The OEM supplier’s product is based on the design provided by the buyer. In other words, they only produce what the buyer needs. They create designs and manufacture products in-house. Products from ODM manufacturers are often referred to as white-label products. The following are the main differences between the two:
What is OEM?
In the supply chain, OEM stands for Original Equipment Manufacturing, which is a type of outsourced manufacturing or contract. OEM factories create products according to customers’ designs and specifications. After opting for this type of manufacturing, you must provide the manufacturer with a product specification sheet and product design.
You can customize a manufacturer’s product or choose to design a new one. Additionally, most OEM projects will require manufacturers to create custom tooling or purchase new tooling and equipment, especially if demand is high. In other words, you have to pay the manufacturer up front.
The buyer owns the intellectual property because he designed the product and created the spec sheet. Also, the buyer may have production rights, since he will pay for the molds and tooling. This type of contract may prevent the manufacturer from using molds and tooling for other customers.
Advantages and disadvantages of OEM
OEM has its advantages and disadvantages. Here are the advantages and disadvantages of this option.
1. Most manufacturers have OEM factories. This means that this is the easiest type of manufacturer to find.
2. OEM allows you to make the best products for the target market.
3. If you have appropriate protection and contracts, you will have intellectual property rights.
4. You will introduce your own products to the market.
The buyer pays for tools and molds, which may be very expensive depending on the nature of the customization.
The creation of stencils and new stencils may take a long time.
The buyer must propose the design and specification table before starting production. In addition, the buyer must ensure that the format of the specification sheet is good so that the manufacturer has time to understand it.
What is ODM?
ODM represents the original design manufacturer in the supply chain. This means that the manufacturer must manufacture products according to the buyer’s design, but based on existing products. After selecting this type of manufacturing, you will purchase the items produced by the factory. The only thing you can change or design is the brand and packaging.
In most cases, the buyer will not change the packaging or brand. They sell products according to the products provided by the factory. However, some buyers may require some appearance changes, such as size, shape, color, and logo addition. The difference between ODM and OEM manufacturing is the customized quantity completed, but in order to simplify everything, ODM is more about marketing existing products.
The biggest problem of ODM manufacturing involves the owner of intellectual property and product design, including customization. As we have said, the factory works on the design or part of the whole design, so it has intellectual property rights. The buyer will own the brand copyright. This creates a big problem because some buyers think that the manufacturer may sell the product.
Advantages and disadvantages of ODM
Like OEM, ODM has its advantages and disadvantages. Here are the expected advantages and disadvantages.
Product development takes a little time. The manufacturer will ship the product to you in a few days so that you can start retailing.
Most manufacturers offer little customized content.
There are no additional costs associated with molds and tools.
You can only accept products from suppliers. There are no custom options.
Your main competitors will have access to the products you plan to sell.
You will not get intellectual property protection.
Suppliers may infringe on others’ intellectual property rights.
In short, if you want to build a water bottle brand and use the existing water bottle models on the market to own your own private brand, you need an ODM manufacturer.
As one of the best water bottle manufacturing companies in china, Everich & Kingvac is dedicated to the R&D, design, and manufacture of various outdoor drinkware products, they are 100% food-safe grade, comply with European and American food safety standards, we have rich experience in OEM and ODM services, and our R&D team is able to form more than 450 pieces of new product design solutions every year.
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