OEM (Original Equipment Manufacturer)

Made to your specification and your brand.

What it changes for you

You normally own the tooling and the design.

In practice

OEM means the product is made to your specification and carries your brand; you normally own the tooling and the design. It gives you exclusivity, at the cost of development time and tooling spend. The alternative is ODM, where you brand the factory's existing design.

Questions about OEM

What is the difference between OEM and ODM?

OEM means the product is made to your specification and you normally own the tooling and design. ODM means you are branding the factory's existing design: faster to market, but the design is not exclusive to you.

Which should a first order use?

Usually ODM or private label, because the tooling risk is lower. Move to OEM once the specification is proven and the volume justifies owning the mould.

Other terms

• FOB (Free On Board) - Seller delivers the goods on board the vessel at the named port; cost and risk transfer there.
• EXW (Ex Works) - Buyer collects at the factory gate.
• MOQ (Minimum Order Quantity) - The smallest quantity a factory will run for one specification.
• Tooling cost - The one-off cost of the injection mould, die or print plate.
• Colourway tolerance - The measured range a factory will hold between sample and repeat production.
• AQL (Acceptable Quality Limit) - The sampling standard (ISO 2859-1) defining allowed defects per inspected lot.

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