Many people get confused when they hear the terms ODM and OEM. While both terms are related to the manufacturing industry, they are different from each other.
ODM stands for Original Design Manufacturing, and OEM refers to Original Equipment Manufacturing.
What is OEM?
Original Equipment Manufacturer or OEM, are companies that manufacture a product based on the buyer’s specifications. All OEM product design, functions, colors and materials are customized according to the buyer requirements.
OEM manufacturers never design any product on their own. OEM manufacturers are only responsible for building the product; once the OEM product is finished, the buyer can then sell the product with their own private label.
In most cases, these companies are private label manufacturers who could print your logo on the product for you in the products they manufactured.
It’s very common to use OEM manufacturers in industries such as cosmetics, electronics, dietary supplements, automobile industry and many more.
However, you need to choose a reliable OEM manufacturer because you are providing confidential product specifics and blueprints to another company.
Benefits of OEM Manufacturers
- They have the expertise to build the product
- They can mass produce the product on a regular basis
- They can build the product more inexpensively
- Good customer service
- Warranty: When you work with an OEM company, you should expect a manufacturer warranty.
- Samples: Most OEM firms offer a sample, so you can see the quality of the product.
What is ODM?
Original Design Manufacturer or ODM are companies that design and manufacture products for their customers.
ODM makes it possible for a company to get a product to market without having to completely design it. In this case, the company that created the specification typically retains ownership of the design.
With ODM, there is no need to design the products. In addition, ODM would only charge a low price for the products.
ODM vs. OEM
To understand the difference between ODM and OEM, let’s use an example.
Let’s say you are a company with an idea for a product, but you need help to develop that product. You have all the specifications and the blueprint to create your product, so you bring that idea to an OEM to manufacture the product. Finally, all you have to do is brand it, distribute and sell the product to the public.
Now if your company doesn’t have the specifications of the product you want, you go to an ODM that can step in and take control of product research and development, design, testing and manufacturing the product.
The advantage of an ODM is that it allows companies with a product idea to hire a product provider that already knows how to build the product you want. They have experienced product developers, and are also capable of designing your idea, something an OEM doesn’t do.
The downside when using an ODM company is once you sign in, you may not have much of a say in the product design and specifications. Besides, you may not maintain the intellectual property of the product, and in most cases, you will have to work out a deal that works for both parties.
Summary
ODM stands for Original Design Manufacturing while OEM refers to Original Equipment Manufacturing.
An OEM company is responsible for manufacturing a product according to your own specifications and blueprint, and you are responsible for the distribution and selling.
With an ODM company, which is responsible for designing and building a product, and in some cases they may maintain intellectual property of the product design. You are only responsible for branding and selling the product.
In fact, ODM companies can only manufacture certain types of products. Thus in certain cases, it is essential to choose an OEM manufacturer. Last but not least, all ODM firms require bulk orders for customization.
