Difference Between OEM and ODM manufacturing

Original Equipment Manufacturer, or OEM is a manufacturer that helps to bring a product to market by providing goods or manpower. Typically, OEMs are associated with OEM services and it is something that is used as a component to a product when produced.

The services of OEM manufacturing is required through a B2B portal site if your company is hoping to launch a new product. OEM manufacturing is the right service for well-established companies as these companies already have products on the market and only require a manufacturing facility and the manpower to help them produce the items and meet the demand of product, or material to finalize the product and have it ready to sell. The company has its original idea, the designs, plans, manufacturing process, and branding ready to go because they will often have a product development team along with designers, testers and marketing professionals who have created a new line of products by spending months, if not years.

OEM manufacturing can be offered and basic manufacturing services can be provided by the manufacturer if he/she don't have the capabilities to design, create, test and brand products, to help businesses produce products.

Original Design Manufacturer or ODM is a Manufacturer that can design, develop, manufacture and sell products themselves. OEM is generally referred to as a service, whereas ODM refers as a product. The products that are created by an ODM are often used by a buyer to rebrand it as private label products and are sold for their profit. Designing and development of products are done independently, or in collaboration with a client with an ODM. If you have new idea, but are yet to design, develop, test, or brand it, then ODM is the ideal manufacturing service.

ODM manufacturers have their own employees or teams who have the skills, experience, and capabilities to design and develop products, as well as carry out testing.

OEMS are great way to launch a new product to market with low investment. A product that is difficult to replicate by competitors or consumers due to the cost or time to produce it, can be created by forming an OEM partnership. You can also have the access to new markets, industry sectors, and geographic locations by hiring an OEM service. Original design manufacturer can offer lower prices for the end consumer as they have lower costs for research and development

However, sometimes confusion can be created when providing design requirement to a manufacturer which require members of your team to provide support and assistance in the factory. This can cost the time and money of your company. It is a disadvantage when working with OEMs. Changes to the product during the manufacturing process  may be required in OEM instead of your design requirement. They won't be able to provide their feedback and advice as they do not involving the manufacturing team during the development of the product which could actually save you money and make it easier to manufacture when it comes to the production costs.

A product can be produced and manufactured by an ODM company according to their own needs, and they the design can be altered to meet the specifications of a client company. Then, these products can be sold by the client using their own brand. ODMs can be more appealing to work with, especially for clients who want to test a new idea as they often have a lower minimum order quantity requirement. The cost to develop a new product is usually very less than the cost of working with an OEM as the ODM has all the key components to design, manufacture, and brand a product. ODM products are more attractive to smaller clients as they have typically a lower minimum order quantity

However, there are fewer opportunities to make changes, customize and control product requirements, because only an idea is provided by the client rather than a final product design. ODM does not have as much flexibility as an OEM, as the client is just allowed to customize an existing design. There is also a risk that the ideas may be get stolen by an ODM product owner because they have all the thing required to make the product themselves without any input or help from the client. But, the clients can protect their ideas and contracts can be offered by manufacturers that give reassurance to new customers in such cases.

Additional services such as packaging products, printing labels and providing specific parts are generally offered by a contract manufacturer. An OEM may be used by a company to mass-produce a product and also require  to package the final product and print instruction manuals and labels. A contract manufacturer may provide additional parts to an end product.