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You may have to keep track of competitors and re-evaluate your prices– the cost of which adds up over time. On a more abstract level, this could harm brand identity, which carries its own negative implications. Designing a product from the ground up also means that your business can tune it to pretty much any specification.

This is a significant factor for small businesses and startups, which can’t risk high production costs and have a minimal profit margin. The section below focuses on teaching you how to identify and find a reliable manufacturer. The main difference between the OEM vs ODM is how product development is conducted. As the customer, you have to consider the differences in time, costs, and IP ownership. Your company provides all the product design-related material, drawings, specifications, and sometimes tooling design to the OEM.

What Is the Difference between OEM and ODM?

Examples of innovative companies are Apple, Nintendo, Microsoft, and IBM. Examples of foundry companies are Foxconn, Flextronics, Pegatron, and Inventec. Basically, every real manufacturer of Alibaba and other platforms can produce OEM products. At this time, I will put forward my needs, such as functions, parameters, appearance, and then commission the company to design and produce for me. Choose one of the products that have appeared on the market and sell it under my own brand.

The platform displays the important details of every manufacturer, such as the store open date, the brand satisfaction score, and customer feedback. Check the quality indicators carefully and the actual product rating. The amount of customization needed dictates the amount of time an ODM process takes. If the manufacturer has to get new molds for your products, then the production might take more than 4 weeks.

Get a deeper understanding of outsourcing manufacturing by downloading industry eBooks and in-depth guides.

The ODM provides the product specifications, and the OEM produces and assembles the components. The differences between OEMs, ODMs, and EMSs are largely based on the relationship you will have with that entity and the services they provide when you are getting your product manufactured. EMS companies can be huge – in fact, difference between oem and odm in the so-called “Tier 1” environment they are multi-billion dollar businesses in their own right. So it’s no surprise that they manufacture some of the world’s best-known products. For example, Apple’s iPhone, HP printers, and many other famous branded products are all believed to be built by Tier 1 EMS companies.

You could also hire OEM companies to make the equipment you need to make other products. An OEM (Original Equipment Manufacturer) builds a customer’s product that is fully designed by that customer and then contracted out to produce. The Apple iPhone, for example, was invented and designed by Apple, and then contracted to Foxconn to build. With this, the iPhone has a much higher level of product differentiation because the design is only available to Apple and its contracted manufacturer. In this white paper, we walk you through the process, step by step, to provide a clear picture of sourcing and how all of the pieces fit together to ensure the delivery of quality products to the end user. These factories typically allow you to make minor modifications to their design like product size, packaging, and branding.

Key differences between OEM and ODM

Afterward, the OEM can market this customized item using its unique image or identity. In the world of intense competition and globalization, Original Design Manufacturing (ODM) is a popular model used by companies trying to create products while reducing costs but keeping superior quality. ODM describes a service where an OEM designs and produces something, then outsources production to another manufacturer – known as the ODM- according to the former’s design specifications. An ODM is ideal because you can help create new specifications and product designs here. All you need to do is give them the idea of the design you want, and they can also show you their existing product lines, and you can choose from them.

For example, the Apple iPhone was created and built by Apple and subsequently licensed to create Foxconn. ODMs design and manufacturer products which companies are looking for, either to be used in their products or to be sold under their brand name. The one company produces products on behalf of another company, after which the purchasing company markets the product under its own brand name. OEMs specialize in large-scale manufacturing and supply chain management, allowing for low costs and higher volumes. Additionally, OEMs can manufacture products to the exact specifications required by their clients, who then sell the final products to consumers. These services include support with initial ideation and design, DfX (Design for Excellence), supply chain management, configure-to-order, outbound logistics and repair elements.

FAQs – OEM vs. ODM

The sportswear company provides the designs, manufacturing requirements, branding, and logo designs, and if required, packaging requirements too. They have the designs, branding, market research, and product testing finalized, and they need each pair of sneakers to have a memory-foam sole. Still, it is often better to incur them than miss out on a chance to bring your vision to life. You would also still own the intellectual property rights to the product because the original idea was yours. OEM stands for Original Equipment Manufacturing, and refers to products that are fully designed by one company and then licensed out to a manufacturer to produce.