyang Technological University assistant professor Vivek Choudhary.Lack of manpower, supply chain disruptions: Manufacturing body calls for innovation to stay competitiveAn immediate plus point is consumers getting their products sooner, said Asst Prof Choudhary, whose expertise is in supply chain management.

"It is all about focus and specialisation," said Prof De Meyer."This may lead to better products produced at higher volumes and thus at lower cost because of the economies of scale."Using an OEM could mean a lack of oversight over the production process, the experts noted.

Asst Prof Choudhary said that in case of quality issues, companies can act as an intermediary between the customers and the OEM, and arrange for a one-to-one replacement or for repair work.

 

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