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Original Equipment Manufacturer
An Original Equipment Manufacturer, or OEM, manufactures products or components which are purchased by a second company and retailed under the second company's brand name. It is a form of outsourcing.
Original Design Manufacturer
An original design manufacturer, ODM is an OEM that designs as well as builds products or components for sale to a second company that retail under the brand name of the second company. It is a form of outsourcing.
Difference between OEM and ODM
The crucial difference is that an OEM manufactures, while an ODM designs and manufactures.
Benefit of OEM and ODM
The practice of utilizing OEMs relies on the original equipment manufacturer's ability to drive down the cost of production through economies of scale. It also allows the purchasing company to obtain the needed components or products without owning and operating a factory.
The term, OEM (original equipment manufacturer) refers to companies that make products for others to repackage and sell. Resellers buy OEM products in bulk, minus the costly retail packaging that comes with individually sold units. The product itself is essentially the same as its more expensive, retail-packaged sibling. OEM products are used in many industries, but are perhaps most prevalent in electronics.
Generally, dealers of OEM or ODM products add something of value before reselling the merchandise. An OEM vendor that does this is known as a "value added reseller" (VAR). A VAR might build components, sub-systems, or systems from quality OEM or ODM parts. OEM or ODM goods allow VARs a wide range of creative marketing choices, which permits smaller dealers to be competitive in the marketplace.
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