Manufacturing glossary: OEM, ODM, MOQ, BSCI

Buyers and factories use the same abbreviations and do not always mean the same thing. I have worked in two industries that use some of the same words differently, so here are both sets, side by side.

Terms of a bag order

What is an OEM?

In soft goods, OEM (original equipment manufacturer) means a factory that builds the product to the brand’s own design and specification. The brand owns the design. The factory brings machines, people and know-how.

What is an ODM?

ODM (original design manufacturer) means the factory also designs the product. The brand chooses a design, adjusts it and sells it under its own label. It is faster to start, with less control over the design.

What is a CM?

CM commonly means contract manufacturing, or “cut and make” in apparel and bags: the factory cuts and sews from the customer’s patterns and, often, materials. It is the narrowest service of the three.

What is MOQ?

MOQ is the minimum order quantity, per style. A small run costs almost as much to set up as a large one, so factories set a floor. In technical bags it is typically a few hundred pieces, far below automotive volumes.

What is BSCI?

amfori BSCI is a social compliance programme. An auditor assesses working conditions and scores the factory from A to E. See what a BSCI audit asks of a factory.

What is an NCAGE code?

NCAGE (NATO Commercial and Government Entity) is an identification code that lets a company appear in defence procurement systems. It identifies a supplier; it is not a product qualification.

The same words in automotive

OEM: opposite meanings

In the car industry the OEM is the carmaker, the brand that sells the vehicle. Factories that supply parts are Tier 1 (direct to the carmaker) or Tier 2 (to a Tier 1). The factory that builds to someone else’s design is called a supplier. This is where the two worlds contradict: the same word names the brand in one and the factory in the other.

Approval: PPAP and the pre-production sample

In automotive, PPAP (production part approval process) is a formal file that proves the process can make the part to specification before series production. In bags the nearest equivalent is the pre-production sample, signed off by the brand. Same purpose, much lighter paper.

Audit: IATF 16949 and BSCI

IATF 16949 is the automotive quality management standard, audited by certification bodies. BSCI audits working conditions, not product quality. They line up on discipline (records, corrective actions, follow-up) and differ on the subject.

Volume and tooling

A carmaker’s programme runs for years at high volume, behind heavy tooling, with the price built into the contract. A bag order runs in small batches with lighter tooling, and styles change often.

Where they line up

Both worlds measure takt (available time divided by customer demand), use problem-solving reports such as the 8D method, and rely on standard work. A manager who knows these in one industry can read them in the other, with different weight.