The manufacturing cost crisis has reached a breaking point. In a recent study, 74% of industrial manufacturers cite escalating costs as their number one challenge. With wages climbing and prices barely keeping pace with inflation, companies face mounting pressure to maintain a competitive edge.

One common strategy is to accelerate new product initiatives, bringing products to market faster to capture revenue sooner.  However, speed without strategic thinking can create negative consequences. Recent research reveals a troubling pattern: companies that doubled their development velocity experienced a 40% drop in customer satisfaction within 90 days.

What’s more, organizations that increase velocity by 50% or more face an additional 38% in production bugs, a 42% increase in customer complaints and technical debt that more than doubles.

The answer to reducing product design and manufacturing costs isn’t about moving faster at any cost or sacrificing quality for speed. It’s about strategic partnerships that transform how products are developed and manufactured from the very beginning, resulting in both rapid time-to-market and superior quality.

“By leveraging the engineers and facilities with strong technical capabilities through DENSO WAVE’s ODM, we were able to secure powerful resources. Since DENSO WAVE works as part of our team, we achieved much faster product launches.”

Is Hiring More Engineers a Strategy to Reducing Manufacturing Costs?

Traditional approaches to cost reduction—hiring more engineers, negotiating harder with suppliers or value-engineering existing designs—offer only incremental savings. Companies achieving dramatic cost reductions while improving quality share a common approach: early engagement with an Original Design Manufacturer (ODM). This partnership model transforms product development economics by addressing cost drivers at their source, during the design phase when decisions have the greatest financial impact.

Here are five ways that illustrate how strategic ODM partnerships deliver measurable cost advantages throughout the product lifecycle—and five steps you can take to realize cost advantages of your own.

Step 1: Engage with Manufacturing Partners Early in the Design Phase

The most expensive product decisions aren’t made in manufacturing—they’re locked in during the design phase. If you’re seriously interested in how to reduce manufacturing costs, this is the place to start. Engagement with an ODM from a project’s inception can help reduce the costs and project delays that result from late engagement:

• costly redesigns
• rushed tooling changes
• production delays that push market entry

Early ODM involvement enables Design for Manufacturability (DFM) principles from day one. This approach optimizes component selection by weighing performance specifications against cost and real-world availability. Real-time cost feedback during design iterations prevents expensive surprises that derail budgets and timelines.

Traditional sequential development often reveals manufacturing constraints after months of design work and possible tooling investment. With an early ODM partnership, parallel development informs the design from the initial sketch. As one customer noted, decades of engineering experience proved invaluable in initial planning discussions, validating designs through simulation prior to committing to production. As a result, products reach market months faster while meeting both performance specifications and cost targets.

Step 2: Access Specialized Expertise Without Permanent Headcount

Companies that partner with an ODM can realize savings by addressing both the obvious and hidden costs of building an internal product development team. Tapping into the depth of engineering expertise available through an ODM extends far beyond personnel salaries. When a company starts the product development process without a robust internal team, there can be disconnects among departments, including design, procurement, manufacturing and quality control. Also, companies often overlook the opportunity costs of diverting internal resources from core business activities.

When teams collaborate with an ODM, the internal team works alongside engineers who specialize in new product design, planning and development, and follow through to procurement, manufacturing, and logistics.

Step 3: Optimize Supply Chain and Component Costs

This engineering expertise helps companies optimize supply chain management. Consider the impact of component availability and pricing on the true manufacturing costs of a product. When selecting an ODM, consider the company’s size, as its scale and market influence can have a dramatic impact on supply chain advantages.

A larger ODM, such as DENSO WAVE, can take a proactive step in reducing manufacturing costs by leveraging its parent company’s connections. As part of a $50 billion organization, DENSO WAVE provides customers with the benefits of volume purchasing power and priority allocation during supply shortages.

As one practical illustration, this advantage proved critical during COVID-19 supply chain disruptions. While many manufacturers missed delivery deadlines, DENSO WAVE maintained perfect on-time shipment records. Some customers requested additional units beyond original forecasts when their other suppliers couldn’t deliver.

Proactive obsolescence management represents another critical supply chain advantage. ODMs maintain close watch on components nearing end-of-life, preventing costly last-minute redesigns when parts become unavailable. Strategic inventory for critical components avoids allocation premiums and ensures production continuity. These supply chain capabilities—from procurement power to forward-looking component management—translate directly into lower costs and reduced risk throughout your product’s lifecycle.

 Step 4: Design Platform Architectures for Future Variants

These immediate advantages set the foundation for long-term cost reduction through platform thinking. While one-off designs incur the highest per-product cost, platform thinking amortizes development costs across product families, with reusable components and subsystems reducing costs for successive generations.

The thermostat evolution illustrates this approach. Starting with basic programmable models, the platform architecture supported progression to communicating thermostats, then to smart connected systems with high-resolution graphics and Wi-Fi capabilities—all built on core platform elements. By leveraging automotive display technology and proven subsystems, each generation launched faster and more cost-effectively than starting from scratch.

Modular architecture accommodates market expansion without complete redesigns. When one DENSO WAVE customer experienced unexpected market success requiring dramatic production increases, the platform approach enabled rapid scaling without sacrificing quality.

A lower non-recurring engineering (NRE) cost for product development means a lower upfront, one-time investment in activities such as design, prototyping, and tooling. Leveraging existing tooling and code, or springboarding new products from existing ones, can lower NRE costs for product variants and market adaptations. This practice can multiply the ROI on initial development investment and significantly reduce manufacturing costs.

