ODM Manufacturing

All you need to know about Original Design Manufacturing

What is ODM Manufacturing?

ODM Manufacturing, or Original Design Manufacturing, is the process of having another company design and manufacture products that are branded by the original company.

This means that a company which specializes in something like sales and marketing can focus on its core business and allow another company, the ODM supplier, to take care of the design and manufacture of the products it wants to sell and market.

The benefits of this approach are obvious; a company that uses an ODM supplier can focus on its core business strength while utilizing the ODM manufacturer’s expertise to get the right products at the right price, without the headaches of project managing the process or investing in additional equipment and labor.

Why use an ODM supplier?

Let’s take China as an example; in China manufacturing is usually cheaper and more cost effective than producing the equivalent goods in the West. It is possible for a firm that needs an ODM product to engage a factory to make use of that advantage – the cost benefits come from low labor costs and local incentives. ODM manufacturing also circumvents the need to start a business in China to manufacture your own products.

How does this differ from outsourcing?

Original Design Manufacturing is a type of outsourcing arrangement and, as with all outsourcing arrangements, it’s important to choose the right partner to get the best value from your ODM supplier.

Are there different types of ODM manufacturing companies?

There are two basic options for making ODM products in China:

  • Direct contract with a single manufacturer – at first glance this seems like an attractive option because, at face value, it would appear to be the cheapest (until you talk to an ODM management company).  These agreements, however, can tie you into contracts where you pay for inefficiencies in the supply chain and the factory’s management. This can lead to you paying for down time during which the company needs to continue paying its workforce and bills, even if no work is being done. It also leaves you with limited options in the event of quality issues. Another factor to consider is the cultural and linguistic hurdles that can cause misunderstanding and project delays.
  • Working with an ODM management company – these companies operate without their own factories; instead they engage with all parts of the supply chain to ensure the best pricing and quality for the components of your ODM product. They will work with an assembly factory to ensure the cost and the condition that your customers expect. These companies make their profits by reducing costs and improving the efficiency of the overall supply chain and don’t normally cost more than a manufacturer. They also usually provide all of the the benefits of Western account managers who are in tune with your needs and used to overcoming the language issues and cultural problems of China.

SZCEIT are experts for ODM management in China, getting the right results every time to give you freedom to manage your core business and the certainty of quality products at the right price every time.