I&#;m going to take a wild stab in the dark that chances are your business will at some point have the need to purchase equipment. (Was I right?!) Perhaps it&#;s time to &#;Office Space&#; that old printer, get a new company truck, or finally get that air conditioner so Dave stops complaining about sweating through his wool suit (in August).
In the world of food production, this usually includes food processing equipment. Maybe yours is a large corporation where purchasing decisions are centralized with long-standing contracts. Or maybe you&#;re the sole proprietor looking for the most economical option. No matter where in the mix you fall, the following considerations are helpful in planning to make the best purchasing decision.
1. What is the nature of your relationship with the OEM?
The basis of business transactions lies in relationships. Will this be a one-off purchase for a specific application? Or a long-term project with multiple components? In either case, maintaining a mutually beneficial relationship is essential for long-term success. Even if your purchase is an &#;off the shelf&#; standardized piece of equipment, it will most likely require service at some point in its lifetime. When that day comes, will the original OEM be able to provide replacement parts? Answer technical questions? Provide service calls for repair or modification? Knowing that an OEM strives to maintain positive, long-term relationships with its customers provides added value and peace of mind.
2. Does the OEM understand your industry and specific needs?
Being a jack-of-all-trades is a desirable quality in many cases, such as traits you look for in a maintenance manager. But when you know there are specific niche applications that pertain to your industry alone, you want to work with a manufacturer with expertise in that area. For instance, you might not want your local McDonald&#;s to serve a fancy surf n&#; turf steak and lobster meal (even though they probably could). Similarly, any metal fabrication shop worth its salt would be able to produce an inspection table. But if they haven&#;t built one for a food production facility, where the materials used and the wash-down ready design are important for food safety, you might end up with a component that is not suitable for your needs.
3. How is their communication & customer service?
We are inherently social beings. Even at a time where commerce is constantly being pushed toward automation and purchases are being made with less human interaction, customer service and open communication are more important than ever. Working with an OEM, especially on applications that require a high degree of customization, means collaboration. A positive collaboration includes open and honest communication among all parties involved. Are they being upfront and realistic about their core capabilities? Can they actually meet the proposed timelines? Put another way, excellent customer service can be summed up in the phrase &#;under-promise, over-deliver.&#; Be mindful of OEMs that promise something that sounds too good to be true (because it often is).
What truly sets companies apart in terms of customer service emerges not when everything goes right, but rather when unforeseen issues occur. It&#;s during these moments that you need to be confident that your OEM is going to respond immediately when challenges arise. A healthy collaboration can often produce a better result than the original design.
4. Does the OEM sell directly, or through a 3rd party vendor / distributor?
There are pros and cons with both methods, and sometimes the buyer has no choice. The general advantages of going through a distributor include convenience (especially when purchasing a wide variety of equipment), the ability to purchase in smaller quantities, reduced lead times if items are already warehoused (think Amazon), and possible cost savings if the equipment is older or used.
Working directly with a manufacturer however generally means lower costs, you have complete control over the sales process, and you have access to the people who actually design and build the equipment. It &#;cuts out the middleman&#; and allows for increased collaboration and customization. It also means partnering for future projects, maintenance and upgrades.
5. Where is the OEM located?
As I write this heading into the summer of , fuel prices are predicted to hit an all-time high in August. Suddenly components from far away don&#;t seem that inexpensive or may not even be available. Coupled with quality issues, time zone challenges and lack of support and it suddenly it makes more sense to source from a domestic manufacturer (if possible). Working with local companies benefits not just the parties involved, but also the communities in which they are located. But it also just makes good business sense. If you need a new conveyor belt right now, waiting a few weeks for someone to install it will not help your downtime. Even if they&#;re not located next door, knowing that they have similar working hours is extremely beneficial, especially when issues arise.
6. What are the OEM&#;s capabilities and certifications?
Verifying that the OEM you&#;re working with can handle the job should be a no-brainer. But double-checking their lists of equipment, past project builds, and qualified capabilities is simply good due diligence. You wouldn&#;t go see a doctor without a medical degree, so why trust a panel supplier without UL-508A certification?
Along similar lines, it behooves you to ask for a full list of capabilities in case the OEM can do more than you may be aware of. (For instance, they may be promoting their powered lug washer, but they also make conveyor and infeed equipment.) Having a single OEM manage a full line project saves time, communication headaches, and money.
7. What value-added services does the OEM provide?
Every project manager knows that sourcing the equipment is just part of the picture. What if the equipment needs modification, either during the design phase or after installation? How will it be transported to the facility? What if the new machine needs to be integrated with existing equipment?
