What Is The Difference Between OEM, ODM, and OBM?

China is the prime location for any individual or company looking for manufacturers and suppliers for various products and services. But manufacturing business brings in a lot of terms like OBM, OEM, and ODM.

You may have often heard terms such as OBM, OEM, ODM. They are generally used with the manufacturing unit. Hence, before you find your ideal manufacturer and sourcing agent, it is necessary to get familiar with the terms OEM, OBM, ODM.

OEM (Original Equipment Manufacturer)

Manufacturing unit

Source: Freepik

What Does OEM Mean?

The term OEM stands for Original Equipment Manufacturer. OEM manufacturers refer to the term that the manufacturers provide the manpower and equipment to develop a product. These products are components and parts of a product that is created by any other company.

The components are designed by a company and then OEM licensed conducts the production of the product.

Chinese OEM companies are an ideal choice for a company that is about to launch their business or launch a product as this offers the firm a team of professional contract manufacturing support.

OEM Advantages and Disadvantages

Advantages:

  • OEM service helps you to have confidence that the production will be carried out in the way you want. It offers to provide high quality products that are as per your requirements and expectations.
  • OEM production ensures that the return on investment of the company is beyond expectations.
  • The company can communicate their wants. The OEM service providers all kinds of engineering technical and creative support and help create a commendable product.

Disadvantages:

  • Providing design briefs may confuse the manufacturers of the OEM service and require the company team members to personally elaborate on the requirements.
  • Due to the absence of a company during the development of a product at the OEM, it may lead to a lack of feedback and advice on the production costs.

An Example

A clothing company/brand is looking for a factory to produce the clothing they designed. The company provides the designs, details on the raw materials and packaging materials if needed. The factory only needs to mass manufacture the clothing according to the order. The factory is the OEM services provider.

ODM (Original Design Manufacturer)

worker at the factory

Source: Pixabay

What Does ODM Mean?

ODM refers to the Original Design Manufacturer. It is a company that can develop, create, design, manufacture, and sell products on its own. These products can have a reselling value. They can be sold individually by the retailer.

ODM manufacturers can produce products privately or in association with a client or another company. This opens up the option for customizations and options for any brand. Manufacturers keep samples and templates with themselves that can be used to offer custom designs for the customers. These products are called Brand products.

ODM manufacturers in China offer a good choice for a company that can create products with their unique designs and has team members with experience and skills to develop and test products on their own.

ODM Advantages and Disadvantages

Advantages:

  • Hiring an ODM service costs less than manufacturing a product on its own. This saves the company’s time and efficiency. The company can utilize this time and effort in other elements of the business.
  • ODM saves up time and saves companies from investing in the research and development of a product. ODM completes the testing of the products on its own as well. The company is only required to rebrand the product as their own.

Disadvantages:

  • As all processes of production are catered by ODM manufacturers themselves, it may get difficult for the company to make any improvements, changes in the final product.
  • As a lot of other companies may also go for an ODM manufacturer, it may get difficult for the company to stand out in their creation as there are already competitors with the same products.

An Example

An ODM manufacturer for school bags has a unique idea and creates multiple bags with design that are customized and further rebranded uniquely by different companies.

 

OBM (Original Brand Manufacturer)

Factory

Source: Pixabay

What Does OBM Mean?

OBM refers to the Original Brand Manufacturer. It implies that the production team is responsible for everything from designing, engineering, research and development, supply chain, marketing, and sale of the products. This option is ideal when the products are sophisticated or the company was to give full complete over all the elements and components of production.

OBM involves full integration and amalgamation of the elements of engineering, designing, and development of the product.

OBM owns the company and the products wholly.

OBM Advantages and Disadvantages

Advantages:

Offer quality control over the products.

Disadvantages:

  • OBM cannot maximize the utilization of all the resources of the company.
  • They require more time, effort, and workforce for the completion of the process and procedures.

An example

Motorola is a real-life example of an OBM production service. They produce all the components and finished products. The company controls, determines, and owns the products in their name. They handle all the production activities from designing to marketing their products on their own.

How To Find Your OEM, ODM, or OBM Manufacturer in China?

Manufacturing work

Source: Pixabay

1. China Sourcing Agent

Match sourcing site

Source: Match Sourcing

China offers sourcing agents to help ease the pressure and issues in finding the traders, manufacturers for the development of products and shipment.

China sourcing agent such as MatchSourcing is one of the best ways to get the right supplier for all your manufacturing needs.

2. China Trade Shows

Trade shows

Source: Freepik

China trade shows are a grand event for any company. These shows cater to all platforms be it clothing, electronics, automobiles, recreational products, daily necessities, medicines, and more. You can look out for product sourcing services using these trade shows.

The buyers come from across countries for the grand event. These include Europe, Russia, the United States of America, and other Asian countries.

3. China B2B Platforms like Alibaba

Alibaba

Source: Alibaba site

B2B portals such as Alibaba allow a great opportunity for new companies to find a one-stop solution for all. The company’s well-established team with experience in marketing and designing provides the facility and manpower to equip a headstart to the process.

4. Referrals

Referral program

Source: Pixabay

The referral program is a that allows the company to find the manufacturers through the existing contacts. This helps to make sure that the company trusts the manufacturer beforehand and opens up options for any discounts and offers by the manufacturer of the products.

Conclusion

In a nutshell, OEM, ODM, and OBM differences lie in the utilization and complete control of resources by the users.

OEM offers the opportunity for the company to manufacture their products by an established company with skilled, experienced designers and a marketing team. ODM offers design independence with the company itself and allows them to create products that are lower in technological aspects and take less time in products.

OBM is an ideal choice for a company that has all the components and resources to develop a product within its control from engineering, drafting, manufacturing, and selling. This is ideal for the production of complicated products.

But the greatest choice is the one that suits you best. Contact reliable China sourcing services like MatchSourcing for all your sourcing needs.

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