An original equipment manufacturer, or OEM, makes a product or component that another company incorporates into or sells under its own offering. Usage varies by industry, so the contract should state who owns the design and specification.
The operating decision
Clarify whether the supplier builds to the buyer’s design, adapts an existing platform or controls engineering decisions. That distinction affects tooling, warranties, change rights and intellectual property.
Evidence to retain
Record the approved drawings, bill of materials, production site, change-control process, testing, ownership and permitted use of the buyer’s marks.
| Area | What to record |
|---|---|
| Decision | Clarify whether the supplier builds to the buyer’s design, adapts an existing platform or controls engineering decisions. That distinction affects tooling, warranties, change rights and intellectual property. |
| Evidence | Record the approved drawings, bill of materials, production site, change-control process, testing, ownership and permitted use of the buyer’s marks. |
| Watch point | OEM is not proof that a supplier owns a factory. Verify the legal entity and production site instead of relying on the label. |
A common sourcing mistake
OEM is not proof that a supplier owns a factory. Verify the legal entity and production site instead of relying on the label.
Related definitions: strategic sourcing, supplier prequalification, landed cost.
