OEM and ODM: What is the difference between OEM and ODM?
OEM and ODM are two important terms widely used in the manufacturing sector. Often you can see people who want to compare the two types to use OEM and ODM.
The two terms are correlated and can sometimes be confused. Some start-ups have few resources to design and manufacture their products. In these scenarios, these companies outsource the production of specific components to contract manufacturers, also known as OEM and ODM manufacturers.
What is OEM?
OEM is original equipment manufacturer. It is generated by the social division of labor and driven by professional interests.
Its basic meaning is: product development and manufacturing in accordance with the original unit (brand unit) entrusted contract, using the original unit’s trademark, and the original unit’s sales and operation and the cooperative operation mode of production .
The first chapter of the first chapter of “The Rich Country” by Adams, the founder of economics, clearly means specialization. Classical economics believes that specialization can promote the increase of marginal revenue and the decrease of marginal cost.
OEM in practice
So as to achieve a reasonable allocation of social resources. If the concept is a bit boring. Let us illustrate with an example: if three persons A, B, and C install the faucet at the same time, from water testing-installation-packaging.
Each person can install 100 faucets per day. There are 300 dragon heads in total. The three people have different specialties.
If you let A test the water, you can try 150 faucets every day. B can install 150 faucets. C can pack 150 faucets. Obviously, a combination of three, each doing one thing, three people can generate 450 faucets every day. This is an advantage of specialization.
This business model has been operating internationally for many years and has been effective. Enterprises in order to increase the allocation of their own resources in terms of innovation capabilities. Reduce the investment in fixed assets as much as possible. The company does not directly carry out production, and completes the production task of the product by letting other companies produce on its behalf.
In this way, you only need to pay for material costs and processing fees, instead of having to bear the burden of equipment depreciation and self-built factories. You can flexibly place orders on demand at any time according to market changes.
This can promote the formation of new operating advantages in the finished product business, cultivate and strengthen the internal expansion power of the enterprise, and provide operating capabilities and management levels, thereby creating conditions and accumulating experience for higher-level capital operations.
In the electronics world, Foxconn is an OEM providing Apple electronics manufacturing services, and Foxconn manufactures all of Apple’s iPhones. In this case, Apple might even outsource manufacturing to Foxconn. In fact, outsourcing to China is a common practice in the West because the labor force of Chinese manufacturing is cheap.
However, it is very good to choose a reliable OEM manufacturer when providing confidential product specifications and blueprints to other companies.
What is ODM?
ODM is the original design manufacturer. He can provide customers with all the services from product development, design and manufacturing to post-maintenance.
Customers only need to propose product functions and performance to ODM service providers, or even provide product ideas, ODM service providers can change the product from idea to idea. Reality. After some manufacturers design products, they will be valued by other companies, requiring the company’s brand name to be used for production, sales, or some small design changes for production. And sell it under its own brand.
The biggest advantage of this is that the latter reduces its own research and development time. ODM that is used to calling the former as the latter
What is OBM?
OBM is the original brand manufacturer. That is, the OEM operation only has a brand, or the manufacturer executes the creation of a product brand, produces and sells products with its own brand. Since the foundry does OBM need a complete marketing network to support, the cost of channel construction is very high, the cost experience is much higher than that of OEM and ODM, and it will conflict with its own OEM, ODM and customers.
Usually, to ensure the interests of major customers, foundries rarely do OBM with a big fanfare. There is a view that the acquisition of current brands and the acquisition of brands through franchising can also be regarded as part of OBM.
In layman’s terms: A fancy B’s product, let B use A’s trademark to produce. For A, this is called OEM; Party A provides its own technology and design, and allows B to process and produce. This is called ODM. For B, he is only responsible for producing and processing other people’s products, and then affixing other trademarks. This is called OBM.
Why are there OEM and ODM?
Some famous brand manufacturers often turn to other manufacturers for help because their factories cannot meet the requirements of mass production, or they need certain parts. The manufacturers who lend a hand are called OEMs.
If it is extended to the IT field, it means those manufacturers that carry out foundry. For example, CPU fans are not produced by Intel or AMD. They usually find professional motor manufacturers like Sanyo Co., Ltd. for fan OEM production.
The biggest difference between OEM and ODM is not only the name. OEM products are tailor-made for brand manufacturers. After production, they can only use the name of the brand, and absolutely cannot be produced under the name of the manufacturer.
The ODM depends on whether the brand company has bought out the copyright of the product. If not, the manufacturer has the right to organize production on its own, as long as there is no corporate design identification.
In industrial society, OEM and ODM are commonplace. Because of the consideration of manufacturing cost, transportation convenience, and saving development time, well-known brand companies are generally willing to find other manufacturers for OEM or ODM.
When looking for other companies for OEM or ODM, well-known brands have to bear a lot of responsibilities.
After all, the product is crowned by its own brand. If the product has a bad face, at least some customers will come to the door to complain, and if the product is bad, it may have to go to court.
Therefore, brand companies must carry out strict quality control during the commissioning period. But after the end of the price, the quality cannot be guaranteed. Therefore, when some merchants tell you that a certain manufacturer is an OEM or ODM product of a certain brand, never believe that its quality is equal to that brand.
The only thing you can believe is that this manufacturer has a certain production capacity.
VIGA have more than 10 year experience in producing and exporting faucets. Please check our catalogue attached.
About payment term, we accept T/T and western union, 30% deposit before production and 70% before shipment.
Normal delivery time is 60 days after we have the deposit. If large quantity, we may need more time.
OEM packing and laser logo is available, we will provide high quality pictures if needed.