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OEM Toy Risks: Everything You Need to Know in 2022

Have you heard of OEM suppliers? OEM is a very important concept in the toy wholesale business, and he is a very common way to cooperate. If you want to carry out toy wholesale business and understand them, it is an essential step.

The original equipment manufacturer (OEM) always face key business risks from unpredictable supply chain vulnerabilities and interruptions. These may include quality failures, financial risks, supply chain interruptions, and network security vulnerabilities.

This article explains what OEM toy risk and how to reduce these risks. I hope to help you better understand more information about OEM toys wholesale.

What is OEM?

For wholesale toy business, OEM represents original device manufacturing. This is actually a contract or outsourcing manufacturing. Its basic meaning is that toys wholesalers do not directly produce products, but use their key core technologies to design and develop new products, control sales channels, and entrust other similar product manufacturers to produce specific processing tasks through contract ordering. After that, buy off the products ordered products at a low price and directly put on your own brand trademark. This method of commissioning others to produce is called OEM. OEM toys are made for brand manufacturers. After production, they can only use the brand name. They must not be crocked for the producer’s own name before production.

In this case, the production plant can design and manufacture products according to specifications and customers. Production products that meet customer requirements.

Before allowing any OEM toy manufacturer to deal with your toy product design, you should do a lot of research and understand its development. Because of the particularity of toys, they are often more complicated. Starting from research product development, market surveys, engineering and design unique research. During this period, you need more information, especially in terms of size.

Advantage

1. You can fully control and have all intellectual property rights with wholesale toys. You can get a higher bargaining status when you bargain with the supplier.

1. Because you have detailed toy wholesale product specifications and related designs, you can speed up the quotation process and quickly get the offer of the supplier.

What are OEM Toy Risks

In order to reduce operating risks, when brand manufacturers choose OEM toy foundry companies, they usually analyze and evaluate their risk status. The risk factors of OEM toys foundries are mainly:

Quality risk

There are many types of quality risks. For example, OEM toy manufacturers cannot meet the quality standards of the client, causing quality risks; or different quality standards between different countries and regions, resulting in quality risks in the same batch of products; and OEM foundries It may be possible to choose low prices and other materials to reduce costs, which causes quality problems and affects the brand image.

Technical risk

Various processing products have different technical parameters. Any technical parameter cannot meet the standards, which may cause technical risks. Second Facing the risk of technology leakage.

Delay risk

Most OEM toy manufacturers will also produce for multiple brand foundries at the same time. If the production capacity of OEM toy foundries is insufficient, delayed delivery risks will increase. In addition, the lack of flexibility for OEM processing production is also an important reason for delaying risks.

Logistics risk

On the one hand, most of the OEM toy foundries do not have a perfect logistics system or a third-party logistics contractor without cooperative cooperation, which may cause the production of products to be damaged during the logistics transportation process. On the other hand, the distance from the transportation distance will also be a factor that causes the risk of logistics.

The risk of logistics is usually transformed into unavoidable delivery delays.

For example, due to the popularity of COVID-19, the price increase of airlines has greatly affected costs, and transport delays threatened the production period.

Shipping is still a choice, but it takes 30-60 days (depending on the destination), and if the management is improper, it may cause delays. If you do not cooperate with suitable partners, this will still bring high risks and may endanger your entire supply chain.

Financial risk

OEM foundry enterprises insufficient cash flow, high proportion of payment, non -performing assets, investment mistakes, etc. can cause financial risks, resulting in difficulty in operation.

Legal risk

OEM manufacturers may increase legal risks with the labor law of the last license or violate the labor law of a certain country; although the legal risk is the responsibility of OEM foundry, it will also cause some social image and market sales to brand manufacturers to some certainty Impact.

Replace the risk of suppliers.

Under individual extreme circumstances, such as natural disasters, shortage of raw materials, and corporate failure, it may cause the supply chain interruption, which is a great blow to the brand Fang and OEM manufacturers. Due to the important position in the entire supply chain, you may face the dilemma of replacing suppliers because you need to re -arrange the entire supply chain.

Examination and evaluation of new suppliers and the scale of expansion may be high, so risks are existing; especially without thorough planning. This can easily affect the last period of OEM, because it takes time to increase production capacity and professional knowledge

4 reasons for OEM Toy risks

Reason 1: Incorrect production capacity planning is usually derived from incorrect PFEP (each part of each part) and an excessively ambitious OEE (overall equipment efficiency).

Reason 2: New suppliers and technologies have inherent risks, because product engineering levels are inconsistent with manufacturing requirements.

Reason 3: Continuous/delayed engineering changes, test failure and delay of equipment.

Reason 4: Due to the compressed and complex international supply chain, the black swan incident (that is, COVID, fire and earthquake), the interruption and launch latency are caused.

These four reasons prove that the company is prepared for early intervention, internal team review, and internal procurement review to avoid production, logistics and process quality risks.

More OEM toy information for you to reference.

https://unionvisionchart.com/oem-odm-toy-wholesale-business/

How to reduce OEM procurement risk?

Geopolical risk threatens not only your price stability, but also the possibility of finding reliable suppliers in a short time.

The following are the two methods to reduce OEM procurement risks:

1. Dual sources restrict risks

For example, if your OEM toy supplier shuts down their factory for any reason (natural disaster, bankruptcy, etc.), your second OEM toy supplier can ensure your production continuity. Moreover, they can even bear the need to increase production in emergency situations.

However, when you purchase from multiple suppliers or locations, it will increase the engineering workload and require more qualifications, review, certification, etc.

2. Manufacturing is closer to your terminal market

COVID-19’s popularity has stimulated many local supply chains, making manufacturing closer to the terminal market to ensure that procurement is feasible, which has far-reaching benefits.

