OEM / ODM production methods
Today, many companies, not excluding the most famous brands use OEM / ODM production methods.
Let’s try to understand why this is happening.
A little about the terms
OEM (Original Equipment Manufacturer) – is a system of relations between the two companies, in which a certain company produces a product on special order, and by mutual agreement with the owner of the trademark. As a result, the product adopts Customer`s brand.
This means that thanks to OEM production, absolutely any company can produce identical in quality and performance product with its brand, without any significant investment.
Reasons for OEM / ODM-cooperation
Nowadays it is unprofitable to contain expensive production in Europe or in America, next to the main markets, spending big money for salaries, pension contributions and insurance workers. The high cost of transferring and logistics make Brand-owner companies partially or entirely remove to developing countries with their labor costs, or, sometimes betake to third-party manufacturers that have their own resources.
As a result, today in Europe, Japan either America you can mostly see just the headquarters of manufacturing companies that are involved in marketing, developing subsequent decisions for factories and products for the local market. Everything else is being connected on Asian production facilities, both personal either the ones that belong to OEM / ODM-partners.
Anyway OEM production has a number of significant advantages:
1. There is no need to increase the costs of organizing OEM production, hire labor, buy expensive equipment;
2. If something does not fit or you do not like working with certain factory-contractor, you can always replace it and start production by another entity, retaining its brand name;
3. The use of OEM production significantly reduces the timing of mass production of the new product and its delivery to the target area;
4. Reduction of mandatory payments for import of finished products in the target country, and in consequence of their greater competitiveness.
5. Low labor costs combined with OEM manufacturing infrastructure that allows producing high quality issues at low cost, even for a small factory;
Since Triol Corporation has been actively developing new markets, we are in talks with a number of manufacturers of the SKD, and in the nearest future with OEM manufacturers of our equipment in the target regions.
Is it important for you who actually produces the equipment that you buy: the owner of the brand or OEM-partner?
I wonder whether you are interested in cooperation in this direction?
I will be glad to receive your comments.
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