“OEM” is a commonly used term in product development-but many aren’t sure of what the abbreviation “OEM” stands. OEM is Original Equipment Manufacturer. Sometimes the OEM definition can be misleading because OEM manufacturers produce components that are used in their products or applied to design specifications when working with a partner. A request from another company for products they wish to sell under their brand or label is also known as “ODM” or original design manufacturer.

Common product categories in the OEM/ODM industry include products with high-volume output such as toys, plastics, and plastic parts, garments, and cosmetics among others. Researching the type of OEM company that can deliver the necessary component/s for any product can be time-consuming and frankly confusing.

There are many variations & levels of OEM/ODM manufacturing and several paths to travel down on the road to product development, but there are core factors that should exist with any OEM/ODM company positioned an original product manufacturer.

The task of selecting a quality manufacturer for your product design can be a daunting task. Many questions & problems can arise in the product development process. It’s important to know that the company you are working with is capable of problem-solving and this should be a factor in your selection criteria.

These are the three important questions you should ask any OEM/ODM manufacturer before launching into any product design & development discussions.

1. Do they exhibit expertise with the base components? A good OEM company will guide you through the appropriate base materials required for your product concept.
2. Do they engineer and manufacture base components and then fabricate an original product? A vertical OEM company will control the raw base component & own fabrication facilities to ensure quality production.
3. Do they work with small and large volume production? OEM solutions are ideal for start-ups, although adept at design and invention–lack the means or expertise to establish their factory production domestically or overseas. Globalization has made it much easier for small and medium-sized enterprises (SMEs) to also benefit from this option. High volume order requirements can be a “make-or-break” decision for many companies who are looking to expand their product offerings with original designs.

Clients usually commission the manufacturer to produce components or a subsystem of components, according to the client’s desired design specifications, rather than full products. Some OEM/ODM companies, however, are fully vertical and can deliver a complete packaged product to the client. The value in selecting an OEM/ODM manufacturing company is it allows both companies to benefit from each other’s strengths. OEM/ODM manufacturing solutions traditionally offer cost-effective benefits to multinational corporations (MNCs) with large-scale order requirements, but OEM/ODM production is also becoming popular among smaller clients.

Finding an OEM/ODM manufacturer that understands both the established business client as well as the start-up business client and also demonstrates a willingness to work with small to large scale manufacturing will give you more flexibility as you scale your new product line.