An ODM, or original design manufacturer, is a company that designs and manufactures a product that is eventually re-branded and sold by a different company. This model is frequently used in international trade. A local ODM will produce goods for a foreign company; this choice is usually made in response to some kind of advantage, such as low labor-inputs, transport links or proximity to target markets. ODMs are especially useful when local ownership laws could possibly prohibit direct ownership of assets by the foreign entity, allowing a local firm to produce for a brand company.
ODMs make it possible for a company to get a product to completion without having to design the hardware from scratch and invest in a production facility. The ODM supplies the manufacturing capabilities for their branded partner.
ODM falls under the outsourcing category and have grown in size in recent years. Many ODMs are now sufficient in size to handle production for multiple clients, providing a large portion of the overall production for their clients.
The defining factor of an ODM is that they own and/or designs in-house the products bought by the buying partner, in contrast to a contract manufacturer, like Alotech.
Benefits of Working with an ODM
The biggest benefit of going with an ODM is that you don’t have to spend any time designing the product. For an inventor, this isn’t an appealing benefit. Part of the fun is tinkering and designing, changing specifications as you learn more from your target market or figure out what works and doesn’t.
But not having to design the product leaves you a lot more time to spend on core operations and bank on the skills of a skilled manufacturing company.
There may also be the benefit of a lower price compared to designing and refining yourself and producing the product. Since you don’t have to spend time and resources designing your product, that money can be fed into the branding and marketing of the product.
Disadvantages of Working with an ODM
While there are some great benefits to working with an ODM, there are sine disadvantages. You will not be receiving a unique product like if you had invented and designed it yourself. This means you will be selling a product with competing products that meet the exact same specifications. You will have to differentiate your product from your competitors through your branding, which means any money you may have saved by working with an ODM could be used in the marketing to make sure your product is a success.
It can also only be truly effective for certain types of products. Unique goods that work on a specialized system can’t be made at an ODM in a cost effective manner.
Industries that Rely on ODM Manufacturing
Many different industries rely on the skills of an ODM manufacturer, especially the food industry. Most supermarkets will have their own range of basic items, like Walmart’s Great Value brand, that may share the same supplier as another supermarket’s brand. While they may have different suppliers, chances are incredibly likely they’re simply re-branding the product in their own name.
Other general industries include:
- Electronics
- Clothing
- Medications
You may not always benefit from working with an ODM, there may be other options that make sense for you and your invention.
At Alotech, we partner with you to find creative ways to help you navigate the manufacturing world. Because we work with inventors with a range of products and needs, we have the resources and knowledge to help you be successful. Contact us today by calling 919-842-3599, or visit our contact page and fill out the form.