The difference between OEM and ODM OEM enterprises need to improve product performance and earn profits, and the first thing to do is to produce and process their own products. Production and processing is the most basic and important part. Processing and manufacturing enterprises refer to enterprises that make profits by providing foreign enterprises with production technology or raw materials to process products.
China is rich in human resources, and its labor production cost is relatively low in developed countries. After the reform and opening up, the labor-intensive processing and manufacturing industry once flourished, contributing to the rapid development of China's economy. OEM and ODM are two production and processing methods. What are the specific differences between them?
The so-called OEM refers to entrusting Company A to produce products for other companies, without using Company A's own brand, and without being responsible for the sales of these products, but only for the processing and production of the entrusted company, or in full accordance with the design and technological requirements of the entrusted company. For example: A puts forward the functional requirements and design scheme of a product and asks B for it? OEM? Sell it in the name of A, then what is B? OEM supplier? ; A takes a fancy to the products of factory B. If A wants to sell them in the name of A, let B do it? OEM? , so b is? ODM supplier? .
The biggest difference between OEM and ODM is not just the name. OEM products are tailor-made for brand manufacturers. After production, only brand names can be used, and manufacturers' own names can never be used. ODM depends on whether the brand enterprise has bought out the copyright of the product. If not, as long as there is no design appraisal of the enterprise company, the manufacturer has the right to organize production by itself.
In industrial society, OEM and ODM are commonplace. Well-known brand enterprises are generally willing to find other manufacturers or ODM for the sake of manufacturing cost, convenient transportation and saving development time. Well-known brand enterprises have to bear a lot of responsibilities when looking for other enterprises to carry out OEM or ODM. After all, the product is crowned by its own brand. If the product quality is not good, at least customers will complain at home, and at worst, they may go to court.
Therefore, brand enterprises will definitely carry out strict quality control during the entrusted processing period. But after OEM, the quality can't be guaranteed. Therefore, when some merchants tell you that the manufacturer of a product is an OEM or ODM product of a big brand, don't believe that its quality is equivalent to the brand. The only thing you can believe is that this manufacturer has a certain production capacity.
For enterprises, it is not simply to entrust manufacturers to produce products for them, but also to know the difference between OEM and ODM in detail. Only by doing enough homework can we formulate better marketing strategies according to the enterprise's own situation, thus promoting the long-term development of enterprise trade activities.
What are the benefits of OEM? In recent years, more and more people choose to travel abroad. Many tourists not only appreciate the beautiful exotic customs when traveling abroad, but also choose to buy many products of foreign brands before returning home. Careful friends will find that although the products are well-known foreign brands, the labels often carry? Made in China? In that case. This is actually branding.
OEM means original equipment/commissioned manufacturing (translated as OEM or OEM). OEM means that the products are labeled with other brands after they come out, and the products are theirs. The manufacturer is only responsible for processing and manufacturing, and has no patent right to the brand. Just like Foxconn assembles the iPhone for Apple, and after the assembly, it is labeled with Apple's trademark, which belongs to Apple's products, not Foxconn's. So there are many goods made in China but not made in China, and China has become the world's? Manufacturing plant? . What are the benefits of OEM to enterprises and manufacturers?
Advantages of OEM:
Compared with the buyer, the supplier is in a relatively passive position, however, it is still profitable to adopt OEM.
(1) Enter the international market and participate in international competition.
In recent years, the competition in domestic household appliances and other industries has become increasingly fierce, and the market has become saturated. In order to open the market, some domestic manufacturing enterprises do OEM work for foreign brands. Enhance the global awareness of enterprises.
(2) scale production, reducing costs
Economies of scale generally exist in modern production, that is, with the expansion of output scale, the unit cost tends to decrease. This may come from the deepening of specialization and the distribution of fixed costs. If the enterprise itself has this overcapacity, the effect of cost reduction will be more obvious. Participating in OEM supply means the expansion of output scale, which not only increases product sales, but also reduces costs.
(3) Learn from experience and improve management.
Enterprises that provide OEM often play an important role in the product supply chain of OEM buyers. OEM buyers can have strong strength in production management, marketing and product development. In the process of cooperation, OEM suppliers can organize production according to the requirements of the buyer in the management of product quality control, success control and operational efficiency control, and have advanced organizational control, which comes from? In high school? Accumulate experience and improve the management level of enterprises.
(4) product innovation, enhance the ability
If OEM products are innovative products, suppliers can not only meet the needs of buyers, but also sell them in domestic and foreign markets under their own brands. Or increase the length of the product line and launch new products; Or deepen the depth of the product line and increase the variety of existing products, which will increase the competitiveness of enterprises in any way.
