About ODM vs. EMS, As the electronics industry blooms, every original electronics manufacturer has multiple options while choosing a manufacturing partner. If appropriately selected, each can fulfill the requirements, whether a CM, CDM, ODM, or JDM.
However, so many acronyms have made simple outsourcing a very tough task to perform. For example, the CM and ECM may perform the same things to some extent. But, if their slight differences are not understood, you might sign up the contract with the wrong guy.
In this blog, we aim to provide you with some clarity about each term in easy words. Additionally, we’ll narrate some practical differences between ODM vs. EMS so that you can compare your situation and choose the one you want.
Table of Contents
- What is an OEM?
- Who are Original Design Manufacturers?
- Who are Contract Solution Providers?
- ODM vs EMS– Why should you choose an EMS provider?
What is an OEM?
OEM stands for Original Equipment Manufacturer. It is the owner of the brand, the one that displays its logo on the final product. For instance, Dell, Apple, Samsung, Lenovo, etc. These companies strictly retain their Intellectual Property (IP) rights.
Here, if you see the manufacturing process of such companies, they hire other manufacturers to do their job. Let us take Apple’s products as an example. The company has its logo on everything it produces, and initially, the products are not manufactured on Apple’s site itself.
Instead, the company hires other manufacturing companies for the production of their goods. Either the contract can be with an ODM or EMS.
In this way, OEM cuts its cost, as it is ideal for them to pay another company for the land and factory costs, testing products and hiring, training staff for the process. On the other hand, if they take all the responsibility, the scalability will be much more challenging.
Thus, they only work on the innovation of the product and do not worry about the making. Yet OEM has to hire an outsourcing manager, which still is not a pricy thing to do.
Who are Original Design Manufacturers?
As the OEM retain their IPs, they make the other companies work for their design services. However, the ODMs have their designs as well as the production and distribution line. These companies do not rely on other companies for core manufacturing services. But these products are sold by other brands with their logos.
The ODM can be white label or private label. The ODM company designs, manufactures, and distributes the finished goods to various retailers and rebrands them white-label. On the other hand, private labeling restricts the ODM from sending their finished products to only one particular retailer.
In design manufacturing, another popular term is the Joint Design Manufacturer or JDM.
What is JDM?
The OEM and design manufacturer jointly design the product in this agreement, thus sharing an agreement. Typically, both parties have equal rights on the IP of the product. In this scenario, the OEM only contributes to the design. In contrast, the JDM will also offer all the manufacturing work as their responsibility.
ODM vs EMS– What is CDM?
As the ODM was competing with the EMS model, bringing their IP and selling the products under their brands, the EMS evolved into something better. That is CDM or Contract Design Manufacturing.
These contractors now provide the products and design support services to the customers of their hiring companies. It is a new concept prevailing in the industry and has offered tough competition to the ODM model.
Who are Contract Solution Providers?
Caption: Electrician testing equipment
Opposite to OEM, the contract solution providers offer their production services to the OEM companies to bring their assembled products to the market. You can categorize the contract solution providers into other categories, such as CM, CEM, ECM, EMS, JDM, ODM, etc.
In these categories, the only difference is the level of services the manufacturer provides. While some contract electronic solution providers offer product designing and manufacturing only, others may offer other services.
These services include supply chain, logistics, and procurement of material, etc. Even some solution providers offer repair services to the OEM end customers if the products fail during usage.
The popular categories are
ECM or CEM
Electronics Contract Manufacturer (ECM) or Contract Electronics Manufacturer (CEM) is the company that contracts with the manufacturers to make the electronic parts for them. They may provide the OEM with single components that they can assemble on their own. Sometimes, an electronic contractor may also have the facilities to create a whole product and send them to the market under the OEM logo.
Industries, such as defense, aerospace, medicines, food, and testing hire the ECMs to do their job.
ODM vs EMS– CM
CM stands for Contract Manufacturing. The contract is outsourcing the work, where the hired company acts as a factory to OEMs. CM quotes the production costs evaluating the labor, process complexity, and the material for the designs of OEM.
CM are commonly hired in automotive, defense, food, and beverage industries like the CEM. The only thing to consider is that CM can replace the CEM manufacturing, but vice versa is not possible. It is because the former is a broader concept and offers more than just electronic contract manufacturers.
How is EMS a little different?
An EMS company is also a contract manufacturer for the electronic field. Like the ECM, an electronic manufacturing service provider or EMS quotes the price for the whole process. Also, the EMS offers product designing, development, testing, shipping, and repairing.
However, there are some other value-added services that the EMS offers, but an ECM does not. These are the back-end supply chain services, outbound logistics for OEMs products, software design assistance, and configure-to-order.
As real-life examples, you may take the multinational companies that assemble Apple, Samsung, and HP, etc., and distribute them in different regions under their logo.
Caption: Testing and production equipment
ODM vs EMS– Why should you choose an EMS provider?
Two types of manufacturing compete for the same kind of company are the ODMs and the EMS. To cut it short, the EMS built products on the designs of OEMs, whereas the ODMs built the consequences for the OEMs based on their plans.
This distinction between EMS and ODM matters as in choosing between two, you have to see your capability. If you can design the products, go for the EMS. Otherwise, ODMs are the better options. But once you choose an EMS, you can benefit from:
Caption: Electrician Team
Choice of Assembly Equipment
OEMs choose the assembly equipment that is complex to set up but is faster in their performance. Also, these companies have unique product lines that manufacture each of their products. On the other hand, the EMS companies have to be more agile. That is, they have to work on multiple products at the same time. Thus, they need assembly equipment that can manufacture more than one product.
ODM vs EMS– New Product Introduction (NPI) Process
The OEM has to work on the designs and establish a portfolio for every product they will sell. Thus, the frequency of introducing new developments in the market is typically low for them. However, as the EMS is working on multiple products and is not involved in electronics product design services, they deliver new products to their customers more often. As a result, the NPI in CEMs is more refined and robust.
Supply Chain Expertise
EMS companies manufacture the products for multiple customers, and so they need much overall supply chain management. However, this may not be the case with OEM companies.
ODM vs EMS–Test Design Expertise
In EMS manufacturing, they have to test a variety of assemblies such as PCB and other box-build products. Thus, they have much more experience in the field than OEM engineers.
Even if there are a lot of acronyms, the priority still has to be your requirements. The company has to follow your manufacturing needs, and if it does so, the type does not matter. Also, going for a broad expertise company will give you an edge to have more services, but maybe a costly decision. So choose while remaining within a budget.
We, Cloom, are an EMS company that offers help in wire harnessing and cable connection. So, to get your quote, contact us now.