Posts Tagged ‘OEM Manufacturing’
How To Get the Most Out of OEM Manufacturing Services
If you work in manufacturing, you know that your products are only as good as every component. Getting the right part at a reasonable price translates to better products, happier clients, and financial success.
This is where OEM manufacturing comes in. There are many advantages to using OEM parts, but there are also some things you can do as a client to get the most out of your relationship with the production company.
This article covers the basics of OEM manufacturing, including the advantages of their products. It also gives you some tips for maximizing your relationship with the company. It will help you ensure you are getting quality parts that allow you to meet your production demands.
What Is OEM Manufacturing?
The definition of “OEM manufacturer” is complex. In general, an “original equipment manufacturer” is a company that makes specific components that are then used in the products of another company. They work with clients to create a design and settle on manufacturing processes.
OEM companies set supply chain goals to produce the right component for the job. They also may offer add-on services, such as assembly, logistics, or warehousing.
Electronics and auto manufacturing are two of the most common industries that regularly use OEM parts. However, there are lots of different industries that rely on OEM manufacturers.
Advantages of OEM Parts
The biggest advantage of OEM parts is that, by definition, they are produced with a specific function in mind. They are made to fit and perform based on the original design of the finished product. This is why you can expect OEM parts to be the highest quality and design.
This may not be the case with aftermarket parts. These too are produced by a third party but without the original design in mind. For this reason, aftermarket parts may be sub-par in quality and function.
Aftermarket parts sales are usually directed toward consumers. OEM companies are generally business-to-business focused. That is due to the nature of the products.
The goal of an OEM is to make a component for a product before its original sale to consumers. Aftermarket parts are often produced as a cheaper replacement for a part after it has been sold, or to serve a different function than the original component.
An OEM is also distinct from an “original design manufacturer” (ODM). While OEMs make components for another end product, ODMs design and produce their own components for sale under another company’s label.
A good example of ODMs is third-party phone chargers. These tend to have a very similar design to other products on the market but are sold by distinct companies.
Getting the Most Out of OEM Manufacturing
The most important thing you can do to get the most out of an OEM manufacturing agreement is to establish a good relationship with the company. Communication is key. Having a working agreement with a manufacturer that is willing to field challenges as they arise will ensure you get the components you need on time.
This includes every step of the production process. Below are some tips to consider as you move through each phase.
Creating a Prototype
Prototyping is standard practice in OEM manufacturing. It allows you to establish a relationship with the company and lay out clear expectations about the process and the product.
This includes discussions of production timelines. If the OEM manufacturer is warehousing products for you, this is a chance to go over inventory management practices and standards.
Finally, the prototyping phase is the time to cover documentation. This includes conversations about how you will handle the exchange of files, blueprints, invoices, and other important documents.
Be sure to sign a non-disclosure agreement. This will grant the manufacturer permission to receive the product design necessary to produce the prototype while ensuring protection and privacy.
Pre-Production
If both parties are completely satisfied with the prototyping phase, they will continue with pre-production. This step involves honing production processes to make a component that is ready to go to market.
Pre-production is an opportunity to take what was learned during prototyping and apply it to the production processes. This will improve efficiencies and end product quality.
Production
Production begins when the OEM has finalized all adjustments from pre-production. Before actual production begins, the OEM manufacturer may ask you to sign a “manufacturing services agreement” (MSA). This solidifies all the expectations from each party.
The MSA is an important step for the manufacturer. It allows them to move forward to supply chain arrangements and set up inventory management. It also allows them to budget and put a production schedule in place.
Be sure you are comfortable with everything laid out in the agreement. This includes any applicable warranty information and production details. It also should specify steps for making changes during certain phases of post-production.
Post-Production
Once production begins, it may feel that things are “on autopilot.” This may be the case, and regular communication may slow a bit, but the manufacturing relationship does not end.
During post-production, be sure to schedule regular meetings for updates and adjustments. Spelling out this schedule in the MSA is even better.
As with any type of sales business, production needs may change. A reputable OEM manufacturer will want to help you meet all your demands, even amidst unforeseen circumstances.
Being upfront about changing needs or production specifics is the best course of action. It will allow you and the manufacturer to iron a plan together that is beneficial to both companies.
Find OEM Manufacturing Services
Now that you understand the basics of the OEM manufacturing processes, you get the most out of your agreement. Remember that the most important thing is to establish clear communication with the company. This will ensure that everyone is on the same page throughout all planning and production phases.
