Let’s say you are a startup company–specifically a consumer electronics brand wanting to create a new line of smart speakers for your business.

You have two most common options in manufacturing your newest invention:

It’s either you come up with a concept for your line, identify the specific features you want it to have and partner with a manufacturing company that has the infrastructure to build it from scratch. 

Or, you don’t have a specific design in mind, leading you to look for a manufacturer who can both design and make the product you will sell. 

Your first option is specifically how it’s like collaborating with an OEM or Original Equipment Manufacturer, while the latter sums up the experience of working with an ODM or Original Design Manufacturer. 

When it comes to OEM vs ODM, your business’s priorities, specific requirements and capabilities are the biggest considerations that can guide you in your decision. 

The right choice allows you to manage, strategise, and plan your resources better. And while it may feel like a big decision, having enough knowledge of these two models can help you make an informed choice. 

In this article, get deeper insights about ODM, and OEM, their differences, and key considerations to help you identify the best manufacturing model for your business.  

Understanding ODM and OEM: A Brief Overview

What is ODM (Original Design Manufacturing)?

An Original Design Manufacturing service is where the manufacturer handles the entire product development process from scratch. 

Companies offering an ODM service usually come up with the product idea on their own and already have it ready for use. With this model, you can pick existing designs from the manufacturer and just incorporate branding (i.e. colours, packaging, etc.) to the product and sell it under your brand name.

An ODM is a better option if you require design expertise—it will help you save on design costs. 

Smaller and newer companies planning to launch new product types may find ODM a great choice, however, note that you’ll have lesser control and perhaps, visibility, on how the product is being made. 

Industries commonly using ODM are tools, electronics, computers, home appliances, the food industry, and health tech, among others. 

What is OEM (Original Equipment Manufacturing)?

In the OEM vs ODM comparison, an Original Equipment Manufacturing or OEM service allows brands to be more involved in the process. 

Here’s how: In an OEM model, your brand designs the product–it is beneficial for those who already have a crystal clear concept of their product, but don’t have the resources to manufacture it. 

You provide detailed plans to the manufacturer which they follow as it is. With this, you have full control over the design and specifications of the product. Choosing an OEM  is the best option for companies that have their design and specifications ready but prefer to outsource manufacturing. This approach helps streamline the supply chain, lower material costs (MCOGs), and create a more sustainable business model compared to managing manufacturing and related operations in-house.

Some industries that commonly rely on OEM include automotive, industrial products, medical devices, etc. A famous brand that uses the OEM model is Apple.

OEM gives you more customisation options and control for quality. However, an upfront cost for research, development, and design will be needed. 

Key Differences Between ODM and OEM

For a quicker view of the OEM vs ODM debate, you can simply recognise their difference according to four categories: product ownership, customisation level, development time, and costs. 

These factors are crucial in determining which option fits your business priorities. Below is a table you can use as a guide. 

OEM vs ODM
Feature	OEM (Original Equipment Manufacturing)	ODM (Original Design Manufacturing)
Product Ownership	Brand owns the design	The manufacturer owns the design
Customisation Level	Full customisation	Limited customisation
Development Time	Longer	Faster
Costs	Higher development costs	Lower upfront costs
Best for	Companies that need unique product designs	Businesses that want ready-made products

Pros and Cons of ODM and OEM Models

Each model comes with its own unique set of benefits and trade-offs. Here’s a closer look at what each option brings to the table–and where they fall short. 

Pros and Cons of ODM

Advantages 

• Lower production costs
• Faster time-to-market
• Less technical expertise required

Disadvantages 

• Limited customisation
• Products are not exclusive to your brand

Pros and Cons of OEM

Advantages

• Full product customisation
• Stronger brand identity
• Better control over quality and features

Disadvantages

• Higher production costs
• Longer development timelines
• Requires technical expertise and resources

OEM vs ODM: Which is the Right Choice for Your Business?

Key Considerations for Choosing Between ODM and OEM

Deciding on OEM vs ODM is not a decision you must take lightly. After all, you are investing your resources, time, and effort. Here are some significant considerations you could reflect on as a brand: 

• Business goals and product vision: Your business goals and product vision should guide whether you need full control over design and customisation (OEM) or a ready-to-market, pre-designed solution (ODM).
• Budget and financial investment: What are your resources and budget considerations? Do you have in-house engineering expertise?  Do you have the budget for research and product development? A clear understanding of your financial limits will guide your choice between OEM and ODM.

• Time-to-market urgency: How quickly do you need to launch the product? OEM is a great option if you want to spend more time on the design phase and product testing. On the other hand, ODM service is better if you want to launch your product immediately. 

• Intellectual property (IP) concerns: Choosing ODM means brands don’t hold exclusive rights to the product unless they pay an additional fee for exclusivity. Opting for OEM, however, allows brands to own exclusive rights to the product because they provide the design and specifications to the manufacturer.

• Customisation and branding requirements:  Do you just need a product whose design is readily available and you just need customisation and branding requirements? If yes, choosing ODM will be a wiser choice.

Hybrid Approach: Can You Combine ODM and OEM?

Sometimes, it’s more than just the OEM vs ODM question. Blending both approaches allows your business to maximise the strengths of both models. 

Yes, you can combine aspects of ODM and OEM and many businesses utilise this hybrid approach. 

By combining these manufacturing models, you customise the process to align with your operational requirements, goals, and market conditions. It allows your brand to have the best of both worlds, ensuring a competitive advantage in the market. 

The OEM and ODM hybrid approach is best for: 

• Companies that want to modify existing ODM products while still retaining some level of design control.
• Businesses that source standard parts via ODM but customise key elements via OEM.
• Brands that start with ODM for market testing, then shift to OEM once demand grows.

The Best Manufacturing Model Depends on Your Business Priorities

Thinking through the OEM vs ODM choice, you’ll need to evaluate your priorities. 

Is it control? Speed-to-market? Budget and financial investment? Understanding which direction you want your brand to go can help make the decision easier. 

Consulting with a professional product designer and manufacturer can provide expert guidance, helping you reach more clarity in your options. With nearly 40 years of expertise, Aztech Technologies Pte Ltd may be the right ODM/OEM partner to help you bring your product vision to life. 

We are a one-stop integrated design and manufacturing solutions provider based in Singapore providing global ODM and OEM services for brands across various industries such as security, consumer electronics, health tech, industrial, communications, and automotive. 

Let our experience and expertise guide you toward the best manufacturing model for your business needs. Contact Us to learn more.