Manufacturing jargon: Who are the players?

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.