Lecture-1
Sourcing
The company decides to outsource the materials when it cannot produce it in-house or has insufficient
in-house capacity. The different types of sourcing possible are
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Under an ODM production strategy, the original design manufacturer (ODM) designs, engineers and
manufactures a product, with the brand of another company that is focused on the marketing and
sales activities of the product.
OEM is a production outsourcing setup where a buyer (which is the owner of a brand name)
provides the design, the product specifications and any other production detail to a manufacturer
that executes the production or the assembly.
Under OBM, the manufacturer owns the brand and is fully responsible to design, engineer,
manufacture, and market the product.
ODM is a production strategy used for lower technology products, OBM, on the contrary, is the only
option for highly sophisticated products that require full integration of the design, engineering and
manufacturing activities.