It is no news that sustainability has been a hot topic in the packaging industry for a long time. Companies constantly push for innovation to create solutions that can advance the sustainability market and positively impact the planet, and Earthmade is no different.
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What is Bamboo-O?
At Earthmade, we introduced a newly developed, patented eco-friendly materialBamboo-O. As the name suggests, Bamboo-O is primarily made from a combination of bamboo fibre and plant starch. Using worldwide patented technologies, Bamboo-O is produced with zero water waste during manufacturing and achieve a lower carbon footprint than paper manufacturing. As a result, Bamboo-O is rigid, reusable, and 100% home-compostable. To achieve the goal of natural circulation, Bamboo-O can biodegrade in a garden or home composting environment. Additionally, the material can be produced using mainstream manufacturing methods such as thermoplastic injection and blow moulding. The material has obtained the necessary certificates to prove its sustainable qualities, and it is already being used in multiple products. Now Earthmade is bringing it to the UK.
Earthmade's use of Bamboo-O
By utilising Bamboo-O, Earthmade developed the Aroma series, which includes the Aromabox and the upcoming Aromacup. The Aroma series is Earthmade's entry into the coffee industry, with the Aromabox being a rigid coffee packaging made for coffee beans and grounds and the Aromacup being Earthmade's take on the ordinary coffee tumbler. Both products are made with Bamboo-O and are home-compostable and food-grade certified.
The main target audience for the Aroma series is coffee roasteries and businesses, and both the Aromabox and the Aromacup can be customised with different colours and finishes to fit our clients' brands.
Besides our Aroma series, we also utilise Bamboo-O to make other products like straws, cutlery, and food containers.
How can Earthmade and Bamboo-O help your business?
With years of manufacturing experience under our belts, we are excited to offer ODM and OEM services to clients seeking to utilise Bamboo-O for their products. Thanks to Bamboo-O's versatility and remarkable home compostability, we are already working with clients who share our goal of creating products that will benefit the environment across multiple industries. We take pride in forging long-lasting partnerships with our clients and are confident that our strong background in Bamboo-O manufacturing can make our client's visions a reality. Here at Earthmade, we not only care about the environment, but we are also passionate about innovating and creating something new. Therefore, we welcome any businesses that have unique product ideas and are interested in taking advantage of Bamboo-O to cooperate and create something special while benefiting the world at the same time.
For more information on our Aroma series and Bamboo-O, or to get in touch, please visit our website: https://www.earthmade.cc.
OEM (Original Equipment Manufacturing) and ODM (Original Design Manufacturing) are two of several models through which product businesses outsource product manufacturing to third-party contract manufacturers. OEM is a manufacturing model where customers provide specialized manufacturers with custom product designs. The supplier works with their existing technology and components to create a unique finished product that the customer can market exclusively. In ODM, on the other hand, the customer orders an existing product from the manufacturer that produces it, then brands it and markets the product as their own (This is also known as private label manufacturing).
In this article, we will examine what is OEM vs ODM manufacturing, exploring these models' characteristics, applications, benefits, limitations, how these factors can influence your business, and which type of manufacturer to work with based on your projects or companys needs.
In the OEM model, specialized manufacturers, known as original equipment manufacturers (OEMs), produce finished products or components according to a customers specifications. The purchasing company then retails the products under their brand name. A key distinguishing characteristic of OEM vs other outsourced manufacturing models is that OEMs are generally specialized manufacturers that focus on specific products or product categories. The manufacturer contributes their know-how and existing technology to the final product design, in contrast to contract manufacturing, where the customer is responsible for the whole product design, or ODMs, where the supplier is providing it.
Customers using OEM models usually have sufficient engineering and financial resources to produce unique designs and fund their tooling and manufacturing rather than buying off-the-shelf products or parts. OEM manufacturers also commonly produce parts that will be used in other products. For example, car companies rely on various OEM manufacturers to create components and systems, such as automotive seats, console controls, etc. The manufacturers have the know-how in specific applications and product areas but produce parts to the customers specifications. The customers may be brands such as Volkswagen, Ford, and GMC for example.
What is an example of OEM manufacturing model?