Shield Works Precision Manufacturing provides customized OEM production, assembly, and warehousing solutions to an international client base. We pride ourselves on maintaining the highest standards of customer service and product management. Reach out to us today to learn more about services or to get a customized quote today.
Choosing the Right Product Manufacturer in China: Contract Manufacturing vs OEM Manufacturing
Contract manufacturing, original equipment manufacturing, and ODM manufacturing, oh my! There are so many different types of manufacturing companies that you can use to fulfill the needs of your business.
When you need to manufacture your product, you will want to pick the one that best protects your intellectual property while upholding the best labor practices possible.
If you are looking for more information about these product manufacturers and how to choose the right one, you came to the right place. This brief product manufacturing guide will cover all you need to know about the common manufacturers and who you can reach out to for more guidance.
What Is Contract Manufacturing?
Contract manufacturing is when you outsource part of your product’s manufacturing process to a third-party company. A large majority of companies use this method, so they don’t have to handle the bulk of their production process. Instead, a contract manufacturer manufacturers products for the OEM, producing items based on a set formula or design.
Advantages of Contract Manufacturing
A significant advantage of using a contract manufacturer is that they can help you create your products without investing in machinery or equipment. This also allows you and your business to minimize labor costs, free up capital, and commit additional resources toward research and development. Contract manufacturers also accept a certain amount of manufacturing-related liability.
Disadvantages of Contract Manufacturing
A major disadvantage of working with a contract manufacturing company is that there is more research and development work. The time to market your product is also a disadvantage.
Because it takes a bit longer to get the product, you will have to wait. Be sure to have a testing and validation plan from the beginning so you and the manufacturer can adjust it over time.
Types of Contract Manufacturing
There is a wide range of contract manufacturing services available. Standard contract manufacturing services include molding, assembly, machining, packaging, and sterilization. It is imperative that you partner with a contract manufacturer that provides the right services needed to support your product.
ODM Manufacturing
ODM manufacturing, also known as Original Design Manufacturer, is a business that creates products designed by you, but they are based on existing products. When you work with these types of companies, you purchase items that the factory already produces; you can just customize the items and add your logo.
You don’t always have to change the logo or design unless you want to. China is currently the leading ODM manufacturer, and most manufacturers outside of China are contract manufacturers.
Advantages of ODM Manufacturing
When you work with an ODM manufacturer, you don’t have to wait too long to market your product. There is also a much lower introduction price since you don’t have to go through the research and development process. ODM manufacturers also have strong expertise in technologies and in the market space.
Possible Issues with ODM Manufacturing
ODM manufacturers have the ability to send out your products quickly because they already have the item on hand or the specifics of the item on hand. A significant issue that comes with working with an ODM is intellectual property and who owns the design of the product even after you add customizations.
For the most part, the manufacturer created most if not all of the design, so they technically own the product’s intellectual property. This means that you own the copyright to the branding.
If you decide to work with an ODM manufacturer, make sure that you check the product you wish to customize. If the product looks similar to another name brand company, they can sue you for using their intellectual property.
OEM Manufacturing
OEM, also known as Original Equipment Manufacturer, is a company that creates a product based on the blueprint you send in. When you create a partnership with an OEM manufacturer, they expect you to provide them with a product specification sheet and a product design document so they can make your product properly.
There are several different varying degrees of original equipment manufacturing companies. Some of them already have a product on site that they can use to make changes to, or you can start from scratch and create a brand new product.
If you plan on creating a brand new product, you may want to reach out to a contract manufacturer for more assistance. With most original equipment manufacturing projects, the client must create custom molds or some other tooling to create the item.
If the OEM does not already have what you need, they will need time before production to get that all prepared. This is a cost most clients have to bear upfront, but there are other manufacturers who purchase molds and just charge you after the fact.
Intellectual Property with an OEM
Since you’re the product designer and you created the product specification sheet, you most likely own the intellectual property of your product. Since you’re also paying for the parts of production (tooling and molds) and you have contracts that prevent the manufacturer from using the specification of your product, the intellectual property is yours. Just to be safe, make sure that you protect your intellectual property with the appropriate documents.
Advantages of OEM Manufacturer
The time to market with an OEM manufacturer is typically relatively short. This is because the original equipment manufacturer already makes products similar to yours, and they can use their current suppliers. Working with an OEM manufacturer comes with lower research and development costs.
Disadvantages of OEM Manufacturer
Although working with an OEM manufacturer comes with several beautiful advantages, a few significant disadvantages can affect your project. For example, if you have to change suppliers, you can’t just make a quick switch.
