At times, the layers of the manufacturing industry are challenging to keep up with. The industry consists of many companies that are part of a more extensive manufacturing process. Like a well-oiled machine, the many parts of the industry work together to create an end product for the customer. The components needed by companies may come from multiple sources. It’s imperative to comprehend this system to understand which company will help meet your needs. This blog will discuss the difference between electronic manufacturing services (EMS) and original equipment manufacturers (OEM). Additionally, we will explain why electronic distributors are essential to EMS and OEMs and discuss the ways EMS and OEMs use distributors in different ways.
Electronic Manufacturing Service
What is an electronics manufacturing service (EMS)?
Electronics Manufacturing Service or EMS is also known as electronics contract manufacturing. EMS can refer to the industry as a whole or to “…a specific class of subcontractors or companies.” Their job is to provide manufacturing, design, shipping, testing, repairs, and more for OEMs. EMS act as a ‘guiding hand’ through the manufacturing process. Many industries such as medical, automotive, and industrial benefit from EMS. An EMS assists with bringing products to life. In addition, they help reduce manufacturing costs and reduce time to market. Asteelflash, a leader in Electronic Manufacturing Services, has 18 factories on four different continents. This global company offers specific services depending on the needs of the market they’re working with. For example, they offer design, engineering, supply chain management, and more to the wearable device industry. This is just one example of the many services they provide and the industries they work with.
How do they use Distributors?
The role of an electronic distributor for EMS varies depending on the market. During component shortages, EMS providers may rely more on distributors. Collaboration is often at the core of a successful supply chain. Because distributors often work with OEMs, electronic manufacturing services face a bit of competition at times, especially when they both get products directly from the suppliers. Some manufacturers may choose to save on costs and skip working with a distributor. However, this plan could potentially backfire. When EMS providers benefit from the short-lived perks of getting components at lower prices, they take on more risks that are part of the supply chain.
Original Equipment Manufacturers
What is an original equipment manufacturer (OEM)?
An OEM, or Original Electronic Manufacturer, makes the parts used and assembled by other companies. The company that uses the parts can mark such parts with their brand or name. The end product comes from the end company but uses the OEM components and/or systems. OEMs are important to partners as they can ultimately save money and time. The end company can focus on other parts of their business when they partner with an OEM. TPT, Texas Process Technologies, is an OEM based in Texas. They manufacture and sell stainless steel process equipment and components for the Dairy, Food, and other industries. As an OEM, TPT helps its customers save time and money while still receiving high-quality products. This alone is a benefit for many businesses when working with an OEM.
How do they use Distributors?
Electronic distributors play a key role in the OEM process. Large OEMs often choose to partner with semiconductor suppliers, which helps to ensure continuous supply and early access to technology. On the other hand, small OEMs often partner with distributors to assist with cost reduction, product design, and more. Distributors are often a vital step in getting products to market. Marketing through distributors is a strategy that many OEMs may use to improve their business and partnerships.
Why are Distributors Important to EMS and OEMs
Through strategic relationships with electronic distributors, EMS and OEMs are able to open more doors for their business. Some of the benefits include extended time for payment, testing, and more. Partnering with distributors often increases the chances of branching out globally. This allows for reaching more significant numbers of customers in less time. At Velocity Electronics, we understand that this relationship is essential. Our team has over two decades of experience working with EMS and OEMs. This allows us to anticipate your needs as a partner and help answer any questions before they even come up. Through the years of experience and our expertise in the industry, we are confident in our ability to serve your needs best.
EMS and OEMs are both essential to the electronics industry, and they each play a unique role in the process. It is crucial to know the difference between the two to know which one best meets your needs. Between manufacturing and distribution, there are multiple opportunities for partnerships. Distributors assist in maintaining supply, reducing costs, reaching a broader clientele, and more. Depending on the market, partnering with distributors may be a great option. No matter the market conditions, Velocity Electronics is dedicated to providing the best experience for our business partners. From the first questions or RFQ submission to product fulfillment, we are here to assist you with excellence every step of the way.