OEM vs ODM manufacturing: What's the difference? - Alibaba ...

Unlike an OEM, who relies on a client brief and product design to manufacturer items, an ODM often designs and develops products independently, ... BusinessBlogsForSMEBeginnersOEMvsODMmanufacturing:What'sthedifference?OEMvsODMmanufacturing:What'sthedifference?Alibaba.comSEPTEMBER07,20207 MINREADShareIfyouhaveanideaforanewproductandarelookingforareliablemanufacturertopartnerupwithandbringyourproductstomarket,youmighthavecomeacrossthetermsOEMandODMmanufacturing.Beforeyoucontactamanufacturer,you’llneedtounderstandthekeydifferencesbetweenthesetwouniquebusinessservices.Alternatively,ifyou’rethinkingofofferingmanufacturingservicesonaglobalscale,you’llneedtodecidewhichofthesetwoservicesyoucanoffer. Inthisarticle,we’regoingtoexplainwhatOEMmanufacturingisandwhenyoumightneedanOEMmanufacturer,andwhatODMscanofferthatOEMscan’t.Whetheryou’reaninternationalfactorytryingtopromoteyourservicesonline,oryou’reacompanylookingtoexpandyourproductrangewithhelpfromamanufacturer,let’sstartwiththebasics. WhatisOEMmanufacturing? OEMstandsfor“originalequipmentmanufacturer,”andreferstoamanufacturerthatprovidesgoodsormanpowertobringaproducttomarket.OEMsoftenproducesomethingthatisusedasacomponenttoaproductandistypicallyassociatedwithatypeofservicescalledOEMservices. Ifyouareacompanyhopingtolaunchanewproduct,youmightrequiretheservicesofOEMmanufacturingthroughaB2BportalsitelikeAlibaba.com.Well-establishedcompaniesthatalreadyhaveproductsonthemarketwilloftenhaveaproductdevelopmentteaminplacewithdesigners,testersandmarketingprofessionalswhohaveallspentmonths,ifnotyears,creatinganewlineofproducts.Becausethecompanyhastheoriginalidea,thedesigns,plans,manufacturingprocess,andbrandingreadytogo,theyonlyrequireamanufacturingfacilityandthemanpowertohelpproducetheitemsandmeetproductdemand,ormaterialtofinalizetheproductandhaveitreadytosell.Inthiscase,OEMmanufacturingistherightservicetochoose. Ifyouareamanufactureranddon’thavethecapabilitiestodesign,create,testandbrandproducts,youshouldofferOEMmanufacturingandprovidebasicmanufacturingservicestohelpbusinessesmass-produceproducts. HereisanexampleofhowOEMmanufacturingworks: Aluxurysportswearcompanyhasdesignedanewlineofsneakers.Theyhavethedesigns,branding,marketresearch,andproducttestingfinalized,andtheyneedeachpairofsneakerstohaveamemory-foamsole. ThesportswearcompanyfindsasupplieronAlibaba.com thatoffersOEMserviceandcontactsthemabouttheirservices. TheOEMhaspreviousexperienceworkingwithfashionclientsandcanmass-producetheluxuryrangeoffootwearwiththememory-foamsoleelement. Thesportswearcompanyprovidesthedesigns,manufacturingrequirements,branding,andlogodesigns,andifrequired,packagingrequirementstoo. OnAlibaba.com,whatdoes"OEMserviceoffered"mean? IfyouareacontractmanufacturerthatoffersOEMservices,onAlibaba.com,youcanclaimyourOEMcapacityonyourdigitalstorefront.Also,youcanshowcaseyourprofessionalcertificationsandthird-partyapprovalstoenhanceyourcredibilitytothebuyers. WhatisODMmanufacturing? NowthatweknowwhatOEMmanufacturingis,let’stakealookathowODMisdifferent. AnODM,or“originaldesignmanufacturer,”isacompanythathasthecapabilitiestodesign,develop,manufactureandsellproductsthemselves.WhileOEMisoftenreferredtoasaservice,ODMisreferredtoasaproduct.TheproductsanODMcreatesareoftenrebrandedbyabuyerasprivatelabelproductsandaresoldforaprofit.UnlikeanOEM,whoreliesonaclientbriefandproductdesigntomanufactureritems,anODMoftendesignsanddevelopsproductsindependently,orincollaborationwithaclient.Thisistheidealmanufacturingserviceifyouhaveagreatidea,butareyettodesign,develop,test,orbrandit. Ifyouareamanufacturerandhaveemployeesorteamswhohavetheskills,experience,andcapabilitiestodesignproducts,developthem,andcarryouttesting,youwillbeabletomarketyourselfasanODM. HereisanexampleofhowODMmanufacturingworks: Aclientworksintheeducationindustryandhasfoundagapinthemarket.Withtheirknowledgeofthemarket,theycontactanODMabouttheirideatocreateaschoolbagthatincludescompartmentsthatchilldrinks,food,andsnacks,whilekeepingotherpartscompletelywaterproofandstain-proof. TheODMreceivesinformationaboutthenewschoolbagideaandsetsupameetingwiththeclienttodiscussthedemandforthisproductinmoredetail. Duringthemeeting,theclientexplainswhythereisaneedfortheproductandwhatwouldbeattractivetoyoungstudentsintermsofcolorschemeandstyle. TheODMtakesthismarketinsightanddevelopsaschoolbagthatfeaturescooling,water-proof,andstain-proofpockets.Theirdesignteamworksonthestyle,fabrics,andspecificationsofthefinaldesign. NowtheODMcanselltheproducttotheclient,whichtheycanrebrandiftheywish,ortheycanselldirectlytotheconsumer. OEMversusODM:what’sthedifference? OEMsandODMsofferclientstwocompletelydifferentmanufacturingservices,butbotharehighlyvaluabledependingontheclientandproject. ProsandconsofOEMs Thistypeofbusinessrelationshipcanbeagreatwaytogetaproducttomarketandstartgeneratingrevenue.ByforminganOEMpartnership,youwillbeabletocreateaproductthatisdifficulttoreplicatebyconsumersorcompetitorsduetothecostortimetoproduceit.Youmayalsounlockaccesstonewmarkets,industrysectors,andgeographiclocationsbyhiringtheservicesofanOEM. However,therearesomedisadvantagestoworkingwithOEMs.Providingdesignbriefstoamanufacturercansometimescauseconfusionandrequiremembersofyourteamtotraveltothefactoryandprovidesupportandassistance.Thiscancostyourcompanytimeandmoney.TheOEMmayalsorequirechangestotheproductduringthemanufacturingprocessthatarebackedbytheirmanufacturingteamsratherthanyourdesignbrief.Also,bynotinvolvingthemanufacturingteamduringthedevelopmentoftheproduct,theywon’thavetheopportunitytoprovidetheirfeedbackandadvicewhichcouldactuallymakeiteasiertomanufactureandsaveyoumoneywhenitcomestotheproductioncosts. ProsandconsofODMs ODMsoftenhavealowerminimumorderquantity(oftenreferredtoasMOQ)requirement,whichiswhytheycanbemoreappealingtoworkwith–especiallyforclientswhowanttotestoutanidea.AstheODMhasallthekeycomponentstodesign,manufacture,andbrandaproduct,thecosttodevelopanewproductisusuallyfarlessthanthecostofworkingwithanOEM.YettherearesomedownsidestoODMrelationships,whichcanmakeclientswaryofusinganODM.Becausetheclientisprovidinganidearatherthanafinalproductdesign,therearefeweropportunitiestocustomize