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OEM Procurement - Meaning and Importance

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by Beroe Inc,
12 October 2022

What is OEM Procurement?

To better understand what OEM means in procurement, it is essential to know what an OEM is. In simple terms, it means Original Equipment Manufacturer. Hence, the OEM definition can be interpreted as a company that offers goods and components that can be further used for production or sale by other manufacturers. 

Many leading companies opt for OEM procurement as it offers them cost savings, faster production, access to skilled labor, and many more. Moreover, the parent company frees up its crucial resources that can then focus on optimizing core operations. For instance, Apple has outsourced iPhone manufacturing to Foxconn, allowing Apple to rather focus on its branding and software. 

OEM meaning in software is slightly different than physical goods as, in this case, there is no physical movement of goods and making any last-minute changes is also possible. This is why many tech companies outsource their software OEM to countries like India and the Philippines.

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