In the world of manufacturing, there are different types of business models that companies use to produce goods. The three most common models are OEM, ODM, and OBM. These terms can be confusing, but they refer to different levels of involvement in the manufacturing process. Understanding the differences between OEM, ODM, and OBM can help you make informed decisions about your own business strategy.
OEM (Original Equipment Manufacturer)
OEM refers to a company that designs and manufactures a product, which is then sold under another company’s brand name. In other words, an OEM creates products that are sold by another company under a different name. The OEM is responsible for the design, production, and quality control of the product, while the other company is responsible for marketing, sales, and distribution.
For example, LG is an OEM that produces consumer electronics and consumer durables. These devices are sold under the LG brand name, they are manufactured under LG own factories.
ODM (Original Design Manufacturer)
ODM is similar to OEM, but the difference is that an ODM produces products based on the specifications and designs provided by another company. In other words, the ODM is responsible for the manufacturing process, but the design and branding are done by the company that commissioned the product. The ODM has the expertise and infrastructure to manufacture the product efficiently and cost-effectively.
For example, Apple is known for designing its own products, but it also uses ODMs to manufacture them. Foxconn, a Taiwanese electronics manufacturer, is one of the ODMs that Apple uses to produce iPhones, iPads, and other devices.
OBM (Original Brand Manufacturer)
OBM refers to a company that designs, produces, and sells products under its own brand name. OBM companies have more control over the entire manufacturing process, from design to marketing to sales. OBM companies are responsible for everything from concept development to customer support.
Tesla is an OBM company that designs, produces, and sells electric vehicles under their own brand name. They have control over everything from the design of the cars to the software that runs them.
Key Differences
The main difference between OEM, ODM, and OBM is the level of involvement in the manufacturing process. OEMs design and manufacture products that are sold under another company’s brand name, while ODMs manufacture products based on the designs and specifications provided by another company. OBM companies design, produce, and sell products under their own brand name.
Another key difference is the amount of control each type of company has over the manufacturing process. OEMs have the least control, as they are only responsible for the design and production of the product. ODMs have more control, as they are responsible for the manufacturing process, but not the branding. OBM companies have the most control, as they are responsible for the entire process, from design to marketing to sales.
