Original design manufacturer

From Wikipedia, the free encyclopedia
Jump to: navigation, search

An original design manufacturer (ODM) is a company that designs and manufactures a product as specified and eventually rebranded by another firm for sale. Such companies allow the firm that owns or licenses the brand to produce products (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 as of 2015 many have the scale to handle production for 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 that sees some advantage in the transaction, such as low labor-inputs, transport links or proximity to markets. Innovative and/or patented technologies developed/owned by the ODM are another cause for this product distribution model. ODM models are also used where local ownership-laws possibly prohibit direct ownership of assets by foreigners, allowing a local firm to produce for a brand company - either for the domestic market or for export.

This type of business is part of "outsourcing". For example: Compal Electronics 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 Compaq's case, computer components). As of 2011, Taiwanese ODMs made ninety-four percent of all notebook computers.[1]

Intellectual property[edit]

ODMs create their own intellectual property and are very proactive in patenting it. Most of their patents are filed in the US, Taiwan and China.

See also[edit]

References[edit]