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Differences between OEMs and ODMs

By Jesus David Cano Romano
April 27, 2016
Factory


First of all, what are OEMs and ODMs and how are they different?
OEM and ODM are terms often used dealing with the manufacturing industry. But careful: as the two types are similar, people tend to mix them up, but they’re not the same. OEM is a Original Equipment Manufacturer, while ODM is a Original Design Manufacturer. The two types are divergent concerning their areas of responsibilities. An OEM is working with your own created designs, while an ODM deals with specifications and designs on behalf of you.
Knowing and comprehending the difference between OEMs and ODMs gives you advantages for your choice of manufacturer later on. Based on your type of business or product for manufacturing, one type of manufacturer may suit better than the other. Each of the two manufacturer types also bares its own risks and takes different precautions to avoid those.

 

Original Equipment Manufacturer:
An OEM is interesting for a buyer that has a special product with a very intensive research and development phase on which the buyer has already spent a huge amount of money. The only missing thing now is a company to produce and assemble the product. This company would be an OEM. Good examples would be Audi sourcing single parts for its cars from a OEM in China or Apple, which is doing its own research and development and then leaves it to Foxconn to fabricate the product.
The danger for working with OEMs is mostly related to intellectual property protection. Due to the extensive previous investments, the information that a buyer has to pass to the OEM is highly valuable. That means that the OEM should be picked very careful. It would be best to have someone from your side on the ground to supervise and control that everything’s running smoothly.

Original Design Manufacturer:
ODMs support the buyer more on its manufacturing process. While the concept is given by the buyer, the overall specifications and the design can be created by the ODM. This makes sense for smaller buyers that don’t have the capacities for the necessary R&D phase or the product development. Prototyping, testing and producing is done by the ODM. This also means that the choice of the ODM you’re working with should be well-considered.
The caveat for the ODM is the limitation of control dealing with the product development such as design or overall specifications. You need to find the right balance to give up control while still maintaining enough influence.

 

OEMs and ODMs are not only producing electronics, but are also covering industries such as fashion and much more. With decades of experience in manufacturing, China is the top global destination for OEM and ODM sourcing.
In the end it’s all about finding the right supplier. At China 2 West we’ve set ourselves to find you the best possible Chinese manufacturer and ensure successful sourcing in China.