OEM (Original Equipment Manufacturer) and EMS (Electronics Manufacturing Services) play very important and distinct roles in the manufacturing industry.Â
They maintain a symbiotic relationship in the manufacturing process. Understanding the differences between these two models can help companies optimize production strategies, reduce costs, and focus on their core strengths.
Let’s learn about such differences in this article.Â
What is EMS?
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Electronic Manufacturing Services (EMS) involve designing, manufacturing, and assembling electronic components for OEMs. EMS providers specialize in high-quality production, assembly, and logistics to meet OEM requirements, often referred to as Electronics Contract Manufacturing (ECM).Â
Key Characteristics
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- EMS works with different clients, especially with OEMs. They offer comprehensive services from product design to post-sales support.Â
- EMS manage complex global supply chains to manufacture various products for different clients.Â
- Their primary focus is to invest in equipment and focus on flexibility to ensure agility in production.Â
What is OEM?
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An Original Equipment Manufacturer (OEM) refers to a company that designs, brands, and innovates products but often outsources component manufacturing to EMS providers. For example, a computer brand may rely on EMS companies to produce specific parts while focusing on product design and branding.
Key Characteristics
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- OEMs develop and design blueprints for their products to retain all intellectual property rights.
- They focus on branding and marketing their products and are agile in responding to the market trends post-product launch.  Â
- One of the most important characteristics of OEMs is enhanced profit margins because OEMs own intellectual rights for their products.Â
Differences Between EMS and OEM
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Aspects | EMS | OEM |
Core Function | They specialize in the manufacturing and assembly of electronic products on behalf of Original Equipment Manufacturers. They manufacture, test, supply and provide support after deployment.  | Focuses on design, development, and branding of products. Owns intellectual property rights and ensures products meet market demands. |
Product Ownership | EMS can only manufacture the electronics and assemblies. They can’t claim ownership over any of the products. | OEMs are the actual owners of the product, they hold the intellectual property rights and are responsible for design, development, and branding of the products. |
Services | Electronic manufacturing services include manufacturing components and assembling them based on OEM specifications. They test and check quality to determine whether the products meet OEMs’ demands or not. Then, EMS handovers the products to the OEMs. | OEM designs and develops the new products and claims intellectual property rights. They get high-quality manufactured products from EMS to sell products under their brand to expand their market. OEM defines the technical specifications and performance standards for products to ensure a competitive edge. |
Customization | EMS will customize the product according to the needs of original equipment manufacturers. EMS designs exclusively for their potential OEMs, they customize manufacturing techniques, product designs, materials, assembly methods, and more. They make sure that the components come under particular cost, availability, and other requirements to get the desired final products as per OEM’s specifications. | OEM’s customization is all about creating unique products according to their customer demands or the market’s cutting-edge technological requirements. They research and analyse the market trends according to such standards, OEMs design the specific projects and give requirements to the EMS. |
Business Reach | Collaborating with EMS allows the OEMs to focus on their core competencies, like product design, marketing, and customer services. Electronics manufacturing services help OEMs streamline their process and ensure that they produce only high-quality products. | Usually, OEMs have a huge reputation for their company’s products. So, working with such OEMs enhances your organization’s name, builds trust among customers, and increases your profit margins too.  |
Business Model | EMS companies work on a contract basis, they provide manufacturing services to various clients. Their business model ensures to invest in advanced technologies to manufacture high-quality products as per the latest and innovative designs from OEMs. | OEMs create proprietary products to sell under their brand banner. They invest a lot in research to attain a competitive edge and meet customers’ expectations. OEMs outsource their requirements to the leading EMS to get high-quality products according to their needs. |
Control Over Design | EMS has better control over design and development because they usually work with finished designs. They will work on a solid idea that OEM designed for their products. | OEM may have impacts on the overall design process because collaborating companies may have suggestions and oppositions. So, this process might take several iterations before finalizing. |
Cost | Working with Electronics manufacturers offers enhanced cost efficiency. Because EMS companies optimize production processes for minimising waste and overall expenses. | Collaborating with OEMs can decrease the total ownership cost as the resources are shared. The manufacturing costs are also reduced, which makes it more economical for partnering companies during the product launch and development. |
Examples | Syrma SGS, NTL electronics, Dixon Technologies, Foxconn, Flex Lt | Siemens India, Samsung Electronics, TVS Motor, Hindustan Unilever Limited |
Benefits of Working with EMSÂ
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Optimized supply chain managementÂ
EMSs adopt lean manufacturing principles to eliminate waste and streamline processes. They also develop risk management strategies to prevent any unexpected problems from interrupting the product development process.Â
Benefits of Working with OEM
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Innovations and access to new technologies
This is a common advantage you get when collaborating with original equipment manufacturers, particularly if you’re a company looking to thrive in the market according to the latest trends.Â
Competitive EdgeÂ
Working with the Original Electronics Manufacturers offers an enhanced competitive advantage because OEMs work on launching new and innovative products.Â
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Conclusion
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Electronics Manufacturing Services and Original Equipment Manufacturer are two essential and distinct aspects of the manufacturing industry. Technology companies, small and medium businesses, startups, established brands, automotive, healthcare, and almost every sector rely on electronic manufacturing services.Â
Meanwhile, Original equipment manufacturers are also indispensable to the business as they focus on enhanced competitive advantage and innovation using cutting-edge technology.