Today, we will share the article to deepen the basic knowledge and the difference between OEM and ODM.
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What is OEM, ODM
We will explain about “What is the difference between OEM and ODM?”
OEM
OEM stands for “Original Equipment Manufacturing (Manufacturer)”, which means to manufacture branded products of other companies or companies under their own name.
In other words, “manufacture other companies’ products with their own brand name”.
This method is mainly found in the apparel industry, automobile industry, home appliances, cosmetics, food, etc.
OEM production form
There are two main types of OEM production.
１．Produce finished or unfinished products under the brand name of the other party
In this case, OEM contractor proposes production.
２．Ask the manufacturer to manufacture their own products
Providing the manufacturing method of the company’s products to the manufacturer for production. The contractor will provide specifications, materials, raw materials, etc. to manufacturers, have the right to manage and own, and even provide technical guidance.
Merits
- Control of production quantity
- Cost reduction
- Improvement of awareness
- Concentration on product development
Demerits
- Outflow of know-how
- No production profit
- Difficult to control the quantity because the production depends on the convenience of the consignment side.
ODM
ODM stands for “Original Design Manufacturing”, which means designing and producing products under the brand of a consignor.
In other words, doing everything from designing to developing the products.
This method is widely used in mobile phone industries and PC industries.
Merits
- New entry is possible without technology (know-how)
- Production at low cost
- Efficient product development
Demerits
- There is a risk of leakage of technology (know-how)
- The price goes up
- Difficult for control the production volume in a reasonable manner between the contractor and the consignee.
Summary
In this article, we have also touched on the differences between OEM and ODM and their advantages and disadvantages.
If you understand the characteristics of each product, and select a production method that makes sense for you, you can make efficient and high-quality products without the need for technology (know-how).
For that purpose, it is important to maintain close communication with OEM and ODM contractors and carefully discuss product specifications and requests.
Looking to the future, make efficient use of OEM and ODM, and aim for the success of your brand and sales improvement!
OEM, ODM production by Kato trade Inc.
Kato trade Inc. makes full use of our know-how to support OEM and ODM production for many companies.
The author himself learns about OEM and ODM from 0, and is involved in the progress of the project through careful discussions with clients every day.
If you are a company or individual who wants to make your own brand products, please contact Kato trade Inc.
In the future in this blog, we will write the information about OEM and ODM based on the projects we were actually involved in.
Please continue to enjoy!