- June 15, 2019
- Posted by: AQI Service
- Category: Product Sourcing
Difference Between OEM vs ODM Suppliers
Have you come across the terms original equipment manufacturer (OEM supplier) and original designed manufacturer (ODM supplier)?
You may say the topic was too old, but we knew lots of people don’t know what does it mean to them? Sometimes the different terms can be quite confusing to many people.
So let’s communicate with OEM and ODM again.
When researching the factory where you want your things to be made in China, you’ll notice that some of them are listed under OEM and others under ODM. These terms are used to classify factories depending on whether they make and supply parts or final parts.
Come with me as I dissect them into details below:
What’s an OEM?
An OEM will design and manufacture your items from scratch. You’ll give them detailed specifications and requirements, a comprehensive vision of what kind of product you need to be made.
An OEM factory is more attentive to your needs and designs, following your will to manufacture for you your products as you want it done. OEMs typically manufacture products that are bought by other companies that then retail them under their brand names. The OEM only refers to the original manufacturer in this case.
As far as the manufacture of auto parts is concerned, an OEM designates the spare parts that are made by the maker of the original parts.
An OEM is the type of supplier you need to go for if you’re looking to produce unique items under your brand name. Once the manufacturing is done, you can then bring on board another supplier for distribution.
What about an ODM?
In contrast to an OEM, an ODM supplier will give you ideas on the type of products you want to manufacture. From you, the factory will require product details like the expected functions and performance. They’ll then use those conceptions to suggest to you a final product that you approve of before production can kick-off.
For those of us who don’t know how exactly to build a specific item, an ODM supplier comes in to help consolidate your ideas and specifications into reality. ODMs design and make products that have been specified by another company. Eventually, the company that gave the specifications will then brand the items for sale once they’re out of the factory.
An ODM supplier lets the brand company produce items, either solely or as supplements, without having to be involved in the management of the manufacturing factory.
One key attribute of this kind of business model is that the ODM supplier designs (and often owns) in-house the items that the purchasing and branding company sells. This differs from both OEMs and ODMs (contract manufacturers).
Risks to Beware of When Choosing a Factory
Whether you choose the OEM or the ODM business model, there are risks associated with both. First of all, letting your manufacturing factory take credit for the designs that your final products bear can put you in a tricky situation.
For instance, what if the factory feels entitled to the designs’ ownership and decides to sell the same products to your competitors?
Again, if you’re making an item that bears a unique design, i.e., that’s not among those that are currently being produced by your factory, you may have issues with quality arising.
Make sure you choose the right manufacturer/supplier by either sending a third-party inspection agent to the factory making your products in China or by visiting them personally before you can place your orders, as well as during the actual production.
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