Close -range production can ensure faster delivery time, better communication, minimum procurement risk and the fastest response.

What is the risk of OEM supply chain?

Prior to the emergence of global economic recession and geopolitical issues, OEM regarded supply chain risks as the most difficult challenge facing its business.

For example, inaccurate predictions, procurement restrictions, supplier integration, price fluctuations, inventory management problems, and the negative impact of natural disasters on transportation, procurement and logistics.

The risk of the top 20 OEM supply chain is as follows:

  • Inventory management error
  • Price uncertainty
  • Exclusive procurement risk
  • Transportation and logistics issues
  • Intellectual property theft
  • Increased facility capacity/insufficient production capacity/insufficient production capacity
  • Excess and outdated inventory
  • Inaccurate prediction
  • The financial accidents of suppliers and contractors deteriorate
  • Under -efficient outsourcing and internal production system
  • Quality issues
  • Supplier integration leads to outdated product line
  • Update the cost and challenge of intellectual property rights
  • Environmental compliance and other international regulations
  • Excessive contact and dependent contract manufacturer
  • Deadial contract obligation
  • Competition with suppliers
  • Interruption related to natural disasters
  • The labor issues and violations of suppliers and contractors.
  • Inaccurate asset valuation

How to reduce the risk of OEM supply chain?

In order to manage the risk of supply chain, you should consolidate your supplier’s foundation so that your most reliable supplier manages more supply chain. After all, optimizing production to obtain stable inventory flow is their professional field. Reliable suppliers should have a good record of meeting high demand.

The following are some techniques to reduce the risk of OEM supply chain:

  • Digitalization of their current risks, compliance and quality planning
  • Capture supplier issues and investigate to determine the root cause
  • Management correction and prevention measures
  • Verify the effectiveness of repair and repair to ensure that the problem is effectively solved
  • Enable the structured process to terminate specific suppliers when the quality is unqualified

More digital, integrated and standardized supplier quality management methods will help OEM understand the entire supply chain and improve the overall performance of the organization.

Why give priority to OEM network security risks?

First, they serve manufacturers who are vulnerable to network security.

They must protect their sensitive data from being seen by external observer, whether it is customer data, customer list, or employee information.

Primitive equipment manufacturers are usually targets, because they have these contacts -criminals can attack the original equipment manufacturers as a means to destroy other goals on their customer network.

In other words, malicious actors may initially attack the original equipment manufacturers, because they know that there will be a larger and more valuable goal in the upstream of the supply chain.

Take the 2017 cyber security attack as an example. Federal Express lost $ 300 million for its subsidiary TNT Express.

The attacker may aim to know that TNT Express is connected to FEDEX with TNT Express.

This example perfectly illustrates how external client connections make the company face more loopholes.

How to reduce OEM network security risks?

The following are two important steps to improve the flexibility of OEM network security:

1. Protecting the production and sales supervision chain

Generally, OEMs need to consider multiple participants and factors. One way to make the supply chain clear is to form a license agreement.

In some cases, the license agreement can help original equipment manufacturers monitor their regulatory chain.

Therefore, each organization in the supply chain is responsible for the situation when the product moves in its supply chain.

For the original equipment manufacturer, improving the visibility of the supply chain should be the top priority. The permit agreement is essential to OEM because it can protect their brand and the business they provide products for them.

In addition, these protocols should usually include a concise language about a specific modification of any product that can be sold to relevant parties.

Any modification of an agreement or sub -protocol may endanger the mechanism or safety measures of the product.

2. Safety equipment

Another way to strengthen protection and reduce the risk of cybersecurity incidents in the original equipment is to identify, manage and protect any equipment they use in operation.

They may allow employees to use company equipment while working on the customer’s place.

Even technologies that do not have external connection capabilities, such as USB drives, need to be managed.

Primitive equipment manufacturers can take measures, such as prohibiting personal equipment, implementing strong security measures, and updating the equipment to the latest software versions.

Other steps to improve security include eliminating unnecessary or outdated data, programs or applications on the device, as well as cleaning up the data storage repository.

It is also important to implement a comprehensive network security training program for employees.

Tips:How to choose the right OEM toy manufacturer

1. Find a guaranteed manufacturer with guaranteed quality

When many brands choose OEM toy manufacturers, in order to seek to maximize profits, compress the cost of product, and more price -oriented, many brands have found OEM manufacturers with a lot lower processing price than market prices. The difference is very different. In the end, it is necessary to re -select the cooperation objects, delaying the timing of occupying the market, and it has to lose money. It is true that price is an important choice factor, but it should not be guided.

2. Find manufacturers with high production efficiency

A high -production foundry can greatly shorten your product production cycle, which helps you occupy and open the market faster, and at the same time increase the turnover rate of your product and reduce market risks.

3. Find a manufacturer with the ability to develop

Today’s consumers have higher and higher requirements for the efficacy of toys, which also requires manufacturers to make diversity requirements in the function of toy product functions. If you want to meet the needs of consumers, an OEM toy foundry that has a professional, continuously discuss market demand for a long time and can make different product formulas will provide you with huge advantages.

Conclusion

The way to manage OEM risk is to deal with every problem that occurs. When your production, sales and income are threatened, this is not the best plan for success.

OEM risk is a painful reality, but you don’t have to face them alone. As a wholesale toy manufacturer for more than 20 years, Union Vision support OEM and ODM orders for wholesale toy products. We have best-selling Plastic toys, plush toys, wooden toys, educational toys, etc. We provide one-stop service, including production, design customization quality control, logistics, etc.

If you are interested in importing from China, please contact us at any time.

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