Apparel manufacturers deal with converting raw materials into finished goods. Apparel manufacturing is highly competitive and becoming more consolidated, with increasing barriers to entry and upgrading. Understanding OEM, ODM, and OBM is an essential step for garment manufacturers and for those people who want to start their importing or exporting business.
The most valuable activities in the apparel business are not related to manufacturing by itself but are found in product design, branding, and marketing. These activities are performed by lead large global retailers and brand owners in the apparel industry, which in most cases, outsource the manufacturing process to a global network of suppliers.
Original Equipment Manufacturer (OEM)
OEM is an apparel business model that focuses on the manufacturing process. The OEM factory is capable of sourcing and financing piece goods and trim, and providing all production services, finishing, and packaging for delivery to the retailer or wholesaler. In the clothing industry, OEMs typically manufacture according to customer specifications and design, in many cases using raw materials specified by the customer.
Original Design Manufacturer (ODM)
OBM is an apparel business model that focuses on design rather than on branding or manufacturing the product. The ODM factory carries out all steps involved in the production of a finished garment, including design, fabric purchasing, cutting, sewing, trimming, packaging, and distribution. Typically, OBM factories organize and coordinate the design of the product; the approval of samples; the selection, purchasing, and production of materials; the completion of production; and, in some cases, the delivery of the finished product to the final customer.
Original Brand Manufacturer (OBM)
OBM is a business model that focuses on branding rather than design or manufacturing; this is a form of upgrading to move into the sale of the customer’s “own brand” products.
OBM fully owns the brand and products. OBM is the option for the manufacturer who wants to produce sophisticated products. Compared with ODM and OEM, OBM usually involves higher costs (including money and time) to produce the products. For many firms in developing countries, this marks the beginning of brand development for products sold in the home country or its neighbors.
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