Folks,
In the past ten days, three clients have presented their new designs (an employee time and attendance clock, a remote activated consumer power strip and a family of industrial and residential thermostats) in order for EastBridge Engineering to pre qualify vendors and generate quotations.
Unfortunately, what we received wasn’t a useful ‘turnover package’ or collection of CAD files, assembly drawings, BOM (Bill of Materials) or a well written specification. The documents weren’t even a clearly stated set of product attributes of deliverables.
We needed to back-up and determine where our clients really wanted to go… Did they want to provide unique and specialized design data and have the finished units fabricated by contract manufacturer? Did they truly want a (mostly) off-the-shelf product designed by fully integrated manufacturer? Or were they searching for a OEM/ODM hybrid approach, whereby a new product, which incorporated some unique design features would be teased out of a existing model?
Our discussion pivoted into the differences between an OEM, ODM and OEM/ODM business models. In the automotive industry, ‘OEM’ (Original Equipment Manufacturer) means a company making ‘drop-in-replacements’ for the aftermarket. In the electronic industry, ‘OEM’ refers to one company incorporating a finished component or sub assembly, purchased from an unrelated supplier, into their own finished product. In other segments, this approach is known as ‘private labeling.’
An ODM (Original Design Manufacturer) project in the electronics segment involves a supplier building a finished device based on an original design and using the clients’ design documentation. In the motion control and industrial segments, it can mean asking the manufacturer to design and build a new product from scratch.
And an OEM/ODM project can include some of the elements listed above and a thousand variations that we can’t think of.
These acronyms (and the underlying concepts and definitions) have become so contradictory and confusing that at this point in time, they’ve become useless. So how do you navigate this potential mess?
As a first step, drafting a clearly written PRD (Product Requirements Document) is the best approach. A PRD can be a single page of bullet points listing the key attributes of the finished product. It can also be a highly detailed and complex document that incorporates market research, competitor profiles, product tear downs and voice of the customer input.
The discussion and effort to produce the PRD oftentimes is sufficient to define which branch of the quoting & production path to take. If the new product is closely related to others in the marketplace, and only requires minor finishing tweaks, private label is likely the way to go. If you’ve invented a new product that largely shares the form factor and technologies of existing products, the blended approach could be useful. If it’s a breakthrough concept that’s going to change the market, the turnkey design approach is merited.
In all of these models, the PRD guides the initial discussion and will help to determine how the product will be built and where the project is placed.
So, before you put much effort into creating your ‘design’ please write up a clear PRD.
Cheers,
Jack Daniels
+1.617.285.2486