In OEM, the customer provides the design and specifications of the product and holds IP rights to these. The following is a typical example of an OEM scenario. A company that markets and sells air conditioner (AC) units contracts a manufacturer that specializes in this product to manufacture theirs. The company designs the unit, providing the manufacturer with industrial and electronic designs and other AC unit parameters. The manufacturer uses their existing facilities, tooling, material suppliers, and supply chain to manufacture and deliver the AC units to the company according to the designs and specifications. The company then markets and sells the units as their own.
Advantages of OEM
Some of the unique advantages of OEM are as follows:
Disadvantages of OEM
The OEM model also has some inherent limitations:
Fig 1: OEM Contract Manufacturing Process
ODM is a manufacturing model in which a company orders the existing product of a manufacturer, brands it as its own, and markets and sells the product. In this model, the manufacturer is called the original design manufacturer. They design, manufacture, and sell specific products to brands and retailers and hold all the IP rights to the products. Generally, the customer ordering the product can only requeq rst minimal alterations to the product, such as color changes, logo additions, and slight design modifications like changing button style, adding different accessories, etc.) that dont impact the products tooling (as this is owned by the supplier and used for different customers). The key distinguishing characteristic of ODM is that the products are either ready-made or have a fixed design that the customer does not alter.
From solopreneurs looking to get into the retail business to large corporations, various levels of business utilize ODM. Typical ODM products include low-end consumer electronics, plumbing fittings, domestic appliances, basic machinery, furniture, and fast fashion. Private label businesses make up the majority of ODM customers.
What is an example of ODM manufacturing model?
ODM contracts vary. However, they are typically similar to the following scenario. A company approaches a manufacturer that produces a particular electric drill and orders a number of drills in specific colors. The manufacturer takes this order, makes the drills like they usually do but in the customer's color, adds the companys logo, and delivers the drills to the customer.
In this scenario, the customer only specified the product color, logo, and possibly packaging design or other minor details. If the customer didn't request any alterations, and the manufacturer has premanufactured drills, they may even simply add the customers logo to the drills and deliver them.
Advantages of ODM
ODM manufacturing offers the following benefits:
Disadvantages of ODM
Fig. 2: ODM Contract Manufacturing Process
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To determine the best model for your business, it is imperative to understand the differences between OEM and ODM, as these differences can impact a business's operations, market positioning, and bottom line. You can achieve this by directly comparing them while considering certain factors.
Model OEM ODM Product Ideation Client Client Research & Development Both Factory Product Testing Both Factory Product Manufacturing Factory Factory White or Private-Label Offerings Both Factory Branding Client ClientTable 1: OEM vs ODM
Customer Involvement
Customer involvement is the most significant difference you'll notice when analyzing what is OEM vs ODM. In OEM, businesses can stipulate specific designs and specifications for their product. There is significant customer input on the engineering, quality, and testing side for everything from material selection and testing procedures to quality assurance operations.
On the other hand, ODM manufacturers are responsible for everything in the product development cycle. Depending on the manufacturer, the customer may have the right to request minor changes. They may also request proof of certain certifications and QA tests. OEM gives the business more control over the manufacturing process. However, this comes with additional responsibilities. In contrast, ODM relieves businesses of any manufacturing responsibilities but also eliminates control.
Flexibility and Scalability
ODM and OEM each offer unique forms of flexibility. OEM contracts are made at the beginning of the project, expressly stating specifics such as design, specifications, and quantity. The stakeholders agree on fixed costs and delivery timelines based on these specifics, thus making it difficult to make any changes mid-contract. Similarly, most OEM manufacturers only accept large production volumes. The flexibility they offer is related to product design - customers have much more leeway to customize the product, make changes to function, appearance, etc.
ODM is even more rigid when it comes to design changes. However, what ODM lacks in design and manufacturing flexibility, it makes up for in production volume and manufacturer flexibility. Since they are almost constantly in production, ODM manufacturers can accept a wide range of production volumes. This flexibility business enables businesses to scale seamlessly. Customers can order a small quantity of products and progressively increase the amount as the business grows. The ODM model also allows companies to change manufacturers more easily, provided that there is another manufacturer with a similar product model or design.