,makechanges,andcontrolproductrequirements.SomepeoplealsoworrythattheirideasmightbestolenbyanODMproductownerbecausethefactoryhaseverythingtheyneedtomaketheproductthemselveswithoutanyfurtherinputorhelpfromtheclient.Althoughthiscanbethecase,therearewaysthatclientscanprotecttheirideasandmanufacturerscanoffercontractsthatgivereassurancetonewcustomers. Whatiscontractmanufacturing? Acontractmanufacturercanofferbusinessesadditionalservicessuchaspackagingproducts,printinglabelsandprovidingspecificparts.AclientmightuseanOEMtomass-produceachild’stoy,forexample,butalsorequireacompanytopackagethefinalproductandprintinstructionmanualsandlabels.Ontheotherhand,acontractmanufacturermaybegiventhetasktoprovideadditionalpartstoanendproduct.Ifweconsiderafoodproduct,acontractmanufacturingcompanycouldproviderecyclablefoodcontainers,sachetsofsauce,orperhapsutensilsforfastfooditems. Ifyou’rethinkingofstartinganOEMorODMbusinessyoushouldconsiderthefollowingthings: Whatresourcesdoyouhaveandwherecanyouaddvalue? Doyouhavetheabilitytodesign,developandtestproducts? Isiteasierforyoutoproduceaproducttoadesignbrief,ratherthaninvesttimeandmoneyintodevelopingaproductyourself? Howfastcanyoumanufactureitemsanddoyouhaveanylimitations? Howcanyoumakeaclientfeelcomfortableworkingwithyourbusiness? Doyouhavelegaldocumentsinplacetoprotectyourteamandassets? ContactusnowwithanyquestionsabouthowAlibaba.comcanhelpyougrowyourmanufacturingbusinessandreachyourgoals! LatestarticlesHowdataanalyticscanhelpgrowyourbusinessAPRIL05,202213 MINREADAguidetoB2Be-commerceinIndiaAPRIL01,202210 MINREAD2022makeuptrendsyouwon'twanttomissMARCH22,202211 MINREADHowtobuildapowerfulbrandforyourbusinessMARCH21,202212 MINREADHowtostartahomelinenmanufacturingbusinessinPakistanMARCH17,202211 MINREAD10effectiveandbudget-friendlymarketingideasforsmallbusinessesin2022MARCH03,202212 MINREADThemostpopulartrendsforsmallbusinessesin2022FEBRUARY24,202210 MINREADThesearchtrendsshapingtheelectronicsmarketin2022FEBRUARY22,202210 MINREADRelatedReadingHowtostartahomelinenmanufacturingbusinessinPakistanAlibaba.comMARCH17,202211MINREAD7tipstoimprovecashflowinamanufacturingbusinessAlibaba.comMARCH31,202115MINREADB2BvsB2C:7keydifferencesyoushouldknowAlibaba.comSEPTEMBER27,202112MINREADReadytoGrowYourBusiness? TiếpcậnhàngtriệungườimuaB2Btrêntoàncầu Nềntảng TạisaolạilàAlibaba.com Cáchbán Tínhnăngsảnphẩm Dịchvụ Giảipháp ThươngmạiđiệntửB2B Thươngmạiđiệntửbánbuôn Thươngmạiquốctế Muatoàncầu,bántoàncầu Giá Câuchuyệnthànhcông Tàinguyênhọctập NhậtkýKinhdoanh Hộithảotrênweb Báocáongành RaggiungimilionidibuyerB2Bnelmondo Piattaforma PerchéAlibaba.com Comevendere Caratteristichedelprodotto Servizi Soluzioni E-commerceB2B E-commerceall'ingrosso Commerciointernazionale Acquistoglobale,venditaglobale Prezzi Storiedisuccesso Risorse Blogaziendali Webinar Relazionidisettore ReachmillionsofB2Bbuyersglobally Platform WhyAlibaba.com Howtosell Productfeatures Services Solutions B2Becommerce Wholesaleecommerce Internationaltrade Globalbuy,globalsell Pricing Successstories Resources Businessblogs Webinars Industryreports Playbooks Learningcenter