Photo by Louis Reed on Unsplash
Tier 1
These suppliers work directly with Original Equipment Manufacturers (OEMs), Joint Design Manufacturers (JDMs), or Contract Manufacturers (CMs). They produce entire systems or modules that fit into a larger product.
Example: Car seat manufacturers for the automotive industry, or camera manufacturers for smartphones.
Tier 2
Suppliers that provide components to Tier 1 companies.
Example: A supplier of frame tubes to a Tier 1 seat manufacturer, or a lens supplier for Tier 1 camera manufacturers.
Tier 3
These suppliers provide raw materials or parts to Tier 2 companies.
Example: Cold-rolled steel suppliers for Tier 2 frames or plastic manufacturers for lens suppliers.
ODMs (Original Design Manufacturer)
ODMs design and manufacture products, which are sold under another brand’s name.
Example: Honeywell designing and making Amazon’s smart thermostat.
JDMs (Joint Design Manufacturer)
A partnership model where companies collaborate with manufacturers to co-develop products.
Example: TSMC working with Nvidia.
OEM (Original Equipment Manufacturer)
OEMs may design and/or manufacture certain components in-house.
Example: Honda producing its own engines and transmissions.
CM (Contract Manufacturer)
These companies are contracted to handle the complete manufacturing of a product, often based on designs provided by other companies, though some may offer design services too.
Example: Foxconn manufacturing for Apple.
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