Product Differentiation (Uniqueness)
The OEM model gives businesses design control, enabling them to maintain a level of distinctiveness in brand identity. This factor is particularly valuable in industries where customization and uniqueness give businesses an edge. Conversely, in ODM, a company can simply "slap on a logo" and have this as the only difference between their product and their competitors. While businesses can request minor modifications, generally just surface-level changes to color or packaging.
Fig 3: Example of Brand differentiation in OEM vs ODM using kitchen blenders
Because the ODM manufacturer is responsible for the entire product development, from design and prototyping to manufacturing, they hold all IP rights to the product. The minor tweaks that a business may make are inconsequential in IP considerations. IP rights ownership varies in OEM, depending on the agreement between the manufacturer and the customer. Typically, the manufacturer owns rights to internal designs and tooling, while the business owns the rights to their designs and proprietary technologies.
ODM manufacturers have designed, tested, and readily available products and tooling. This eliminates the entire design, testing, and tooling preparation phase. The manufacturer may also have ready-made products available. These factors significantly speed up product time-to-market. Any minor alterations the customer requests will have minimal impact on the timeline. This speed allows private labels to obtain a sample and receive goods in a few weeks to up to three months, depending on the changes made (custom colors or packaging) and the time for shipment.
OEMs also offer relatively fast time-to-market, as these specialized manufacturers have tooling, supply chains, and suppliers for specific products. However, as customer designs are unique to them, they will often require further testing and custom tooling, increasing development timelines to 6 to 12 months for a typical electrical product or 3 to 6 months for a more straightforward product without tooling or extensive testing/certification requirements. OEMs, unlike ODMs, usually wont have stock available as each design is specific to a customer.
ODMs take on the bulk of initial investment costs. They own the tooling and have covered design, testing, and certification. These costs may be amortized into the product, but as long as they are sold in big enough volumes, the cost per unit will be very low. Price scales directly with order quantity - the more you buy, the lower the cost.
Businesses using the OEM model have to spend that extra initial investment cost in designing and developing their product, which generally means the cost per unit for testing and tooling is higher for OEM projects. Cost per unit depends on volume but is also affected by the cost to run customer-specific tooling, equipment set-up, minimum order quantities for unique parts, etc.
Criteria OEM ODM Customer involvement High levels of customer involvement and control No customer involvement Flexibility and Scalability Flexible design specifications, large production volumes Fixed design, a wide range of production volumes Product uniqueness Relatively unique products The same products across all customers, with insignificant differences Design and tooling IP rights Rights ownership varies, depending on the contract. Manufacturer and customer may share rights Rights solely belong to the manufacturer Initial Investment costs Higher initial investment costs due to product design and custom tooling Lower initial investment costs due to ready-made designs and tooling Minimum Order Quantity (MOQs) Medium to High (products are made to order) Low to high - may be as little as a few pieces of standard colors and packaging ordered Product development timeline More time is spent on product design, prototyping, and procurement, leading to slower product development Faster product development due to ready-made productsTable 2: Comparing OEM vs ODM models
The next step is selecting the suitable model for your business. Factors such as the company's size, industry, specific needs, and strategic goals influence the choice between OEM and ODM. These factors can be broken down into cost, resources, IP rights, and time considerations. Many of these factors and considerations are interrelated and directly relate to a business's strategic goals, resources, and market dynamics.
When to use an OEM
When Design and Manufacturing Control are crucial
When Brand identity and product differentiation are important
When Intellectual Property is Crucial
When to use an ODM
When Volumes Are Low
When Time-to-market is Key
When Cost is King
When Company Size or Capabilities Are Limited
Table 3: OEM vs ODM, Selecting the Right Model
The ODM and OEM models are widely used by various levels of businesses across numerous industries. These outsourced manufacturing models have different characteristics, benefits, and limitations, making each better suited to different businesses' needs, goals, and resources. The key difference between them is the level of customer responsibility, rights, and control involved in the product development cycle and manufacturing process.
ODM is a fast, low-cost method to get a wide range of product quantities. However, these come at the expense of control, IP rights, and product differentiation. Conversely, OEM gives businesses substantial control, relatively unique products, and the rights to their designs and technologies. For these benefits, companies have to spend more time and resources.
If you need the minimal responsibility that ODM offers but also the high levels of control obtainable in OEM, then turnkey manufacturing, another manufacturing model, may be the right option for you.
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