ODM vs OEM: Difference and Comparison

OEM and ODM have been found in the design and production industries, and people stay confused as they are pretty similar regarding the distinctions between the two names. In actuality, these are nomenclatures for producing and reselling firms. The words ODM, OBM, and OEM, describe various configurations of fabrication activities. The distinction between these production systems is the extent to which a brand owner undertakes design, engineering, and production activities.

Key Takeaways

  1. ODM stands for Original Design Manufacturer, a company that designs and manufactures products based on the specifications provided by another company and then sells the product under their brand name.
  2. On the other hand, OEM stands for Original Equipment Manufacturer, which refers to a company that produces components or products that are then sold to another company that rebrands and sells them as its own.
  3. While both involve manufacturing products for another company, ODM focuses on designing and manufacturing the entire product, whereas OEM specializes in producing components or parts of a product.

ODM vs OEM

The difference between ODM and OEM is that ODM is frequently referred to as “private labelling” or original design fabrication. In this case, an importing company chooses from a factory catalogue an already existing product design, makes a few tweaks, and sells it under its brand name. OEM has spared importers the need to invest millions of dollars in R&D to build a new product from scratch.

ODM vs OEM

ODM is a corporation that creates and produces a product by itself. The original designer. The product is subsequently sold to another firm that sells the product under its brand name. An ODM business can only begin when it is familiar with the product idea and function and has all the R&D facilities.

An original Equipment Manufacturer is a firm producing a product according to other businesses’ requirements. The product is sold to the ordering firm and then sold under the buyer’s brand name. OEM has manufacturing facilities but is not involved in R&D and only manufactures within the company’s requirements for producing a product.

Comparison Table

Parameters of ComparisonODMOEM
Full formOriginal Design Manufacturing. Original Equipment Manufacturing.
MeaningODM firm is in charge of developing and constructing a product following the specifications of another company.OEM refers to a company and business which is in charge of developing, constructing, or selling the product to another company.
FeatureDesign products on customer-based specifications.Designs products on its own based on specifications
DiscoveredODM was first used in 1906.OEM was first used in 1962.
Labeling ODM is non-private labelling.OEM is private labelling.

What is ODM?

ODM is frequently referred to as “private labelling” or original design fabrication. In this case, an importing company chooses from a factory catalogue an already existing product design, makes a few tweaks, and sells it under its brand name. Changes may include such items as packaging or product bundles, colors and branding, and certain restricted components or functional alterations. Two cat-toys ODM laser-pointer.

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Each product is specifically branded, colored, and packed according to each purchaser’s request, yet both are produced according to the same fundamental design. However, ODM is not only about electronics. This is another example of ODM manufacturing. A manufacturer maintains a file template that may be customized to meet its demands. ODM is a corporation that creates and produces a product by itself.

The original designer. As the definitions make apparent, ODM creates and produces at its discretion, whereas OEM is an entrepreneur who carries out another business’s design specifications. Since ODM firms manufacture their products, they naturally have greater negotiating leverage and can achieve greater pricing demands than OEMs. The product is subsequently sold to another firm that sells the product under its brand name.

An ODM business can only begin when it is familiar with the product idea and function and has all the R&D facilities. As the definitions make apparent, ODM creates and produces at its discretion, whereas OEM is an entrepreneur who carries out another business’s design specifications. Since ODM firms manufacture their products, they naturally have greater negotiating leverage and can achieve greater pricing demands than OEMs.

What is OEM?

OEM refers to a company and business in charge of developing, constructing, or selling the product to another company or company responsible for the distribution of its product following its standards. The first firm manufactures things on behalf of another firm, and the buying firm uses its name to promote the goods. An original Equipment Manufacturer is a firm producing a product according to other businesses’ requirements.

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The product is sold to the ordering firm and then sold under the buyer’s brand name. OEM has manufacturing facilities but is not involved in R&D and only manufactures within the company’s requirements for producing a product. OEM refers to items created incomplete and then licensed to a producer. OEM refers to the production of original equipment. For example, the Apple iPhone was created and built by Apple and subsequently licensed to create Foxconn.

As a result, Apple and its licensed manufacturer have a higher level for the iPhone since its design is exclusively available. Many additional electrical brand names and equipment are OEM. Another example of OEM is customized clothes in contrast to generic clothes with bespoke branding. OEM mostly benefits from maintaining full creative control over design. While ODM goods are confined to a default design, OEM items can be produced as required.

The only constraint is the imagination of the designer. The downside of OEM production is its intensity of resources. Over several years, OEM designers frequently devote millions of dollars in research & development to produce distinctive goods. As a result, OEM designers must protect their designs as intellectual property so that they are not duplicated and sold at a lesser price by another firm.

Main Differences Between ODM and OEM 

  1. ODM firm is in charge of developing and constructing a product following the specifications of another company, whereas OEM refers to a company and business which is in charge of developing, constructing, or selling the product to another company.
  2. ODM is non-private labelling, whereas OEM is private labelling.
  3. ODM designs products on customer-based specifications, whereas OEM designs products on its own-based specifications.
  4. ODM was first used in 1906, whereas OEM was first used in 1962.
  5. ODM stands for Original Design Manufacturing, whereas OEM stands for Original Equipment Manufacturing.
References
  1. https://www.sciencedirect.com/science/article/pii/S030504831500105X
  2. https://www.fujifilm-vietnam.vn/compromise/cadpx-nitrilo-124-suncendsafety-29990865.html

Last Updated : 28 June, 2023

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23 thoughts on “ODM vs OEM: Difference and Comparison”

  1. The examples offered in the article, such as the cat-toys and electronics, illustrate the practical application of ODM in real-world scenarios. It provides a tangible understanding of the concept.

    Reply
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      Reply
  2. The comparison table provided in the article is very helpful. It clearly outlines the parameters and key differences between ODM and OEM, making it easier to grasp the concepts.

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  10. The distinctions between ODM and OEM are quite clear. ODM creates and produces a product by itself, while OEM is responsible for developing, constructing, or selling the product to another company, following its standards. This clears up the confusion between the two terms.

    Reply
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