Frequently Asked Questions
What is the difference between a contract manufacturer and an original design manufacturer (ODM)?
The key difference between a contract manufacturer and an original design manufacturer (ODM) lies in the ownership of the intellectual property (IP) and the design process. A contract manufacturer is a third-party company hired by a business to produce specific merchandise based on the hiring company's design or formulation. The hiring company retains the IP rights and is responsible for the branding, promotion, and advertising of the product. Contract manufacturers, such as Flex Ltd., which produces the Xbox for Microsoft, can manufacture thousands of products for various clients, thereby benefiting from economies of scale. On the other hand, an ODM not only manufactures products but also owns the IP for the actual product. They typically focus on a smaller number of categories compared to contract manufacturers. The ODM is responsible for the design and development of the product, which is then sold under the brand name of the hiring company or various companies.
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