Do you want to launch your product but don’t know how to manufacture it or where you can start? Well, you’re not alone. Many businesses face the same problem. OEM and ODM actually provide you with a solution in manufacturing.
Before you decide between OEM vs ODM, you must know their differences and how they can impact your business growth. This is what I have explained in today’s simple guide.
What is a Product Company?
Product company is a business that manufactures and sells physical products to customers. These companies create things that you can use every day such as phones, clothes, safety products or toys.
You can buy the products directly from their stores or online. These organizations are responsible for deciding how they manufacture products. For example: in-house, outsource production or collaborate with OEM/ODM partners.
What is Contract Manufacturing?
When a company hires another business to produce its products instead of handling production internally, it’s known as contract manufacturing. Basically, the hiring company will provide designs and specifications related to items.
While, the manufacturer will handle production and assembly. Sometimes, they also manage packaging of products. OEMs and ODMs also serve as contract manufacturers in the market.
What is an Original Equipment Manufacturer?
If a company manufactures products or parts for another business according to their requirements, it’s called OEM manufacturing. These other companies are called value added resellers. You will not see the OEMs name on the items box, but you still use what they made.
For example, if you purchase a car, the seats, tires or radio inside your car may be made by OEM service. However, the car company combines all these parts together and sells it to you as one product.
How OEM Works?
The OEM never sells their products under its own name. It gives these goods to another company. Then, that company relabels and sells products as their own brand. This setup allows you to focus on your brand designing and marketing. While, the OEM handles the hard work of producing and the delivery of good quality products.
What is ODM?
An original design manufacturer or ODM manufacturing is a service that designs and makes a product for another company based on their detailed requirements. It is as the one who plans, creates and builds the whole product. You can add your brand name to the product and sell it to your customers.
How Does ODM Work?
With the ODM model, you will get ready made products. After you purchase these items, you can add small changes such as brand name or colors. After that you can sell it as your own brand. In this way, you can launch products faster. But, you are not allowed to fully customize the products. Hence, ODM may sell the same goods to other companies too.
ODM vs OEM Examples
ODM Examples
You will find ODM services in many industries. Most businesses trust this process when they want ready-made products with their own branding. Examples includes:
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- Electronics (smartphones, tablets and smartwatches)
- Home Appliances (microwaves and refrigerators)
- Cosmetics & Personal Care (skincare products, makeup or haircare items)
- Toys and Gadgets
OEM Examples
You can see OEM examples all around you. In the auto industry, car makers such as Toyota or Ford use OEM parts. For instance: engines or brake systems made by their original suppliers.
Dell or HP electronics companies use OEM components. These include: processors from Intel. Also in appliances, brands trust OEM suppliers for motors, compressors and other main parts.
OEM versus ODM Comparison
In the supply chain and production industry, OEM and ODM both play a major role. But, each has its own way to work and follow their own rules. Following is the contrast between OEM and ODM.
Product Ideation
With OEM service, you have to provide product ideas and designs to the manufacturing company. After that, the OEM will only customize it for you.
In ODM, the company already has the product idea and design. You can use items with your brand name for selling.
Product IP Rights and Control
In OEM, you completely own the intellectual property rights. Because, the idea and design of items are created by you. This gives you more control over how the product is made and sold.
In contrast, the ODM company owns the design rights because they made the idea. You can still sell the product under your brand. However, you will hold less control over the model and changes.
Manufacturing Process
If we talk about the OEM method, you act like the planner and the function of the company is only the builder. They have to follow your steps to make the product.
The ODM company handles everything from start to finish. Both the planner and builder will be the ODM firm while you can just put your name on the final product.
Branding/Customization
With an OEM model, you have full control over branding and customization of products. The reason is that the product will be built exactly according to your specifications. You decide the features, colors and logo placement.
The product is mostly pre-designed in ODM, so you can only add your brand name. Further, you are allowed to make minor changes, but major customization is limited.
Research and Development / R&D Responsibility
The OEM factory focuses on producing what you designed. You will handle overall research and development related to products.
In ODM, the company is responsible for the research and development of the product for you. The main purpose is to save your time, so you can focus on selling rather than designing.
Product Testing
You will decide how the product should be tested and the OEM manufacturer follows your guidelines to make sure it works perfectly.
The ODM company will handle the testing process on their own before giving you the finished product. As a result, it’s ready for the market with minimal effort from you.
Customer Involvement
When you avail OEM services, you are highly involved in the process of goods designing and manufacturing. You will make major decisions at every step.
Your involvement is lower with ODM as compared to original equipment manufacturers. The company will be more involved to design and develop most of the product.
Scalability and Versatility
OEMs will take more time to produce items because they are custom-made to your design. But, ODMs goods are mostly ready, so you can grow your brand and adapt faster.
Product Uniqueness
Original equipment manufacturers provide you unique products based on your brand requirements. The control of every feature, color & style will be under you, so no one else has the same product.
