How do you select an original equipment manufacturing (OEM) partner that meets your high standards?
At its core, OEM is about cost efficiency. OEM companies help their partners save money. They’re popular in all sectors of business.
But receiving a defective order for complex components can send your company into a financial tailspin.
Keep reading to learn how to make the right choice the first time when selecting an equipment manufacturing supplier.
OEM Partners in Brief
Original equipment manufacturing refers to a company that produces equipment or components that are used in a product marketed and sold by another company. Typically, that second company is the seller.
The practice is common across various industries.
For example, a computer brand might not manufacture all the parts used in its computers. Instead, it could obtain processors or hard drives from OEM suppliers. This approach lets companies focus on what they do best while delegating some (or all) of the manufacturing process to OEMs.
OEMs typically have economies of scale, which allows the companies ordering from them to offer high-quality products at competitive prices.
The partnership can also give companies access to new technologies they wouldn’t otherwise possess. This collaboration gives them a competitive edge in addition to cutting costs.
Benefits of Partnering With an OEM
Whether it’s product design, marketing, or customer service, an OEM partner can free up resources, leaving manufacturing to the experts. This refined, laser focus can:
- Improve product quality
- Improve customer satisfaction
- Improve overall business performance
- Cut costs
- Access new technologies
By partnering with an OEM, you benefit from their innovations and produce better products to get ahead.
What to Look For in Equipment Manufacturing Suppliers
How do you assess an OEM’s capabilities? You need to break them down and evaluate each in turn. The five aspects of OEMs you should evaluate are:
- Manufacturing expertise
- Capacity for scale
- Track record
Can the OEM company produce the components you need at the volumes you require? Do they have the necessary equipment and technology to manufacture your product to your specifications?
These are crucial questions to ask up-front when assessing a potential supplier.
Consider their track record, and determine whether the original equipment manufacturer has partnered with other companies in your industry before. Examine their ability to not only deliver high-quality components but to deliver them on time and within budget.
The supplier’s location may also influence your decision.
Partnering with a supplier in a low-cost country can cut costs immensely. While there will be additional costs, such as shipping and import duties, the savings on your bottom line far outweigh them.
Assessing the Capabilities of an OEM Company
The company’s experience and capabilities are critical aspects when selecting an OEM partner.
And this goes beyond mere manufacturing ability.
You need to look at their overall ability to meet your expectations. An OEM with extensive industry experience will better understand your needs and challenges. They will be equipped to produce specific, high-quality components.
Crucially, they will be able to anticipate any potential issues before they turn into problems.
Their technological capabilities are also vital. Cutting-edge manufacturing techniques are necessary and a key driver of quality in the fast-paced manufacturing world. An OEM that invests hefty sums of capital into the latest equipment can produce high-quality components faster at a lower cost.
Key Questions to Ask Your OEM Partner
Before entering into an equipment manufacturing partnership, you must ask any potential partner about their:
- Manufacturing capabilities
- Equipment and manufacturing technology
- Quality control processes
- Industry experience
- Intellectual property protection
Evaluating Quality Control Processes
Quality control is a critical aspect of any manufacturing process.
Ask whether an OEM supplier has robust policies to detect and correct errors during manufacturing. Regular audits, manual inspections, and automated inspection systems are all signs of good quality control.
Make sure to verify they have a dedicated team of quality control experts, and ask about their quality control policies.
Do they have a process for correcting faulty products and preventing them from recurring?
Intellectual Property Protection
Protecting your IP from theft is important in an OEM partnership.
It’s likely you’re sharing trade secrets like product designs, proprietary information, and manufacturing processes. Keeping these out of the hands of your competitors is vital for the success of your business.
So, you should make sure your OEM partner values intellectual property protection. They should have measures in place to prevent unauthorized access to information. Strict controls, regular security audits, and secure data storage are all paramount for protecting your IP.
You may consider entering into a non-disclosure agreement with your OEM partner.
The agreement will legally bind your partner to keep your trade secrets confidential. Should the worst come to pass, it will also outline the consequences of breaching the agreement.
Pricing and Cost
Cost is a significant factor in the decision-making process. Any private business is profit-driven, so cutting costs without cutting quality is attractive.
The two areas to evaluate are the costs of the parts and the cost of doing business. How does the OEM’s pricing compare to other suppliers? Are their prices competitive?
Low prices don’t always mean value. Defective components will only cost more in the long run. So, quality and cost need to be balanced.
In addition, review the costs of doing business.
Shipping costs and import duties should both factor into a decision. However, outsourcing to low-cost countries tends to far outweigh the additional business costs. Economies of scale and large production volumes result in cost savings that can be passed on to your business.
Select the Right OEM Partner
Choosing an equipment manufacturing partner can boost your business, heighten your products, and allow you to focus on what you do best.
The right OEM partner isn’t just a supplier.
They’re a strategic ally that can help you thrive. So take your time, do your research, and choose wisely your business success depends on it.
Shield Works offers custom, high-precision OEM manufacturing solutions for clients all across the globe. Learn more about our manufacturing capabilities here.