When it comes to outsourcing manufacturing, there are two main types of manufacturers: Original Design Manufacturers (ODMs) and Original Equipment Manufacturers (OEMs). Both have their own benefits, so it can be difficult to decide which one is right for your business. In this blog post, we will discuss everything you need to know about ODM and OEM, so that you can make an informed decision about which type of manufacturer is best for your business.
What Is ODM and Its Benefits?
With a more and more clear social division in recent years, ODM has grown considerably in popularity as most companies want to keep their focus on what they’re best at while outsourcing other parts to other parties who’re more efficient in them. ODM is a type of manufacturer who provides pre-production services, such as product concept creation, design, and engineering, etc, while the buyer uses its label to produce the completed items. In this scenario, the buyer can focus only on marketing and sales operations and hires the ODM to handle all other parts of the supply chain, from design and engineering to manufacturing.
Working with an ODM has many benefits. Some of them are as follows:
– Save the efforts and money used for design, R&D and manufacturing tools or equipment, which can be taken by the ODM.
– Facilitate the supply chain and reduce the time needed from the product concept to market.
– Get professional design and custom products by taking advantage of ODM’s expertise and enable you to improve other core parts of your business.
What Is OEM and Its Benefits?
OEM stands for “original equipment manufacturer” which is a kind of production outsourcing arrangement in which a buyer (usually the brand owner) offers the design, product specs, and any other production information to the maker who will finish the manufacturing work for the buyer. Compared to ODM, OEM as a third party only takes the production according to the buyer’s design and manufacturing process.
Same as ODM, there are lots of benefits when working with an OEM:
– Get a large number of products completed quickly. OEMs usually come with advanced manufacturing process and mass production equipment. So working with an OEM can facilitate your delivery and get products to your customers’ hands as soon as possible. Actually large orders are often welcomed to OEMs and can also get a discount. While, you can just wait for your finished products delivered to you and arrange for further sales.
– Save your time and money and enable you to focus on your key parts like improving your R&D, and increase your patents and intellectual property. OEMs can take the most time-consuming manufacturing and free you up for more beneficial business.
Which One Is Best for You
As we know now, both OEM and ODM have their features and benefits, but which one is best for you depends on a few factors:
Your Products and Business Model
The first factor to consider is your products and business model. What’s your target products? What is your company’s area of expertise?
If your products have been well designed and require only a high level of specialized manufacturing which may need high invest in equipment or tools, then an appropriate OEM may be a great way to go and they’re more professional and efficient in these deals. On the other hand, if you are great at generating product ideas and need someone to help ripen them to become custom products, then ODM may be the better way to go and they can help you bring the idea to life.
Your Product Quantity
Another factor to consider is the product quantity that you need.
If you have a large needs for products,, then you may consider OEM manufacturing which usually has a large minimum ordering quantity (MOQ). On the other hand, if you only want to try some customized products before mass production, then you can consider ODM manufacturing which is usually budget-friendly and requires low MOQ.
So here you know what is ODM and OEM and their benefits. But for the question of which is best for your business, there is no one right answer. It actually depends on your specific needs. If you need a large batch of products manufactured quickly, then OEM manufacturing may be right way to go. But if you need a more complete service from design to products, then ODM manufacturing may be preferred. Hope this post can help you know better about ODM and OEM, so that you can make the best decision for your needs.