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You’ve probably heard the term OEM before, but do you know exactly what it means and why it matters in industries like automotive and technology?
OEM stands for Original Equipment Manufacturer a company that produces parts or products to be used in another company’s final product.
Why OEM Matters
In the automotive world, quality and safety start with the right parts. OEM components guarantee your vehicle’s performance and durability, as every part is manufactured according to the original producer’s standards.
OEM steel suppliers don’t just produce parts they ensure the steel’s quality and durability, providing reliability and consistency across the automotive supply chain.
Let’s take a closer look at the OEM world.
An OEM is a company that manufactures parts or products to be incorporated into another company’s final product. Think of spark plugs in a car or processors in a computer these are specially produced by OEM suppliers, ensuring perfect compatibility and quality standards.
The economic logic is simple: companies focus on their core strengths like product design, marketing, and customer relations, while leaving production to trusted OEM partners.
This approach reduces costs and ensures reliable production without the need to build in house manufacturing facilities.
The term OEM has evolved over time. Originally, it referred only to part manufacturers. Today, it can also apply to companies producing entire systems, like Dell or Volkswagen, who manage both assembly and overall production.
In automotive, OEM parts refer to the original components used in initial vehicle assembly. For example, a Ford vehicle might use Autolite spark plugs, Exide batteries, or Bosch fuel injectors as OEM parts. Third-party replacement parts are known as aftermarket products.
In technology, the OEM concept works similarly. If Microsoft provides an operating system for Dell or HP computers, Microsoft acts as the OEM, while Dell and HP integrate the software into their final products.
The main difference between OEM and ODM (Original Design Manufacturer) lies in design and intellectual property control:
• OEM: Product design and specifications are determined by the buyer. The OEM only manufactures, and all IP rights belong to the buyer. Ideal for unique products with high control.
• ODM: The manufacturer handles both design and production. Buyers often sell pre-designed products under their brand, reducing R&D costs but limiting customization.
In short:
• OEM is perfect for high control and unique products.
• ODM is suitable for fast, cost-effective, and standard products.
The automotive industry is a massive sector, generating over $6 trillion in revenue as of 2024. At least 15 global manufacturers are active in the automotive space.
The primary OEMs companies that design, integrate, and brand vehicles set market demand. Brands like Volkswagen and Toyota fall into this category.
Modern OEMs focus on vehicle engineering, embedded software systems, and branding. The majority of production, however, is carried out through extensive global supply networks. This structure makes control over the brand and intellectual property (IP) more valuable than owning production capacity itself.
OEMs do not manufacture every component of a vehicle in-house. Instead, they rely on a comprehensive supply chain divided into three main tiers:
Tier 1 Suppliers
• Role: Deliver complete vehicle systems or major components to the OEM.
• Examples: Powertrains, braking systems, infotainment units, chassis systems.
• Interaction: Work directly with OEMs and integrate components from Tier 2 suppliers.
• Representative Companies: Bosch, Magna, ZF
Tier 2 Suppliers
• Role: Provide the components required to build Tier 1 systems.
• Content: Subassemblies, electronics, software, and metal parts (e.g., steel components for chassis or engine blocks).
• Interaction: Do not work directly with OEMs; their main clients are Tier 1 suppliers.
• Focus: Materials science, component innovation, and quality improvement
Tier 3 Suppliers
• Role: Supply raw materials and basic components.
• Content: Steel ore, basic plastics, chemicals
• Interaction: Primarily work with Tier 2 suppliers
This tiered structure allows OEM steel suppliers and other supply chain players to ensure high quality and reliability throughout automotive production.
The automotive industry demands high and specific quality standards from its suppliers. This is where IATF 16949 comes in. Built on the ISO 9001 framework, this standard provides a mandatory Quality Management System (QMS) for global automotive production.
OEMs typically require suppliers to hold this certification. Why? Because IATF 16949 ensures continuous improvement, defect prevention, and waste reduction throughout the supply chain.
