What is the difference between OEM & ODM? - Cosmetics ...

The terms ODM and OEM are well-known and often heard: OEM is short for original equipment manufacturing, and ODM for original design ... WhatisthedifferencebetweenOEM&ODM? 19-Dec-2019 Research&Development OEMandODMarefrequentlylumpedintogetherwhenitcomestooutsourcedmanufacture;butwhatexactlydoeseachoneentail?TheBCMPA’sRodneySteelclearsupanyconfusion,andoutlineshowtofindtherightpartnersforpersonalcarecreation CosmeticsBusinessasks:WhatisthedifferencebetweenOEM&ODMandexamineswhatexactlyeachoneentails Overtotheexpert… ThetermsODMandOEMarewell-knownandoftenheard:OEMisshortfororiginalequipmentmanufacturing,andODMfororiginaldesignmanufacturing. However,assometimeshappenswithfrequently-usedexpressions,thedifferencesbetweenthemcanbecomeslightlyblurred.Indeed,somecommentatorsdon’tactuallydistinguishbetweenthem. ArecentreportfromAdroitMarketResearch,forexample,statedthattheglobalcosmeticsOEM/ODMmarketisexpectedtoreachUS$77.22bnby2025,growingataCAGRof5.3%. OEMproductstendtorefertothosedesignedandmanufacturedtoaparticularcompany’sownspecifications.Theseproductscanbelicensedtoanothercompanytobemanufactured;ortheycouldbemanufacturedbytheOEMcompany,whothensellsthemtoanothercompanythatisresponsiblefortheirdistribution. ThisseconddescriptioniswhereconfusioncanariseasitgetsquiteclosetohowsomepeopletermODM,wherebyanODMcompanyisresponsibleforproducingaproductasperanothercompany’sspecifications. Meanwhile,anotherdescriptionofODMlikensitmoretoprivatelabelling,meaningthatacompanyselectsanalreadyexistingproduct,makesafewchangesandsellsitunderitsownbrandname. Thisiseffectivelyashortcuttomarketthatsavesonmajorinvestmentinresearchanddevelopmentincreatinganewproductfromscratch. Nevertheless,forthepersonalcareandcosmeticssector,anydifferencesininterpretationofOEMandODMshouldnotcloudoneofthekeyunderlyingmessages. Namely,thatinahighlycompetitiveindustry,acollaborativeapproachisveryoftenthebestwaytogetaproductquicklytomarket,helpingtokeepbrandsrelevant,andprotect,maintainandgrowmarketshare. Therefore,whetheracompanyhasanewproductideathatitwouldliketodevelopfurtheroraprovenproductwithwhichitneedshelpinmanufacturing,orifabusinesssimplywantstosellpersonalcareproductsunderitsownname,thereareplentyofspecialistoperationswhowillbeabletohelp. Forpersonalcareapplications,outsourcingpartnershavetheexperienceandproductioncapabilitiesnecessarytoturnaconceptintoafinishedproduct,andcanprovidespecificservicesacrossthedevelopmentandmanufacturingprocess–everythingfromnewproductformulationtosourcing,procurement,packingandlogistics. Thesupportprovidedcanalsobemuchmorethansimplythephysicalproductionofproducts,extendingtowideradviceandguidance,forexamplehelpingtoensurethenecessaryproductcompliance,labellingandlegislationrequirementsaremet. Outsourcingcompaniesalsohavetheabilitytohandletheshorterproductionrunsoftenassociatedwithinitiallaunchvolumes,nicheortemporaryproductlinesandpromotionalpacks.        Inahighlycompetitiveindustry,acollaborativeapproachisveryoftenthebestwaytogetaproductquicklytomarket    Anoutsourcingpartnershiplowersthecostofproductionbyprovidingcompanieswithcomprehensivefacilitiesthatcanmeettheserequirementswithouttheneedforadditionalinternalinvestment. Italsosignificantlyreducesthecomplexityofoperationsforacompany,enablingconsiderationssuchasextrastaffrequirements,spaceconstraintsandmanagingproductionschedulestoaccommodateincreasedworkloadsornewproductionrequirementstobeoffloadedtoanexternalexpert. Brandownersarethenabletoconcentratetheirenergiesandresourcesontheircorebusiness. Perhapsthemainchallengeofthequestion‘whatisODMandOEM?’,forpersonalcareapplications,isthattheyaretermsusuallymorecloselyassociatedwithengineeringproducts,notablyformarketssuchasautomotiveandcomputersoftware. Therefore,whenseekingasolutiontotheirdevelopmentormanufacturingrequirements,beautycompanieswouldbebettertoavoidsearchingunderthesespecificterms,andinsteadfocusonthelevelofexpertiseandsupporttheyareseekingandthenlookforsupplierswhocanmatchtheserequirements. Thisshouldthendeliverthepartnershipapproachthatsupportsthedeliveryofmanyoftoday’spersonalcareproducts.AgoodstartingpointforanyinitialenquiryisthesearchfacilityandaccreditedmembershipontheBCMPAwebsite:bcmpa.org.uk. 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