Page 42 - FoodFocusThailand No.176 November 2020

SMART PRODUCTI
SMART PRODUCTIONON

Profound Perspective

of OEM Beverage...Easy or Difficult?

“OEM” or “Original Equipment Manufacturer” is the solution for those who have the ambition to start
their own branded products. This business model gives a light of business opportunity overnight.

In the past, ones start their own factories, there were a customer satisfies those products, OEM can proceed FDA registration, and run the
a lot of start-up capitals required. The entire cost includes entire production instantly.
but not limited to a land, a design and preparation, a Generally speaking, OEM is Business-to-Business or “B2B” business model, which
construction, a machine, a labor, a working capital, and produces and delivers products to customers without the service of marketing campaign
many necessary expenses. Especially, the beverage and sale distribution. Such a total service from production to marketing and sell would
production must comply with regulations and Good be called Business-to-Customer or “B2C” model. At present, there are various branding
Manufacturing Practice (GMP). The codes and beverage producers with an excess capacity. So, they convert those available facilities
instructions demand the site location, the factory design, to OEM business. This is to make products to any general customer who wants to
the space planning, the building material control, the establish their own branding.
utility design, the machine materialized, and the machine
installation. All of those aspects must be met to ensure Pros and Cons of Using OEMs
a food safety and a hygiene standard according to the Pros
Notification of the Ministry of Public Health. Whenever • Ease of business entry: OEM business model required less capital resource to
the process involves a production method, a machine start a branded product. There is no need to spend a lot of money, and time to build a
and equipment, and a food storage, the higher investment factory. Also, it is not necessary to buy a machine and to apply permits and licenses.
is typically required for a superior hygienic course. It makes a quicker start-up with a lower risk compared to building their own factory.
Today, there are business groups who see the • Flexibility to adapt and change business strategies: If there is any external force
opportunity to fulfill many customers of new generation to the business, that might cause a decision to alter a product development such as a
who are likely to start their own entrepreneurship.
Therefore, these businesses invest in a building, and a
machine installation to produce a merchandise-by-order
to those who want to have their own branded products.
This business model is generally called “OEM”.
What is OEM?
In principle, OEMs for beverage production normally
have the factories, the machinery, the licenses to produce
food products, and the standards and quality assurance
systems to fulfil the customer’s need with a specific food
formula and a process requirement. Moreover, some
OEMs have upgraded their turnkey solutions. They may
include a new product development service, or a
marketing consultancy including a branding strategy
service. In addition, some OEMs have on-the-shelf
products from their research and development teams. If

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