This certification proves that OEM steel suppliers and other partners meet global quality standards. It also acts as a risk management tool, helping OEMs maintain reliability while sourcing parts and components worldwide.
Understanding the difference between OEM and aftermarket parts is critical in automotive manufacturing:
• OEM Parts: Produced using original materials and processes, ensuring maximum performance and reliability. They also come with strong manufacturer-backed warranties. For example, General Motors offers a 24-month or unlimited mileage warranty on some OEM parts.
• Aftermarket Parts: Often cheaper, but quality and compatibility can vary. Certifications like CAPA attempt to guarantee quality, but they generally cannot match the reliability or warranty provided by OEM equivalents.
Steel is one of the most critical materials in automotive manufacturing. On average, it accounts for around 60% of a vehicle's weight approximately 800–900 kg.
• Body structure: 40% steel
• Powertrain: 23% steel
• Suspension: 12% steel
Different steel types are used for different applications:
• Mild Steel: For easily formed body parts
• High-Strength Steel (HSS): For critical components requiring energy absorption and safety
Suppliers providing critical materials like steel must adhere to strict standards to ensure automotive safety and structural integrity:
• Certificate of Conformance (CoC): The physical and chemical properties of supplied steel must be verified by independent laboratories, guaranteeing reliable parts for OEMs.
• Measurement Equipment Calibration: All testing and measurement devices must be calibrated to ensure compliance with OEM requirements.
These standards ensure that OEM steel suppliers like Hasçelik not only deliver high-quality production but also guarantee scientific reliability of materials.
At Hasçelik, we provide high-quality steel solutions for automotive and advanced technology sectors through Hasprime Vacuum and Finished Steel. This special steel series offers superior durability and consistent performance for critical vehicle components and precision assembly applications.
• Vacuum Production Technology: Maximizes steel purity for a pore-free, homogeneous structure.
• Finished Steel Features: Improves manufacturability while ensuring maximum mechanical performance and reliability in the final product.
These features make it easier for OEM manufacturers to meet quality and traceability standards.
Additionally, Hasprime supports sustainable production and low carbon footprint goals. Steel produced via Electric Arc Furnace (EAF) and continuous casting uses 100% recycled material, providing an eco-friendly solution. OEMs can achieve both performance and sustainability simultaneously.
Automotive OEMs are increasingly focused on reducing the carbon intensity of their supply chains. One effective approach is using Electric Arc Furnace (EAF) steel instead of traditional high-carbon steel (BF-BOF).
Advantages of EAF Steel:
• Enables closed-loop recycling
• Meets quality requirements for critical components and exterior body panels
• Helps OEMs reduce Scope 3 emissions
These developments make it essential for suppliers to meet not only IATF 16949 quality and Certificate of Conformance (CoC) traceability standards but also environmental requirements. Suppliers unable to adopt sustainable production may struggle to meet future OEM specifications.
The COVID-19 pandemic and subsequent semiconductor shortage highlighted the fragility of automotive supply chains. Between 2020–2022, approximately 12% of global automotive production was lost.
Geographic concentration of critical materials also increases risk: 80% of semiconductor production occurs in China, Taiwan, and South Korea. Geopolitical tensions can restrict access to these components.
The transition to electric vehicles (EVs) introduces new supply dependencies, such as rare metals for batteries. Traditional Just-In-Time approaches failed during these crises, as they did not provide buffer stock. Studies show most OEMs reacted rather than proactively mitigating disruptions.
The automotive industry now prioritizes supply chain resilience alongside cost efficiency:
• Advanced Risk Modeling: AI and data analytics simulate potential disruption scenarios
• Risk Premium: Flexible cost calculations guide sourcing from high-risk regions
• Supply Chain Visibility and Redundancy: All tier suppliers are mapped, and backup capacity is established for critical materials
• Adaptive Inventory Strategies: Buffer inventory replaces zero-stock approaches to ensure continuity during disruptions
Conclusion: Maximum efficiency no longer equals minimal cost; it can mean maximum vulnerability. Future competitive advantage comes from guaranteeing stable and reliable production, not just low-cost parts.
