OEM meaning Original Equipment Manufacturing is an instance of contract manufacturing. A factory can manufacture products following your unique designs and specifications if they are OEM.
A company that manufactures products or components sold by another company is an Original Equipment Manufacturer. The OEM meaning can be misleading because Original Equipment Manufacturers do manufacture a product, but they do not design it. It is up to the firm that manufactures the product to provide the design and specifications for it.
Before finding an OEM to manufacture your product, you should perform an extensive research and development process, including design, engineering, and market research. Original Equipment Manufacturers products based on your designs. A large number of companies can benefit from OEM manufacturing, especially when they have large orders. But OEM manufacturing also has a lot to offer smaller companies. Read below to find out what OEM benefits can mean for your up-and-coming business.
Original Equipment Manufacturing designs products that are manufactured to meet the specifications for the buyer’s product. In general, any design, material, dimension, function, or color that is customized can be considered OEM. These include CAD files, design drawings, bills of materials, color charts, and size charts.
Original Equipment Manufacturing can only refer to products completely customized to the customer’s specifications, while others consider even the slightest changes to an Original Demand Manufacture product design to be OEM. Most buyers and suppliers will agree that an OEM product is a byproduct for which tooling must be developed before production can begin. Read on to discover the top 5 reasons OEM can benefit your cooperation.
1. OEM Benefits For Your Bottom Line
When sourcing products from China, international businesses work with Original Equipment Manufacturers as they can help significantly lower labor costs. The advantage of Original Equipment manufacturing is that the focus can be shifted to sales and profits rather than production. Your business can benefit greatly so you can concentrate on the innovation of your corporation.
2. Improved Quality and Design
Choosing an OEM means that you can contract out your manufacturing and production work. Most Original Equipment Manufacturers use cutting-edge technology, which means better quality and design.
Developing innovative, high-standard products is one of the easiest ways to engage customers as their needs change over time. Since Original Equipment Manufacturing is committed to manufacturing inventive new products, collaborating with them is the best way to bring original products to your customers.
3. A Cost-Effective Solution
Original Equipment Manufacturing also has the benefit of being cost-effective. Reducing costs is the strongest indicator of sustainable gains. Outsourcing your production to an OEM can save you money on manufacturing and operations costs. That is in stark contrast with a company that makes all its products in-house. A company that manufactures large quantities of products needs to have proper manufacturing facilities. These facilities will also require staffing, which will raise labor costs as well as operating costs. Having human resources means that they must have a recruitment team to find the right people. Recruitment is a lengthy and tedious process, which further increases costs.
Original Equipment Manufacturing also has the benefit of being cost-effective. Reducing costs is the strongest indicator of sustainable gains. Outsourcing your production to an OEM can save you money on manufacturing and operations costs. That is in stark contrast with a company that makes all its products in-house. A company that manufactures large quantities of products needs to have proper manufacturing facilities. These facilities will also require staffing, which will raise labor costs as well as operating costs. Having human resources means that they must have a recruitment team to find the right people. Recruitment is a lengthy and tedious process, which further increases costs.
4. OEM vs Original Design Manufacturing (ODM)
In an ODM product or an Original Design Manufacturer, the product is based on an existing design or to some degree developed by the manufacturer rather than the buyer. Suppliers can develop their own Original Design Manufacturing products, or they can replicate products already on the market.
A buyer’s logo can be applied to OEM products, which are often called private label products. Original Design Manufacturing products can often be customized to some extent. Example modifications include changes in color, materials, coatings, and platings. When you attempt to change an Original Design Manufacturing product’s design or dimensions, you enter OEM territory.
Original Equipment Manufacturing service means that the supplier is willing and able to create products based on the buyer’s design. Alibaba allows most suppliers to provide Original Equipment Manufacturing services. Indeed, that is what they do every day. There are even suppliers who reject quotation requests based on ODM products since they only deal with OEMs.
5. Find a Supplier on Alibaba Offering OEM
The concept behind ODM and private labeling is that the supplier provides a template product, that the buyer can brand with their logo. Hence, the buyer can save time on money, as An ODM or private label product is manufactured by a supplier and branded by the buyer. By eliminating the lengthy product development process and the need to purchase expensive injection molds and another tooling, the buyer can save time and money.
ODM products are far more prevalent in mainland China. Over time, Chinese factories have simply accumulated more tooling, machinery, and capital. Many Chinese factories also produce ODM products for the domestic market. ODM products are complete and finished products, unlike OEM products.
Once you understand OEM’s meaning including its benefits, and how Chinese manufacturers operate, you will be able to choose the right OEM for your business. Since sourcing agents have in-depth knowledge of the industry trust them while investing with OEMs in China. Unlike traditional product development, they don’t have to invest in expensive injection molds.
By working with a Chinese OEM, you are guaranteed to receive products at a fair cost. Because the products’ manufacturing standards are strict, high-quality products are produced. You keep trademarks associated with your product design and specifications in addition to benefitting from Original Equipment Manufacturing technology.
The bottom line lies within the companies that produce the ODM model, design products according to the type of collection, while companies producing OEM models, design products according to the specifications of the client company.
