OEM, ODM, EMS and CEM: the differences explained
17 February, 2021
The manufacturing sector, like any other industry, has its own jargon which can often confuse outsiders, as well as those newcomers who may be in the initial phase of research and development. As some of these terms are relatively new and the activities of these service providers can frequently overlap, this can indeed muddy the waters.
This is particularly the case with acronyms, and in manufacturing-speak, these acronyms are becoming increasingly commonplace in the world of electronics manufacturing and hold significance. For instance, the activities of an original equipment manufacturer (OEM), an original design manufacturer (ODM), an electronic manufacturing service (EMS) provider and a contract electronics manufacturer (CEM) vary. Knowing the difference is key, and depends on their speciality and your product.
The role of these specialty manufacturers is to produce, manufacture, contract or provide the specific component or service that will deliver an end-user solution.
Why it is vital to know the difference between an OEM, an ODM, an EMS and a CEM
The growing use of these acronyms is a result of the rapid expansion and fragmentation of the electronics products industry, accelerated by a fast-moving global trend for digitalisation and the increased connectivity associated with it.
As more manufacturing and assembly resources are becoming outsourced by businesses, selecting the right manufacturing partner is central to this. The importance of a partnership that is best matched to your manufacturing needs cannot be downplayed. In today’s marketplace, having complete clarity on the specific services that they provide and being able to fully grasp the difference between these providers is pivotal.
So that you can make the correct decision and opt for the correct manufacturing partner, this quick guide to OEMs, ODMs, EMSs and CEMs and what they entail should assist you:
What is an OEM?
The term OEM is used in several different ways. An original equipment manufacturer may either market complete ‘turnkey’ products or just produce certain sub-components or assemblies for other companies to use in their end product.
OEM company business models typically focus on product research, innovation and development. OEMs design most of the products themselves and retain the intellectual property (IP) rights. They also contract to produce a raft of products away from commercial and consumer electronics, such as vehicle parts or medical devices. Ironically, perhaps even more confusingly, it is not unheard of for OEMs to subcontract with CEMs or CMs to supply parts and components for their own products.
What is an ODM?
Similar to a CEM, an ODM typically owns IP for the product itself, while regular contract electronics manufacturers use their customers' designs and IP. Whereas CEMs often produce a large range of different products across multiple markets, ODMs tend to specialise in a small amount of specific product types that are designed and manufactured by themselves. These products are then subsequently rebranded and sold by another business which does not undertake any manufacturing.
What is an EMS?
An EMS is essentially a contract manufacturer in the electronics field; designing, manufacturing, testing, shipping, or repairing electronic products such as electronic components and assemblies for OEMs.
It may also provide specialist assistance in a range of associated areas, including design and software development, or other value-added services such as supply chain management, configure-to-order, repairs and distribution.
Some EMS companies are huge, multi-million pound Tier 1 businesses that manufacture parts and components for global consumer giants including Microsoft, Apple, HP, Sony, and Cisco.
What is a CEM?
A CEM is similar to an EMS provider. It manufactures products and assemblies under contract for other companies, often for OEMs in major industries. However, while CEMs offer support with regard to design, supply chain management, testing and distribution, they generally do not provide services relating to software and applications.
What is UK Circuits’ role in the electronics manufacturing sector?
UK Circuits is a CEM, a contract electronics manufacturer of printed circuit boards (PCBs) and electronic assemblies.
We forge long standing partnerships with many leading manufacturers across multiple industries, which outsource PCB and product assembly to UKC to fully harness an array of benefits to boost their business.
Want to work with a CEM partner that will benefit your business and support your future growth?