Having expert help with other steps of the process can add huge amounts of value to a project. Consider the following example: Manufacturer A&#;s equipment pricing is higher than Manufacturer B. At first glance, the obvious choice seems to go with the lower-priced option in A. But being a great project manager thinking about the total cost of acquisition, you would also be investigating logistics, integration, and future support. It turns out that A&#;s unit will cost much more to ship, and being that they&#;re based internationally, they would have to contract out for field repairs and support, bringing the total cost A well above B. So, it is important to ask: Is the OEM able to assist in other areas than just manufacturing?
8. What is their capacity and lead times?
Finding the right solution for your facility can be downright exhilarating. But that excitement can be immediately stymied once you realize that the equipment you found, that perfect one that ticks all the boxes, has a lead time of 18 &#; 24 months. And your team needed it yesterday.
At the time of writing, Global supply chain issues continue to hamper operations near and far. After all the work put into getting a major piece of capital equipment approved, only to find out at time of purchasing that the manufacturer won&#;t be able to commit to your timeline, can be downright heartbreaking. Even worse is a situation where the manufacturer claims to have capacity to hit your deadline but comes back after the PO has been accepted to inform you that there will be a delay. No one is perfect, and sometimes delays are inevitable. But probing questions and asking for testimonials in the exploration phase will help ferret out suppliers who are not truly able to deliver on time.
9. Can the OEM be flexible and scalable to your project needs?
Finding the right OEM for your needs might be a little like Goldilocks trying porridge: you want the fit to be just right. A smaller OEM will likely be more responsive to your needs, but they won&#;t be able to handle the volume of a large project. Larger multi-national OEMs are ready to handle larger undertakings, but you&#;ll be competing for their attention against their other customers. Ideally, you&#;d like the OEM to be both scalable enough to handle all of your projects, but not so large that you&#;re just another number lost in the mix.
10. Is the OEM able to customize their equipment to fit your needs?
Manufacturers, as a general rule, prefer to produce multiples of the same design to maximize efficiencies. The larger the OEM, the more efficiencies needed to remain profitable. These two general principles combined mean that large OEMs will be less able or willing to customize individual equipment, especially if the volume is low. A smaller OEM on the other hand has the capacity to be much more flexible and is more available to accommodate customization, even on a single piece of equipment. If the application has a very unique design need, an OEM may even work with you on a completely custom build.
11. Is the OEM able to provide examples of their work?
Every OEM wants to claim that their equipment is the best. But what do their customers say? Are they willing to allow a site visit or demonstration to you, a potential customer? If the OEM&#;s clientele is so impressed with their choice that they&#;re eager to share their experience, that&#;s a very strong indication of complete satisfaction. If, however, an OEM has difficulty providing examples, the opposite would be more likely.
OEMs come in all shapes and sizes, and not every one is the best fit for every application. But by asking questions and performing due diligence, you should be able to determine if they are the right fit for your business.
Do you have an application? Get in touch with us to see if we&#;re the right fit for you!
With competitive price and timely delivery, Getell sincerely hope to be your supplier and partner.
These third-party producers, which keep global manufacturing running, can also bring your product to life. Find out what OEMs are, how they differ from original design manufacturers (ODMs), and discover what benefits aftersales markets can bring to your business.
Original equipment manufacturers (OEMs) make products and components that other companies sell under their name. OEMs range in size from small fabrication shops to global mega-manufacturers.
OEMs offer many advantages to brands. Among them, they can achieve economies of scale to make products and parts more cost-effectively. Also, as specialists, they can offer production quality guarantees. This can help free up money so that you can focus on other areas such as design or marketing.
OEMs can play different roles within supply chains, depending on the contracts they have signed with their clients, but they generally operate business-to-business.
&#;You can have, say, a chocolate maker that sells to a department store which will put its branding on the packaging," says Samir Dani, Professor of Operations and Supply Chain Management at Keele University.
Larger OEMs will often engage with smaller OEMs to source smaller or more specialised components.
&#;Engaging closely with other OEMs in our supply chain has proven vital for our growth,&#; says Tom Humble, Chief Experience Officer (CXO) and Founder of ECD Auto Design, which provides specialised parts made in the UK for vintage cars, primarily Land Rover Defenders.
Value-added resellers (VARs) take parts or entire products from OEMs and sell them on to consumers. This can range from simply rebranding OEM products to assembling OEM components into the final product.
These VARs contribute significantly to familiar brand names seen in retail stores. They add their value to diverse products, from children's toys to appliances and automobiles, before these items reach consumers.
