• Original Equipment Manufacturers (OEM)
  and Original Design Manufacturing (ODM)
• Product Research and Development for International Markets
  • Mock-Up Samples
  • Material Consideration in R&D---
    Reducing Costs and Increasing Sales
  • Design and Tooling Consideration in R&D---
    Enhancing Production Efficiency and Profitability
  • Product Safety Consideration in R&D---
    Protection of Life and Property
  • Labor and Production Assembly Consideration in R&D---
    Reducing Costs
• Quality Strategy---
  Quality Control (Q.C.) and Quality Assurance (Q.A.)
  • Guide to Effective Sampling
• Product Safety---Consumer Protection and Satisfaction
  • Safety Test Marks
  • Application for Government Export Safety Inspections
• Patents, Trademarks, Brand Names, and Copyrights
• Export Packing
  • Master Export Packs
  • Diagram:  Master Export Packs
• Export Labelling and Marking
  • Country of Origin Markings
  • Marking Plastic Bags
  • Pre-ticketing of the Merchandise
  • Customer's Supplied Artworks or Final Films and Bar Codes
• Shipping Marks and Numbers
  • Diagram:  Shipping Marks
  • Cautionary Markings---Pictorial Cargo Handling Marks
  • Cautionary Markings in Selected Languages
• Hazardous Materials (Dangerous Goods)
  • Diagram:  Hazardous Materials Shipping Labels
• Bonded Manufacturer
• Electric Plug Types in Domestic and Commercial Use
• Electric Current Characteristics and Plugs
  of the Selected Importing Countries
• Chemical Elements
• Plastic:  Origin of Commonly Used Plastics
• Plastic:  Abbreviations of Plastics
• Plastic:  Applications of Plastics
• Plastic:  Registered Brand Names of Plastics
• Tool Steel:  Classifications of Tool Steels
• Tool Steel:  Standards Designation Equivalent of Tool Steels---
  AISI, JIS, DIN, SS, and BS
• Tool Steel:  Applications of Tool Steels
• Conversion Factors - Units of Measurement---
  Units of Length, Area, Volume, Mass, Pressure,
  Flow, Power, Work, Temperature, Etc.

The term original equipment manufacturer, popularly called the OEM (or O.E.M.), refers to company that actually manufactures a given product. Over the years, the term OEM used in international trade has evolved to convey other meanings. The OEM---the OEM contract, or OEM arrangement, or OEM transaction---may mean:

• The original manufacturer of a given product subcontracts the production of the product entirely in an exporting country. The subcontractor (the OEM supplier) follows exactly the product specifications, quality, packaging and labelling of the original product.
  
  Subcontracting of production to overseas manufacturers is not uncommon in many countries and lines of products, particularly in developed countries, where their own productions may cost more than imports, for example toys, footwear and garments.
  
  
  
• The importer subcontracts the production of a given product in an exporting country. The importer can be a trading company or a manufacturer who does not make a product that is intended as a supplement to their own manufactured products or as a component part (the spare part) of a product, or a newly designed product which has never been manufactured in a production line. The exporter (the subcontractor) supplies the product according to the specifications, quality, packaging and labelling requirements of the importer. This OEM arrangement often refers to as the ODM (original design manufacturing)
  
  
  
• The importer, either a trading company or a manufacturer, buys the product of an export-manufacturer based on the latter's product specifications and quality, but follows the importer's specified packaging and labelling requirements, including the use of importer's own brand name. This OEM arrangement is not uncommon when exporting the manufactured goods to chain stores.

The export-manufacturer must be cautious when selling to a prospective OEM buyer, particularly if the buyer is a manufacturer. It is normally expected that the OEM buyer, who may be a manufacturer, may request to tour the supplier's production plant and see the production in progress. Being an OEM supplier, he/she does not have to divulge the production secrets or show the 'sensitive' production facilities.

If a prospective OEM buyer is more interested in knowing the production know-how rather than the quality of the product and the supplier's ability in meeting the quantity and shipping requirements of the buyer, by all means refuse dealing with such buyer, which is better than running the risks of divulging the production know-how.

