OEDM, Original Equipment Design & Manufacture, is an emerging form of outsourcing partnership that is growing to meet new competitive demands. It describes the practice of outsourcing the entire, end-to-end product origination-to-production function to a single, trusted partner who provides the depth and breadth of experience to deliver a full set of integrated solutions. This model works for companies that want to grow, improve or diversify their product portfolio and, for established and new companies with innovative and disruptive propositions.
The system is also flexible enough to enable the Brand & IP Owner to work with the OEDM partner at different entry points, for example, from prototype stage.
OEDM is a form of consultative partnership that starts with a collaborative product definition and design process and ends with the final production and delivery of the product to market. The principle partner owns the intellectual property and the route to market - the OEDM partner has the broad scope knowledge of the entire product origination, realization and production process. The principle’s value proposition, brand equity and marketing know-how combined to the OEDM partner’s expertise across the total product design-to- production cycle can leverage the joint resources to drive better outcomes. From a business perspective, this arrangement can offer significant competitive advantage.
Although the traditional view of outsourcing is driven by cost reduction and scalability, businesses are finding that they can achieve higher business impact when the OEDM takes on a more value-focused, strategic role. Bringing in an OEDM partner that is an expert in that space at the origination stage of a project can address the process management needs of the product development and production functions, manage time and money effectively and deliver superior value to the end user. All way beyond the basic transactional business model of contract manufacturing.
The base level
The base level shows the traditional, generic contract manufacturing type relationship where the principle, the Brand & IP Owner, commissions the manufacturer to source parts and suppliers, assemble and test the product, and then deliver to the end user.
The OEDM model is a connected process.
The OEDM model coordinates the whole product design and delivery process, identifying and engaging with the supply chain, providing a totally integrated, in-house manufacturing process where the design team and manufacturing have direct lines of communication and a shared understanding and knowledge.
Tier 1 Supply
Marketing & Sales
The top level
The higher level on the diagram shows how the OEDM partner works with the Brand & IP Owner collaborating on product development at the origination phase, which starts with a specification-focused design. This co-creation stage is critical. Collaboration means that the OEDM can contribute to the concept development from the start and bring expert and objective insight and ideas to the table that can then be seamlessly developed at the detailed design stage; identifying and integrating the appropriate technologies, going on to prototyping, design for manufacture and in-depth testing and validation.
It’s also a value added process.
At the start, the Brand & IP Owner brings their product strategy, brand equity and customer knowledge to the partnership. The collaborative and transparent approach means that they retain the full product specification along with the original, and now enhanced intellectual property. As a business proposition, the OEDM not only brings their talent and expertise to the deal, they also help manage fixed cost efficiencies and provide the critical facilities and technologies.
CE Technical Files
The OEDM market structure
Equipment manufacture is the primary revenue source of an OEDM service business.