In the case of common goods like washing machines or electric heaters, VARs might integrate a unique control system into the user interface for added value. Others may provide additional enhancements.
&#;Some VARs, including some large retailers, will have assembly lines at their receiving warehouses, where they put the products together,&#; says Dani. &#;Others may simply have a packaging machine in which they box or bag products.&#;
Depending on the market or product, OEMs will decide to sell either to VARs or direct to consumers. For example, Bosch, the German engineering company, sells OEM parts to car brands whilst also selling home appliances under its name.
OEMs create and supply products based on the specifications of their VAR customers, whereas original design manufacturers (ODMs) research and design their own goods. Often referred to as "white label" or "private label" suppliers, ODMs produce unbranded goods that are sold under a VAR&#;s name.
Essentially, OEMs can provide businesses with bespoke products, while ODMs provide an "off-the-shelf" solution.
ODMs can be an attractive option for those businesses lacking their own research, design, and manufacturing capabilities. They're also sought after by businesses that have identified market gaps and want to act quickly with products that are ready to sell.
Outsourced manufacturing can also include companies that supply non-branded aftermarket parts for ongoing maintenance. These are third-party companies that make spare parts or components almost identical to those made by OEMs, but without the OEM's logo or licence.
These products are less expensive because they usually aren&#;t made under licence of the OEM or brand. Depending on the terms of warranty, use of aftermarket parts can nullify any product warranties provided by the OEM or brand owner.
However, in other circumstances, aftermarket companies can become OEMs by default when the original manufacturer no longer produces the part - as can be the case with some of those components produced by ECD Auto Design.
&#;We do not hold licenses from Land Rover to manufacture parts or upgrade their vehicles &#; our customisations are done independently, based on the preferences and requirements of our clients,&#; says Humble. &#;By nature, we also provide aftersales support and services to our clients, offering maintenance, repairs and additional upgrades.&#;
Brands have market shares and reputations to protect. When sourcing suppliers such as OEMs they go to great lengths to ensure the companies they contract pay the highest attention to product design, safety and cost.
Contracts negotiated between OEMs and their suppliers will focus largely on invoices and payment terms. To give you greater flexibility in paying your suppliers, with the American Express® Business Gold Card you can have up to 54 days to settle your balance¹.
OEMs are contracted to supply products that are built to tight specifications. The contracting company will insist on stringent quality controls because it will be on the hook for legal costs or reputational harm should a deficiency in a product cause injury or damage.
Quality assurance processes take time to put in place and that can pose difficulties for makers of fast-changing products, such as smartphones or laptops, which may be updated every six months. In this case, the OEM&#;s reputation for reliability will be a deciding factor.
&#;When the product lifecycle is short, you may find that by the time an issue has been found, the company would already have moved on to the next model,&#; says Dani. &#;In the aerospace industry, however, quality assurance is better because it needs to be monitored and traced within an aeroplane that lasts for 50 years.&#;
Should quality issues be discovered in a finished product, or batch of products, the offending part must be identified so that the fault can be remediated. VARs and OEMs alike will keep close track of where each component was made so that faulty parts can be traced back to the source of production.
Businesses that outsource to OEMs should first identify their in-house production limitations and then look for suitable manufacturers to plug any gaps. Online B2B marketplaces can provide a means of connecting manufacturers and suppliers.
Industry organisations, such as the Society of Motor Manufacturers and Traders (SMMT) in the UK automotive sector, will also play a crucial role here. They maintain a registry of industry participants, including manufacturers and suppliers.
&#;Finding the right OEM suppliers is crucial for our business,&#; says Humble. &#;We carefully evaluate potential suppliers based on their quality, reliability, and ability to meet our unique customisation needs. We maintain strong partnerships with suppliers who can deliver the high-quality components required for our projects.&#;
Sustainability in manufacturing is now crucial, leading to increased public and investor examination of OEMs' operations. As a result, contracting brands and VARs typically request a sustainability report or evaluation from a sustainability auditor to determine how effectively an OEM manages its environmental impacts.
OEMs use their skills, tools, and spaces to manufacture high-quality, custom products at a premium cost.
Buyers may alternatively source parts from aftersale suppliers, who make almost identical parts more cheaply, only without the licence's warranty coverage and other guarantees associated with parts made by OEMs. Buyers can lower their costs by using trusted aftersales providers if they are prepared to bear the costs of any faults in the products.
1. The maximum payment period on purchases is 54 calendar days and is obtained only if you spend on the first day of the new statement period and repay the balance in full on the due date. If you'd prefer a Card with no annual fee, rewards or other features, an alternative option is available &#; the Business Basic Card.
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