Original Design Manufacturer
Encyclopedia
An original design manufacturer (ODM) is a company which designs and manufactures a product which is specified and eventually brand
ed by another firm for sale. Such companies allow the brand firm to produce (either as a supplement or solely) without having to engage in the organization or running of a factory. ODMs have grown in size in recent years and many are now sufficient in size to handle production for multiple clients, often providing a large portion of overall production. A primary attribute of this business model
is that the ODM owns and/or designs in-house the products that are branded by the buying firm. This is in contrast to a contract manufacturer
(CM).
This model is especially used in international trade, where a local ODM is used to produce goods for a foreign company which sees some advantage in the transaction, such as low labor inputs, transport links or proximity to markets. This is also used where local ownership laws possibly prohibit direct ownership of assets by foreigners, allowing a local firm to produce for a brand company for either the domestic market or export.
This type of business is part of "outsourcing
". An example is Compal Electronics
, which makes notebook computers and monitors
, and operates as a mass producer for numerous brand companies, assisted by low labor costs, low-cost transport, and the near commodity nature of the physical inputs (in Compal's case, computer components).
The market research firm iSuppli issued a report in 2006 which demonstrated that 82.6% of PC notebooks' components are made by Taiwanese ODMs.
and are very proactive in patent
ing it. Some companies, such as Hon Hai patent their innovations at three times the rate of IBM
when measured on a per employee basis. Most of their patents are filed in the US, Taiwan and China. Very few are filed in Japan or the EU.
Brand
The American Marketing Association defines a brand as a "Name, term, design, symbol, or any other feature that identifies one seller's good or service as distinct from those of other sellers."...
ed by another firm for sale. Such companies allow the brand firm to produce (either as a supplement or solely) without having to engage in the organization or running of a factory. ODMs have grown in size in recent years and many are now sufficient in size to handle production for multiple clients, often providing a large portion of overall production. A primary attribute of this business model
Business model
A business model describes the rationale of how an organization creates, delivers, and captures value...
is that the ODM owns and/or designs in-house the products that are branded by the buying firm. This is in contrast to a contract manufacturer
Contract manufacturer
A contract manufacturer is a manufacturer that contracts with a firm for components or products. It is a form of outsourcing.-Business model:...
(CM).
This model is especially used in international trade, where a local ODM is used to produce goods for a foreign company which sees some advantage in the transaction, such as low labor inputs, transport links or proximity to markets. This is also used where local ownership laws possibly prohibit direct ownership of assets by foreigners, allowing a local firm to produce for a brand company for either the domestic market or export.
This type of business is part of "outsourcing
Outsourcing
Outsourcing is the process of contracting a business function to someone else.-Overview:The term outsourcing is used inconsistently but usually involves the contracting out of a business function - commonly one previously performed in-house - to an external provider...
". An example is Compal Electronics
Compal Electronics
Compal Electronics is a Taiwanese original design manufacturer , handling the production of notebook computers, monitors, and televisions for a variety of clients around the world, including Acer Inc., Dell, Toshiba, Hewlett-Packard, and Fujitsu Siemens Computers...
, which makes notebook computers and monitors
Computer display
A monitor or display is an electronic visual display for computers. The monitor comprises the display device, circuitry, and an enclosure...
, and operates as a mass producer for numerous brand companies, assisted by low labor costs, low-cost transport, and the near commodity nature of the physical inputs (in Compal's case, computer components).
The market research firm iSuppli issued a report in 2006 which demonstrated that 82.6% of PC notebooks' components are made by Taiwanese ODMs.
Intellectual property
ODMs create their own intellectual propertyIntellectual property
Intellectual property is a term referring to a number of distinct types of creations of the mind for which a set of exclusive rights are recognized—and the corresponding fields of law...
and are very proactive in patent
Patent
A patent is a form of intellectual property. It consists of a set of exclusive rights granted by a sovereign state to an inventor or their assignee for a limited period of time in exchange for the public disclosure of an invention....
ing it. Some companies, such as Hon Hai patent their innovations at three times the rate of IBM
IBM
International Business Machines Corporation or IBM is an American multinational technology and consulting corporation headquartered in Armonk, New York, United States. IBM manufactures and sells computer hardware and software, and it offers infrastructure, hosting and consulting services in areas...
when measured on a per employee basis. Most of their patents are filed in the US, Taiwan and China. Very few are filed in Japan or the EU.
See also
- Contract manufacturerContract manufacturerA contract manufacturer is a manufacturer that contracts with a firm for components or products. It is a form of outsourcing.-Business model:...
(CM) - Original equipment manufacturerOriginal Equipment ManufacturerAn original equipment manufacturer, or OEM, manufactures products or components that are purchased by a company and retailed under that purchasing company's brand name. OEM refers to the company that originally manufactured the product. When referring to automotive parts, OEM designates a...
(OEM) - Electronics manufacturing servicesElectronics manufacturing servicesElectronic manufacturing services is a term used for companies that design, test, manufacture, distribute, and provide return/repair services for electronic components and assemblies for original equipment manufacturers...
(EMS)