direct supplier of a final product manufacturer
Essentially I agree with flieder, but I think the term OEM needs to be clarified.
First, here's an explanation of the phrase tier-one supplier in the automotive industry:
""Tier 1" and "Tier 2" aren't official terms; they're more of a descriptive nature. They're also not exclusively used by the automotive industry, though that's probably where you're most likely to hear these terms used. The concept of "tier" doesn't reflect how big or important a company is; ***it mostly indicates who the end user of that company's product is.***
Basically, if we stick with automotive manufacturing, at the top of the food chain are the original equipment manufacturers (OEMs), who are the name-brand car-makers, like General Motors, Toyota, Ford, Hyundai, Renault, etc.
A Tier 1 supplier would be a company who makes products specifically for one of the OEMs. That would be companies like Delphi or Dana or Johnson Controls who sell directly to an OEM.
Then you just move down the list. A Tier 2 supplier who be somebody selling products to Delphi. A Tier 3 supplier sells products to a Tier 2 (probably to a lot of Tier 2's), etc."
by David Blanchard, IndustryWeek editor-in-chief
Now about the term OEM, in reply to Jack Doughty's comment:
"Original equipment manufacturer, or OEM, refers to containment-based re-branding, where a company uses a component of another company in its product, or sells the product of another company under its own brand. OEM refers to the company that originally manufactured the product."
In this sense, Jack Doughty makes a very important point, the OEM is the one who directly supplies the final manufacturer.
"OEMs are the industry's brand name auto manufacturers, such as General Motors, Ford, Toyota, etc. The OEM definition in the automobile industry constitutes a federally-licensed entity required to warrant and/or guarantee their products, unlike "aftermarket" which is not legally bound to a government-dictated level of liability.
OEMs also apply to component manufacturers, such as Bosch, BBS, NGK, Pagid, Ferodo, etc. Identical products, such as spark plugs, may be supplied though official franchised dealers in appropriately branded packaging (Volkswagen, General Motors, etc). The same product may be supplied through general auto retail outlets (in the UK - Halfords, A1 Motor Stores, etc), or 'trade' motor factors (UK - Euro Car Parts, APD) in the manufacturer's original branded packaging."
So we use the term OEM in two different meanings. Here's more:
"When a company purchases products or components from another company and resells the products or components with the purchasing company's name or logo on them (usually, but not always as part of a product), the company that resells the product is called the OEM. For example, when IBM purchased Tandon floppy drives for IBM's original PC, IBM sold the floppy drive to the end user via sales of IBM's PC, and IBM was called the OEM in relation to the Tandon floppy drive. However, in another common usage, Tandon would be called the OEM.
According to Search Data Center, the former meaning (the reseller is the OEM) is the modern meaning, and the latter meaning (the manufacturer is the OEM) is a holdover from an older usage.."
all of the above on OEMs are from:
Obviously I don't know the rest of your document, but the ambiguity in terminology may also be the key in the explaination why "many companies in automotive industry describe themselves as tier-one supplier".
| Kornelia Robertson|
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