In the original design manufacturer, the company provides ready-made items. This means your product is less unique and shared with other brands as well.
Risk Responsibility
Generally, you are the risk-taker when you work with an OEM company because you handle most product- related tasks.
On the other hand, an ODM company takes the responsibility of maximum risk since they create and develop the product.
Time To Market or Manufacturing Timeline
OEMs usually take longer to launch the product because they can’t control the whole process. But, ODM products mostly do not offer customization, so you can introduce your brand to the market in less time.
Cost
OEM products usually cost more in the starting phase of production. But, you may save money over time due to customization and better quality. You might think, why are OEM parts so expensive? It’s because you get high components directly from the manufacturer and you also pay for brand assurance, R&D costs and warranty coverage.
ODM products are affordable to start because the design already exists. It can lead to higher long-term prices due to potential lack of uniqueness.
OEM Benefits
Below are some major advantages of an OEM company.
- Affordable service
- Flexibility in design
- Improved quality control
- customer satisfaction
- Capacity to grow
- Time saving
- Minimum Chance of Risk
- High rate of profit
Advantages of ODM
When you partner with original design manufacturers, they will offer you many benefits for your business.
- Lower initial investment
- Minimum design efforts required
- Reduced risk in Product Development
- Diverse product variety
- Quality assurance
- Pre-designed products
- Accelerated launch
ODM and OEM Manufacturing Companies in China
OEM China Manufacturers
- JACKWIN (Traffic (cones & signs etc) and road safety products)
- Clover Industrial Co., Ltd (mobile phones, tablet and laptops)
- Fine Tech Mold and Manufactory Ltd (CNC machined parts, 3D printed components and plastic molds)
- Xinhui Brothers Leathergoods (Bags and cases)
- Fujian Diamart Trading Co.,Ltd (ceramic mug, baseball caps and vacuum flasks)
- TenRal (CNC machining and metal stamping components)
- Harber MIM (Copper alloy sintered and precision stamping parts)
ODM China Manufacturers
- JACKWIN (road marking equipment and materials)
- Wingtech (automotive electronics, laptop and mobile phones etc)
- Huaqin (Commercial devices, automotive and electronics products)
- Inventec ( computers, cloud devices and servers)
OEM and ODM Services By Jackwin
Our company is Jackwin and it is located in China. We are a trusted supplier and manufacturer in the road safety and traffic products industry with over 18 years of experience. Our supply chain is functional in more than 70 countries around the world.
If you want to produce your own branded products, you can contact Jackwin experts. We provide both OEM and ODM services. Our team offers you high quality products at affordable prices with design support and large-scale manufacturing.
When To Use OEM and ODM in Manufacturing?
OEM or ODM? You should make decisions based on your business needs as well as goals.
Original equipment manufacturer is ideal when you want the following features.
- You need unique product design specifically personalized to your brand.
- You can choose an OEM when you need full control over quality, specifications and IP.
- OEM is best if you want a unique product and long-term brand standout quality in the market.
You can select ODM service if your business has the following requirements.
- If you want to launch products quickly without spending your time on design, you must choose ODM.
- ODM is ideal for lower initial investment and faster product introduction speed.
- Original design manufacturers can be better when you are comfortable selling products that are mostly pre-designed with only minor changes.
Conclusion
Finally, you are able to differentiate OEM and ODM. You can see OEM gives you full control but ODM allows faster launches. We recommend that you compare both approaches and carefully select the one that fits your business goals.
If you are still confused, you can contact us. Our team will guide you to the right production option for your project needs.
FAQs
Is OEM Parts Online Legit?
Well, it is considered moderately legit because some customers actually receive the correct parts they order. However, many buyers also say that they face issues such as late deliveries, poor communication or difficulty in getting refunds. This means the site is not a total scam.
Is Apple OEM or ODM?
Apple is mainly an OEM (Original Equipment Manufacturer). Because it designs its own products like iPhones, iPads and MacBooks under its brand. But, Apple also relies on ODM services. It partners with ODMs like Foxconn, Pegatron and Wistron to manufacture the devices.
Is OEM B2B or B2C?
Mostly, OEM is B2B (business-to-business). This means, they usually sell their parts or products to other companies, not straight to you. The other company then sells the final product to customers.
What Industries Commonly Use ODMs?
You will find ODMs services industries like electronics, clothing, furniture, toys and household goods. These companies use ODMs because they save time, reduce costs and make it easier for brands to launch new products in the market.
What is the Biggest OEM Company?
Most of the largest OEM companies in the world work in the technology and automobile field. Some big names such as Foxconn, which manufacture products for Apple. Furthermore, Bosch makes parts for cars.
What Are the Main ODM Challenges?
The major drawback of ODM is that you cannot fully customize the products. The factory holds the design rights. As a result, similar products may appear in the market. On top of that, issues like supply delays & higher costs can badly impact business growth.
