In the manufacturing field, we often hear the term ODM/OEM. So what is it and how are these two concepts similar and different?
OEM
OEM is an acronym for Original Equipment Manufacturer/Manufacturing, which refers to a manufacturer that provides goods or manpower to produce and bring products to market. OEM can be understood as a company that specializes in manufacturing work to order for a partner or to specifications that are pre-ordered by another company. The products that are put on the market are branded by the company that made the product. Depending on the product, OEM manufacturing can be simple or complex. This requires a manufacturer’s financial investment, highly qualified personnel and research time, including time to find solutions, import materials, prototyping and time to mass production.
For example, a company that trades and distributes canned fruit juice A needs to find a bulk manufacturer that can make products with quality assurance and nutritional characteristics according to the company’s existing samples. Company A. Company A can contact Nam Viet Foods and Beverage JSC to be able to produce products on demand in large quantities with guaranteed quality and time.
ODM
ODM is an acronym for Original Design Manufacring, which refers to a company or factory responsible for designing and manufacturing products as required. Some companies have an idea for a product but have not yet concretized it by design and production, so ODM service should be used in this case. The ODM model brings important functions such as design, manufacturing or branding to a product, product development costs are often much less than the costs of using OEM.
For example: You have an idea for a sparkling water product combined with juice but you do not have the design and cannot guarantee the production, you can contact Nam Viet Food and Beverage Joint Stock Company To be provided with complete and quality production services, not only meeting the standards of domestic distribution but also exporting to major markets such as the US, the Middle East, Russia, Korea…
Advantages and disadvantages of OEM and ODM
Advantages and disadvantages of OEM
Using OEM service, the ordering company can obtain products without building a new factory which reduces production costs. Companies that perform OEM services already have technology, equipment, machinery, and workers ready to comply with the requirements of the ordering company with the production capacity of millions of products with censored quality. rigorous and consistent. However, OEM has a big disadvantage that there are still risks that prevent the product from reaching the desired quality.
Advantages and disadvantages of ODM
The great advantage of ODM is getting the final product even though the business is just at the beginning of the idea. Some companies that perform ODM services already have sample products, so customers only need to order and customize to meet requirements. ODM also helps businesses save effort, cost and time, increasing the ability to adapt to market needs. The disadvantage of ODM service is that you do not create the designs or manufacture with your own technology, so there is a risk that the design may be acquired, reducing the competitive advantage.
What is OBM?
In addition to the two terms OEM, ODM also has the concept of OBM. OBM is an acronym for Original Brand Manufacturing, which describes companies that only develop the brand without being involved in the design or manufacturing process. Companies using this service will buy back products made by other companies outright and put their own brands on it just to add value to their products.
Advantages and disadvantages of OBM
Building and promoting a brand is not easy, so hiring an OBM company will be beneficial because it helps you get quality products from a well-known manufacturer, so it contributes to increasing your brand value. However, using OBM still has the risk of damaging the brand if the product is not of good quality or consumers may be confused because the product of the same manufacturer is only different from the brand name.
Conclusion
Whether you use OEM, ODM or OBM services, there are benefits and limitations to it. It is important that your business is at what stage of the production process to bring the product to market, it will need the corresponding service. Businesses also need to choose a reputable and quality service provider.