You will have to change up your entire supply chain. This means you will need a new component supplier as your OEM won’t disclose their component supplier to you.
Because these sub-suppliers are not disclosed to you, there is a chance the OEM could switch out sub-suppliers without you knowing. This could significantly affect the quality of your product.
How to Find a Product Manufacturer
Before you can look for the right product manufacturer for your needs, you must decide if you want a factory overseas or here in the United States. The best solution for your business needs depends on your personal goals and priorities.
Advantages and Disadvantages of U.S. Manufacturing
Using a factory in the United States does come with a few benefits. For example, when you use a manufacturer in the United States, you have more direct control over overproduction. You have the opportunity to visit the site more regularly, and you avoid dealing with international shipping logistics and tariffs.
Unlike overseas factories, manufacturers in the states allow you to order smaller batches of products. Overseas, they have minimum order requirements that you must meet before they fulfill your order. If you don’t meet the minimum, they may add an additional fee.
One of the most significant disadvantages of working with a supplier in the United States is the fact that they cost more. Sure, you may have access to the supplier, but they typically charge more since they are closer.
Advantages and Disadvantages of Overseas Manufacturing
A factory overseas is almost always cheaper than using one in the United States. When you look for a product manufacturer overseas, you will notice that you have more options than you do in the United States.
This means you will have a large pool of applicants to choose from who have experience creating products similar to yours. The biggest challenge that comes with outsourcing is the longer shipping times and handling of import/export regulations.
There is also an issue of a possible language barrier. Thankfully, there are several different companies that have a dedicated representative that can communicate your needs in your language.
Look for a Product Manufacturing Plant
You can attend several networking events for more information on other Chinese manufacturing plants. International trade shows in the United States are another great resource to use when looking for the proper manufacturer.
When looking for the right company, make sure they make products similar to yours. A manufacturer may be eager to let you know that they can make it, even if they have no experience doing so.
Although this may work in some factories, that does not work with all of them. If they offer to create the product but have no experience, the product may lack quality.
United States Exports
Lastly, it would be best if you looked into a manufacturer that regularly exports products to the United States. These manufacturers already have experience complying with product safety standards, quality standards, and packaging requirements.
Look for a company that is a Wholly Foreign-Owned Enterprise. Wholly Foreign-Owned Enterprise, also known as a WFOA, is a company that has production facilities in China. Still, the ownership and management of the company are run by non-Chinese teams. Depending on who owns the facility, you can expect the same quality and service that you would receive from a western company.
Protect Your Intellectual Property
As mentioned earlier, regardless of who you use to manufacture your products, you will want to protect your intellectual property at all costs. Without that protection, you risk having the manufacturer sell your product to another client.
You can use trademarks, copyrights, and patents to protect your intellectual property. Make sure that the protection you use is also designed for international situations.
If you would like to, you can use an NDA. An NDA, or a non-disclosure agreement, is a legally binding contract prevents other companies from copying your product. It would be best if you made potential manufacturers sign an NDA before you get any quotes.
Questions to Ask the Manufacturer
Before you partner with a manufacturer, you must ask a few questions to ensure they are the right fit for you. For example, make sure to ask the company about their labor practices.
The last thing you want is to work with a company that uses unfair labor practices. Not only is that inhumane, but it can also damage the reputation of your business.
Ask to see their business license and any documentation that proves they have a solid quality control system. It would also be best if you asked about their proof of inspections or their third-party audits. If a company refuses to give you that information, they may be hiding something.
Additional probing questions to ask your potential manufacturer:
- What is the price for production?
- What are your company’s payment terms
- Do you have a minimum order quantity?
- How long does it take to get the product exported
- Who are some of your clients?
- What experience do you have making products similar to mine?
- Do you charge for samples?
- Is all of your work in-house?
- Do you use sub-contractors?
Asking these types of questions can help you determine which manufacturer is best for you and your needs. Don’t be afraid to ask clarifying questions. You’re hiring them to do a service for you at the end of the day.
Partner with the Best Product Manufacturer
Picking out the right manufacturer does not need to be a complex process, but it can be challenging if you aren’t sure what you’re exactly looking for. Once you figure out which type of product manufacturer you want to use, check out their reviews and business licensing.
You want to make sure you partner with a reputable manufacturer that can make your product just the way it is intended to be made. Contact us now if you are ready to learn more about your manufacturing options. We also offer warehousing and logistics if needed.