What is OEM?
Original Equipment Manufacturing is a type of outsourced-manufacturing or Contract manufacturing China. OEM just indicates that a factory is willing and able of manufacturing products according to your special designs and specifications.
Now you might believe you need an OEM factory for even the least degree of customization. But this is not the case. In simple words, you could say that you are dealing with an OEM product China if you need to make fresh tooling before you can begin production.
Typically, before you can let an OEM produce your product, you first need to perform your own research and development. This contains design, market research, and engineering.
So let’s say you have been working on a big idea of Smart-glasses that, besides helping you to view better, also show incoming text-messages, the dimensions of any object and news.
You are an engineer yourself and have hire design-home to make a charming design for the glasses. Further, you have ran a successful campaign on Kickstarter. The campaign has verified that there is sufficient demand for your product, and you have raised the $200,000 you need to bring the smart-glasses into manufacturing.
The largest benefit of OEM is that you have full control over your intellectual property (IP). Because you have performed all the R&D yourself, all IP rights belong to you. This provides you an excellent bargaining position and makes it simple to switch to other suppliers if required. Anyway, forever save your IP well. The final thing you want is that your special designs and specifications are stolen by copycats.
Because you have a full package of specifications and designs, it is simple to get quotes from producers.
For little businesses, the key benefit of working with an OEM is that you need to offer the producer with full and right designs and specifications.
Not all firms have in-house resources to generate these. And they might not be in the financial place to hire 3rd parties. For them, a ODM could be a best substitute.
An OEMs initial responsibility to produce the goods according to your specifications and design. So, all prior research and product development should be performed by you, the client. This can take up months and goes with important costs for engineering, design and tooling.
When functioning with an ODM, this all is taken care of. As an outcome, product development cycles are much little, which can keep you tons of money.