An ODM is similar to a contract electronics manufacturer, but they typically own IP for the product itself, while regular contract electronics manufacturers use their customers' designs and IP. What is an ODM?įor completeness, but possibly confusing things further, the term ODM also exists.
Thousands of different products are manufactured each week by contract manufacturers, which are then usually branded with the OEM's name and then sold out by the OEM to its customer base. They typically take on, wholly or partially, the manufacturing responsibility for OEMs in sectors like industrial, defence, oil and gas, test and measurement, computing, instrumentation, communications and transportation. Instead, OEMs are encouraged to take an alternative view of the EMS horizon, to find the most appropriate supplier for their business model and product range.ĬEMs are companies that make products under contract for other companies. However, for OEMs that design and sell low to medium volume, often complex products, in sectors away from consumer electronics, Tier 1 suppliers may not be the most appropriate fit. While these suppliers will often make "Top 10" lists, they specialise in manufacturing high volume, low complexity products and, as a result, demand multimillion-pound spend levels - which is why much of the world's consumer electronics end up shipping from their factories. For example, Microsoft's Xbox, Apple’s iPhone, HP printers, Cisco routers and a variety of products from companies like Sony and Nintendo are all believed to be built by Tier 1 EMS companies. So it’s not a surprise that they manufacture some of the world’s best-known products. What is an EMS provider?Īn EMS provider is now the generally accepted term for a contract manufacturer in the electronics field that not only makes products for OEMs but also offers assistance with a wide array of value-added services, including: support with design, design for manufacture, supply chain management, configure-to-order, outbound logistics and repair elements.ĮMS companies can be huge - in fact, in the so-called "Tier 1" environment they are multi-billion dollar businesses in their own right. Increasingly, OEMs outsource all or part of their manufacturing so it could be argued that the "M" in "OEM" is now somewhat outmoded. They design most of the products themselves and own the "rights" to them - i.e. OEM company business models typically focus on product innovation and development. In the latter example, an OEM offers components or sub-systems that are re-sold by another company as part of their end product. An OEM may either market complete "‘turnkey" products or just certain sub-systems or components. The term OEM is used confusingly in several different ways. In addition, we'll look at some of the more practical differences between original equipment manufacturers and the electronics manufacturing service providers they may choose to outsource the assembly to. In an attempt to provide some clarity, this blog provides the generally accepted definitions for each term. The roles of original equipment manufacturers (OEMs), electronics manufacturing service (EMS) providers, contract electronics manufacturers (CEMs) and original design manufacturers (ODMs) are frequently confused and misused. Editor’s note: This post was originally written in 2015 and has since been refreshed and republished for accuracy purposes.