Definition of OEM & ODM

OEM and ODM are terms used in the manufacturing industry. OEM and ODM are similar terms that refer to types of manufacturing companies. The difference between them is one designs and manufactures products; the other simply manufactures products.

OEM

OEM, original equipment manufacturer, is a manufacturing company. An OEM makes products or components of products that other companies purchase and sell under the purchasing company's brand name. The purchasing company designs the products, while the OEM simply makes them to the purchasing company's specifications and design.

ODM

ODM, original design manufacturer, refers to manufacturing and designing companies. They design and manufacture a product that is eventually sold by another company with that company's brand. In this case, the ODM does everything from designing the product to manufacturing it. This type of company is often used in international trade. A local ODM offers benefits for the foreign company by offering lower costs.

Differences

ODMs serve as research and design teams. ODMs come up with ideas and develop the ideas by turning them into products. OEM companies simply copy items that are already made. They often change small things such as color or size, but the items made are simply replicas. Compal and Quanta are two examples of ODM companies. Hewlett-Packard and Dell are two examples of OEM companies.

References

• Venture Outsource: Inside ODM Contract Service Agreements
• Electronics Manufacturing Asia: Working with ODMs: Growth, Benefits and Challenges