• IoT & AI: Improve production efficiency and reduce costs
• Real-Time Data & Automation: Ensure consistent production capacity
• Supply Chain Visibility: AI and blockchain track raw materials, enabling rapid response to disruptions and better inventory management
Two critical trends shaping the automotive industry's future:
• Electrification: Reduces reliance on fossil fuels and introduces new component and supplier requirements
• Circularity: Prevents waste and emphasizes recycling. Steel suppliers restructure production using scrap and EAF steel for a circular process
These trends make meeting both quality and sustainability standards essential for OEM steel suppliers.
Historically, the OEM concept referred primarily to the supplier. Today, especially in complex assembly industries like automotive, OEMs are global manufacturers responsible for design, branding, and integration of the final product.
OEMs determine market demand and manage a complex pyramid of Tier 1, Tier 2, and Tier 3 suppliers. Industry analysis highlights three core imperatives:
1. Absolute Quality and Compliance
International quality standards such as IATF 16949 are prerequisites for OEM contracts. These standards:
• Ensure defect prevention and continuous improvement processes
• Require traceability for critical materials like steel
• Demand Certificates of Conformance (CoC) verified through physical and chemical analysis
These requirements guarantee reliable and consistent production for OEM steel suppliers and other supply chain participants.
2. From Cost to Flexibility
Semiconductor and raw material crises have exposed the limitations of traditional lean supply chain optimization. OEMs now:
• Conduct risk modeling and scenario analysis
• Map suppliers and establish backup capacity for critical materials
• Manage geopolitical tensions and rare metal risks from EV transitions
These strategies prioritize operational resilience and flexibility over mere cost reduction.
3. Digital and Sustainable Transformation
Industry 4.0 technologies (IoT, AI) and digital analytics make OEM production processes and supply chains more transparent and controllable.
Simultaneously, electrification and circular production require low-carbon EAF steel production. This is no longer just an environmental goal it is an integral part of new material specifications for OEMs.
Today, competitive advantage in OEM supply chains is achieved not by minimizing costs but by integrating:
• Operational stability
• Quality and traceability
• Sustainability
Successful OEMs and suppliers are those who can navigate this complex and variable environment. Trusted OEM steel suppliers like Hasçelik combine quality and sustainability, providing automotive manufacturers with a strategic edge.
Automotive OEMs are seeking both quality and sustainability in their supply chains. At Hasçelik, we fully meet these expectations.
Circular Production Chain
Using next-generation Electric Arc Furnace (EAF) technology, we produce steel with 100% recycled scrap metal. Every production step recycles materials, making our steel fully recyclable. This directly supports OEMs in achieving their environmental goals.
Energy Efficiency and Advanced Technology
With Consteel® technology and a scrap preheating system, we integrate waste heat recovery into production. The result? Up to 80% lower CO₂ emissions compared to traditional blast furnace steel. This protects the environment while helping OEMs meet their sustainability targets.
Continuous Improvement and Quality
Hasçelik produces steel at the highest quality using continuous casting technology and state-of-the-art electric furnaces. This guarantees a quality standard that automotive OEMs can confidently use for critical vehicle components.
CBAM Compliance and Future-Readiness
Our advanced technologies ensure that we are fully prepared for CBAM regulations. Annual sustainability reports demonstrate our transparency and environmental responsibility.
Strategic Partnership for OEMs
At Hasçelik, we don’t just produce steel for OEMs we create strategic value. Balancing quality, traceability, and environmental sustainability, we are one of the most reliable steel suppliers for automotive OEMs.
Partnering with Hasçelik ensures that OEMs can meet current and future production standards, achieve their carbon targets, and maintain a reliable supply chain.
