Nowadays, there are a lot of large companies or individual brand owners who use OEM and ODM services to produce their products so that they do not need to invest heavily in providing buildings, production facilities, production machinery, and equipment as well as the labor involved in producing their products. Thus, production costs are lower and can increase profitability and increase company competitiveness.
What are OEM and ODM?
In companies engaged in manufacturing, we are quite familiar with the terms OEM and ODM company. What is ODM? OEM stands for Original Equipment Manufacturer while ODM is Original Design Manufacturer. They are related in terms of manufacturing. Manufacturing is a collection of activities or industries that process raw materials into finished goods to be sold and give advantages to the use.
This collection of activities includes designing, planning, documentation, selecting, and purchasing raw materials / supporting materials (purchasing), production, quality control, and product quality assurance (Quality Assurance).
Definition of an OEM (original equipment manufacture) company
OEM (Original Equipment Manufacturer) is a company or organization that designs and produces products (components or finished goods) according to the specifications determined and then sell them to the buyers or other companies. The buyers then distribute the product or component. The specifications referred to OEM are product specifications determined by the OEM company. In other words, an OEM company produces products on behalf of another company, after which the buying company markets the product under their own brand.
Definition of an ODM (original design manufacturer) company
ODM is a company that designs and manufactures a product which is then branded by another company to sell. Such companies allow the company that owns the brand to produce goods without having to run a factory.
Definition of a contract manufacturing
Contract manufacturing is a popular type of outsourcing that is used by many companies. One of them is collaboration in the production of cosmetics or beauty products through a cosmetic printing service system. Printing services or contract manufacturing is the outsourcing of part of the product manufacturing process to third parties. More specifically, the focus of the printing services activity is the outsourcing of production previously carried out by a company to other companies. A company can outsource the manufacture of components in a product or outsource the assembly of the product. Today, contract manufacturing has grown from being a manufacturer of certain products to become experts in design, production, assembly, and distribution.
Benefits of contract manufacturing
There are a few benefits of contract manufacturing in many industries. The reason why companies choose contract manufacturing is that companies/individuals can significantly save funds for labor, materials, and other costs related to production.
In the context of international and national trade, there are many companies or manufacturers in developing countries because of cheap human resources and regulations that are not complicated and confusing.
However, users of contract manufacturing must continue to carry out proper supervision, so as to reduce production costs, maintain production quality, and increase profit margins.
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