For buyers and sellers, OEM mode not only enjoys the overall competitive advantage of products, but also has the most distinctive advantage, that is, the flexibility of buyers and sellers inside and outside the market. Either party can terminate the contract at any time as long as it finds a more profitable way. From this perspective, the OEM market is efficient.
(5) Saving sales investment
When enterprises face foreign markets, it is difficult to establish a completely independent circulation network because of the vast territory and different business habits in different countries. But it will be much more convenient to borrow the sales force of foreign companies. For example, Fuji, Ricoh and so on. OEM is adopted for its manufacturers and brokers in Europe and America, which reduces the friction in the business process, reduces the large amount of sales funds that enterprises should have invested, and enables enterprises to adapt to overseas operations.
For dealers, they can work out the most suitable marketing plan according to their actual situation. When there are problems or changes in the plan or market, we can adjust the plan as quickly as possible and formulate countermeasures. At the same time, the profit space can be mastered by itself, which avoids many troubles such as disagreement among manufacturers, and calmly responds with the fastest response and the highest efficiency in complex and changeable business wars, while manufacturers can make full use of their own resources to achieve the purpose of improving efficiency.
For product suppliers, OEM can not only maintain the survival and development of enterprises, but also provide a learning channel for manufacturers. On the one hand, product suppliers can produce more cheap products by constantly improving the quality and production level of workers, on the other hand, they can learn from the market experience of brand manufacturers and improve their market development ability. OEM has realized the complementary advantages and win-win situation of distributors and product suppliers.
After the reform and opening up, a series of policies and guidelines implemented in China have achieved great results, and the level of productivity and economy has developed rapidly. As the saying goes, there will be a market if there is demand. From the perspective of economics, with the high development of market economy, the social division of labor will inevitably become more and more detailed.
OEM is a phenomenon with the refinement of social division of labor, which actually represents an idea of division of labor and refinement of competition. Its biggest feature lies in the separation of brand and production, which makes producers more focused on production and frees brand holders from complicated production affairs. OEM reduces the investment in fixed assets such as factory buildings and equipment, and hands over production-related technologies and work to professional enterprises, which can improve product quality and shorten production cycle. Everything has two sides. While OEM provides convenience for manufacturers and markets, it also has some disadvantages.
OEM is a parasitic phenomenon, which has existed since the concept of private brand. It originated in developed countries. At first, it was a rule of the game for large enterprises with independent brands and market advantages to seek partners for joint production in order to reduce production costs and increase brand added value.
In view of this, some brand enterprises slowly extend their horizons and tentacles to the backward areas of developing countries, especially those centered on manufacturing, in order to obtain the huge resources needed by processing places with market advantages and actively seek agents? OEM, let them only be responsible for processing products, and then put on their own trademarks and sell them in their own names, so as to expand their brand influence and realize? Is the world armed? Brand goals. In the eyes of brand enterprises, the processing place is their own world workshop.
And those who volunteer to do OEM work are generally unknown manufacturers and enterprises. Limited by the lack of technology and funds, they can't independently research and develop, the market has no foothold, and they can't seize the market share at all, so they have to lower their posture and ask for orders from brand enterprises in order to survive. Buy wedding dresses for other girls? , for human production. At the same time, in the case of limited orders, they are willing to sacrifice their own profits to reduce prices, leading to competition among OEMs.
When the world economy is developing strongly and the demand is very strong, some enterprises are not because there are a steady stream of ready-made orders from others. There are often days of thinking? , but? Drink today, get drunk today? I don't work hard on my own brand, but I am enthusiastic about others, blindly catering to other people's charitable orders, and thinking about other people's food all day and I will never starve to death. Happy? .
This inertia caused by OEM processing itself greatly hinders the enthusiasm and self-confidence of processing enterprises to create their own brands, and also greatly weakens the competitiveness of OEM enterprises. In the face of powerful brand enterprises, they have no bargaining power, but passively process and produce according to the requirements of brand enterprises, for fear that an unintentional word will ruin their cooking and will? Attention? Only after getting the order, through the so-called mass production, small profits but quick turnover. In the face of orders, they not only failed to strike back, but also failed to strike back.
OEM is essentially a brand colonization, which shows that it provides a way of life for product suppliers. In fact, it deprives these manufacturers of the right of independent research and development in disguise, and also weakens the competitiveness of foundry enterprises. Over time, it will have a certain impact on the balance of the whole market.