ODM and OEM: What are The Differences Between Their Products?
November 23rd, 2021
Have you heard the terms ODM and OEM before?
Are you confused and want to know which one suits more for your business?
Original Design Manufacturer (ODM) and Original Equipment Manufacturer (OEM) are two frequently used acronyms related to manufacturing. People often use these terms interchangeably, but they are not the same.
ODM manufacturers design products for themselves while OEM manufacturers design products, especially for the customers.
This means that if you work with ODM factory, you will only need to sell their products. While working with OEM, you should provide your own design of products, and they only help in manufacturing.
For making things easier, in this blog, we will discuss ODM and OEM in detail. It will help you differentiate between ODM and OEM and it can be easier for you to select one of them to cooperate with in the future.
Chapter 1: Understanding the DifferencesBetween ODM and OEM
ODM and OEM are two acronyms that you will see a lot while discussing the most potential business models. People are often confused about their basic use and the meaning of these terms. ODM works differently from OEM.
In this chapter, we are going to discuss detailed information about ODM and OEM to make these terms more familiar to you.
1. What is meant by ODM? How does it work?
ODM is the manufacturer who will finalize all the designing and producing part of a product. The responsibilities of ODM include R&D, white or private label offerings, product manufacturing, and product testing.
Product idea and spotting of a modern showcase opportunity for their brand are the responsibilities of the client.
The ODM products are based on an already existing design that was customized to a few degrees by the manufacturer.
It can also be modified, the most frequent modifications to the products can be the change of product color, coatings, materials used, and plating.
If you buy ODM products, they can be customized and modified with your requested logo. However, not all ODMs work as white label manufacturers. A few ODMs offer product customization options.
The people who have a good idea regarding products but do not want to design them on their own can avail this opportunity.
2. What is meant by OEM? How does it work?
The OEM items are made according to the buyer’s demands. The responsibilities of an OEM client include marketing, product design, product testing, and market research, while OEM only manufactures the product.
Hence, OEM is the manufacturer who only help in producing items according to a customized plan, color, fabric, and measurements, etc. For the manufacture of OEM products, you will have to provide details like:
A colors chart
Drawings of the proposed design
An OEM supplier produces items according to the exact demands of its customer or at the maximum efficiency humanly possible. An OEM can also provide a buyer with the spare parts or components which he might need for manufacturing goods himself.
3. What kind of product is referred to as an ODM product? How about an OEM product?
The ODM product does not require special moulds. It is made with the help of public moulds. The ODM manufacturers do not provide customization options, and the buyer can only ask for some little changes like the logo to be incorporated in the order.
The buyer is not responsible to pay for the public moulds used in the manufacturing of the ODM goods.
A product that is manufactured according to the buyers’ specifications is called an OEM product. It is made according to the designs provided by the buyer. The precision of the design buyer is very crucial in the OEM model.
Special moulds are used to create OEM products, and the buyer has to pay for these moulds.
4. How ODM and OEM can help you in saving costs?
ODM and OEM are the two best ways to get goods for your business. Both of them provide you value for the money you invested. ODM and OEM suppliers reduce the time required to manufacture products and save your energy also.
The products are made according to your plans. They can adjust whatever changes you want them to make. If you wish to get a product that is completely customized and made according to the design you provided, then you should choose OEM.
ODM suppliers give you products that are not customized and only have a logo of the company.
Choosing ODM and OEM suppliers can help you get hands-on larger volumes of goods within less time and with no extra efforts involved. You do not even need to hire people so, it saves the cost investment also.
5. Comparison between the production of ODM and OEM?
ODM and OEM are two models that can provide you with goods, then you can sell through your company’s platform. Both these models have diverse uses and are significant for the buyers. Following are two crucial points regarding their comparison.
Customized mould and public mould
Special products need special moulds. When you want the seller to provide you with goods that are exactly similar to the design you made then, you will opt for the OEM. OEM providers will get customized moulds for you.
In such cases, a buyer mostly has to pay for the special and customized moulds.
The public moulds will be used to create your ordered products if you opt for the ODM model. So, you will not have to pay for them.
Customized moulds create some special and one of their kind products. If a buyer wants to stand out in the market and provide the most unique goods, he should choose the OEM model.
In this way, he can also retain the copyrights of that design. The goods that have been made by using public moulds are common in the market. So, they can be differentiated only through the logo and the packaging.
Complete products and components
Every buyer does not want to get goods or complete products only. Some of them want to get the spear parts and components. But which model is suitable to buy the components? The answer to this question is OEM.
Original Equipment Manufacturer can also provide components to the buyers. You can order complete goods from both ODM and OEM. However, you can get components only through OEM.
6. How to choose manufacturers to work with? OEM or ODM?
To choose the best manufacturer for getting goods, you will have to analyze your requirements first. You will have to see what you can compromise on and what you cannot miss.
Do you want to get unique goods made according to your designs, or do you only need to get goods that have a logo of your company with a little overall modification?
You will also have to analyze your budget and see what suits you the most. Time also is one important factor to determine the supplier.
After a thorough analysis, you will know if you want ODM or OEM products, and you can find the suppliers after that. ODM and OEM suppliers are available all around the world.
It is the 21st century, and most of the work is carried out online so, you can get find suppliers on the internet also. You can conduct virtual and face-to-face meetings. Get samples to test them and then decide the best supplier.
Chapter 2: Pros and Cons of ODM and OEM Products – Risk Factors Regarding ODM and OEM
Everything comes with some benefits and disadvantages. No matter which method of manufacturing someone chooses, one should know completely about it.
Knowing about the risk factors and cons can help you make up for them beforehand, and getting knowledge about benefits will improve your decisions.
In this chapter, we are going to discuss the pro, cons, and risk factors linked with ODM and OEM.
1. Original Design Manufacturer (ODM)
Original Design Manufacturer (ODM) is a very frequently used method to get designed products. It allows you to customize the previously designed and manufactured goods a bit according to the demands of your company.
The main advantages, disadvantages, and risks related to ODM are being discussed below.
-Pros of ODM
The benefits of using ODM for product sourcing are being given below.
You won’t be charged for moulds. Your supplier has to pay for special instruments or moulds.
Marketing of ODM is usually quicker than OEM.
ODM saves your time and money on R&D.
The dangers of a duplicate product can be significantly diminished by connecting to a well-reputed ODM supplier.
The manufacturer does not need a lot of money and resources to create a product. So, the ODM rates are thus very reasonable.