OEM, also known as OEM, was first popular in Europe and the United States and other developed countries, it is the international companies to find their respective comparative advantages of a rule of thumb, can reduce production costs, improve the added value of the brand.
In our country is often called "OEM", "OEM", "commissioned production", "commissioned processing", "customized processing ", "customized manufacturing", "production outsourcing" and so on. Its essence is to have the advantage of the brand enterprise in order to reduce costs, shorten the transportation distance, seize the market, entrusted other enterprises to carry out processing and production.
The brand producers do not directly produce products, but the use of their own mastery of the "key core technology" is responsible for the design and development of new products, control of sales and sales "channels", in order to reduce the risk of new production lines, through the contract ordering way to entrust the production of other manufacturers of similar products. In order to reduce the risk of new production lines, through the contractual ordering of other similar products commissioned by the manufacturers of production, the ordered products at a low price buyout, and directly affixed to their own brand trademarks.
Extended information:
Benefits of OEM production
(1) access to the international market, to participate in the international competition
In recent years, the domestic home appliances and other industries are becoming increasingly competitive, the market tends to be saturated, certain domestic manufacturing Enterprises in order to be able to develop the market, and do OEM for foreign brands. Enhanced the global awareness of enterprises.
(2) Scale production, reduce costs
There is a general effect of economies of scale in modern production, that is, with the expansion of the scale of output and the tendency of unit costs down. This may come from the deepening of specialization and division of labor, the sharing of fixed costs. If the enterprise itself has this excess production capacity, the effect of cost reduction will be more obvious. Participation in OEM supply implies an increase in the scale of output, which not only increases the marketability of the product, but also reduces costs.
(3) Learning from experience, improve management
The enterprise providing OEM often plays an important role in the supply chain of OEM buyer's products, OEM buyer can have strong strength in production management, marketing, product development, etc., in the process of cooperation, OEM supplier can control the quality of the product, control the success of the control, management of operational efficiency control, etc., to organize production according to the buyer's requirements, and to improve the quality of the product, to ensure the quality of the product. According to the buyer's requirements of the organization of production, advanced organizational control, from the "dry learning" experience accumulation, improve the management level of enterprises.
Reference:
Baidu Encyclopedia - OEM