Research and Development (R&D) may fall under the Production Department or it can be an independent department, which is typically the case in a large company.

Product research and development is a long and expensive process. For this reason, a limited number of export-manufacturers can afford to re-invest a percentage of their income in R&D. It is not at all surprising that some exporters resort to copycat tactics.

In R&D, it is important to consider such factors as market demand, the cost of materials, tooling and labor, product safety, and production efficiency. What works well in the R&D laboratory can be uneconomical, unsafe or inefficient in actual production runs.

The mock-up sample, often referred to as the prototype, is an original model or pattern from which subsequent products are made. There are specialist contractors (the prototyping companies) in the market who can make high quality mock-up samples based on the product blueprints. The prototyping fee can be costly.

Under the OEM arrangement, the buyer's request for mock-up samples is normally expected, particularly when a product is new. The exporter may use the mock-up sample to obtain market feedback and/or to conduct pre-production sales.

The cost of materials is important in the saleability of a product. If the supply of a material is abundant, its cost generally will be lower. Where the materials are readily available in the local market, production interruption due to material shortage is less likely to happen. The suitability of materials for a particular product is essential especially where safety is concerned.

Buyer's Specified Materials

Buyers may specify the materials to use in a product, particularly in an OEM or ODM arrangement. In practice, it is not uncommon for the buyer to specify the brand name of the material, instead of giving its generic name. For example, in the use of plastics, the buyer may specify using Teflon as the non-stick coating in cookware. Teflon is a registered brand name, its generic name is polytetrafluoroethylene (PTFE). Besides Teflon, there are other brands of PTFE in the market. It is important to verify with the buyer whether to use strictly Teflon or whether any other brand of PTFE is acceptable, the costs and quality can be different.

In another example, the buyer may specify using Formica laminated sheets for the table tops. Formica is a registered brand name, its generic name is melamine-formaldehyde (MF). Like Teflon, there are other brands of MF laminated sheets in the market with competitive prices and of good quality.

The buyer may also specify the standards designation of the material. For example, in the use of tool steels, the buyer may specify using SKH9 for the thread rolling dies. SKH9 is a JIS (Japanese Industrial Standards) high-speed tool steel.

When referring to the chemical composition of a product, in practice, the symbol of chemical elements is used, instead of the name. For example, symbol C stands for carbon, Ca for calcium, and Cu for copper.

New moulds and dies are often necessary in new products. The more complex a product design, the higher the tooling costs. Tool steel moulds and dies are expensive.

It is helpful to anticipate the market 'life expectancy' of a new product and its expected quantity demand over a period of time. The choice of tool steel material in making moulds is linked to the quantity demand for the product. A plastic mould, for example, can last for 100,000 shots (the number of injections) or more, depending on the type of tool steel used, size and construction of the mould, surface treatment (hardening), maintenance, and plastic material used. There is no need to invest in the AISI H13 (the standards designation equivalent of the JIS SKD61, DIN 1.2344, SS 2242, BS BH13) plastic mould when the AISI A2 (the standards designation equivalent of the JIS SKD12, DIN 1.2363, SS 2260, BS BA2) plastic mould, which costs less and can do the required job.

The mould may have a single cavity or multiple cavities, depending on the size and complexity of the moulded product, the injection capacity of the machine, and the plastic material used. In the single cavity moulds, only one piece of the product is moulded in each injection. In the multiple cavity moulds, more than one piece of the product is moulded simultaneously in one shot. For example in the injection moulding of the toothbrush handle, the mould may have 16 cavities where each injection produces 16 handles.

Please see Product Safety---Consumer Protection and Satisfaction for information.

The faster the assembly of a product, the lower the labor cost. An example is the number of screws used to fasten the base of a portable lamp. If using three screws can meet the safety requirements of the lamp, then there is no need for four screws. Although there is only a difference of one screw, there will be a significant difference in the assembly line, where the lamps move on the conveyor, and in the speed at which the screws are fastened.