Step 5: Implement Quality Standards That Prevent Defects

Quality can reduce costs when it is built into a project from the beginning, by preventing issues rather than detecting them. Quality built in from the beginning results in:

• fewer field failures
• lower warranty claims
• less chance of product recalls
• reduced risk of downtime
• reduced rework

Quality is designed into processes, and not as an afterthought during inspections, catching issues during development rather than after customer shipment. This approach proved its value over DENSO WAVE’s 40-year relationship with Rockwell Automation, during which consistent quality earned recognition as its largest supplier and multiple supplier excellence awards.

Total Quality Management – The Strategic Way to Reduce Manufacturing Costs

ODM partnerships with DENSO WAVE provide access to proven processes and top-quality management without the burden of permanent headcount for temporary project needs. At DENSO WAVE more than 50% of the organization’s personnel are engineers, with expertise across embedded software, digital and analog electronics, mechanical design and human-machine interfaces.

The Toyota Quality Management System approach embedded in DENSO WAVE operations applies top standards to industrial products.

• Stringent safety and regulatory standards
• Complex supply chain relationships
• Cross disciplinary complexity (embedded software, mechanical design, electronics)
• Quality and traceability

As one customer said, “By leveraging the engineers and facilities with strong technical capabilities through DENSO WAVE’s ODM, we were able to secure powerful resources. Since DENSO WAVE works as part of our team, we achieved much faster product launches.”

Having decades of engineering experience is invaluable for initial planning discussions and for validating designs through simulation before committing to the product. As a result, products reach market months faster while meeting both performance specifications and cost targets.

Begin Your Roadmap to Reducing Manufacturing Costs

Cost reduction through strategic ODM partnerships addresses root causes rather than symptoms. Early engagement eliminates waste throughout the product lifecycle, creating compounding effects: faster time-to-market, better quality, plus lower total cost of ownership.

Companies that engage ODMs early gain competitive advantages that traditional approaches cannot match. The question isn’t whether you can afford ODM partnership—it’s whether you can afford not to optimize your product development process.

Contact DENSO WAVE to discuss cost-optimization strategies for your next product development project and discover how a strategic partnership can transform your product economics.

Your marketing and engineering teams have identified an innovative market opportunity. The product concept is solid, the business case is compelling and there’s a critical window to beat competitors to market. But you don’t have the internal resources or in-house expertise to handle the project, so it’s time to marshall outside resources to take it across the finish line. That leaves you with this critical choice that will determine your success: Do you partner with an Original Design Manufacturer (ODM) or an Electronics Manufacturing Services (EMS) provider?This choice has profound implications for your time-to-market, product quality and long-term competitiveness. Understanding the fundamental differences between these partnership models will help you make the right decision for your specific situation.

What Is an EMS Company?

EMS companies serve as contract manufacturers who execute your production requirements. Once you hand them complete designs, specifications and bills of materials, electronic manufacturing service providers excel at turning those blueprints into finished products.
EMS companies bring important strengths: cost-effective production at scale, efficient assembly operations and streamlined logistics. For companies with established designs and in-house engineering teams, EMS partnerships can deliver reliable manufacturing capacity without capital investment in production facilities.
However, EMS providers operate within defined boundaries. They don’t participate in product ideation or design decisions. Their role is reactive rather than proactive—they wait for your engineering specifications rather than contributing to product innovation. When market demands shift, components reach end-of-life or your product requires evolution, EMS partners may lack the engineering resources to adapt designs for future market needs.

What Is an ODM?

An ODM operates as your strategic innovation partner, bringing new technology and products from conception to delivery, rather than just acting as your manufacturing vendor. The relationship begins before you have detailed CAD files or finalized specifications—it starts with your product vision and market requirements.
ODMs manage the complete product journey: initial concept development, industrial design, electrical and mechanical engineering, prototyping, design validation and full-scale manufacturing. This partnership approach means your ODM becomes an extension of your product development team and a partner in every part of quality control.
Beyond initial development, ODMs provide continuation engineering and lifecycle support. They monitor component availability, propose design improvements, manage obsolescence issues and help your product evolve as market requirements change. It’s an innovative partnership for strategic growth, not just production contracting.

The Critical Differences of ODM vs EMS Providers That Impact Your Success

Design and Engineering Capability
ODMs provide full design and engineering expertise to create new products from concept. When DENSO WAVE developed a moisture sensor prototype for AO Smith, a large hot water heater manufacturer, the company delivered a fully functional prototype in just 2.5 months—including hardware design, firmware development and non-contact sensing technology.
EMS providers build products based strictly on your existing designs and generally cannot modify or improve them. If design issues arise during production, resolving them requires returning the work to your internal engineering team, which can lead to delays and supply issues.
Scalability and Future Product Variants
ODMs design with future variants and market expansion in mind, creating modular architectures that accommodate growth. DENSO WAVE’s relationship with Lennox, a large HVAC manufacturer, demonstrates this evolution—starting with basic programmable thermostats and progressing through smart thermostats, commercial systems with CO2 sensing and Wi-Fi-enabled products. Each generation built on established platforms while adding new capabilities.
EMS providers focus on current product instructions without the ability to plan for evolution. When you need product variants or next-generation features, you’re back to internal engineering resources to develop new designs.
Manufacturing Capacity and Growth Support
ODMs offer high-volume production capabilities built to scale with your sales growth. One DENSO WAVE customer experienced unexpected market success that dramatically increased demand. DENSO WAVE scaled production to meet requirements without sacrificing quality—a responsiveness that reflects manufacturing capabilities designed for growth from the beginning.
EMS providers fulfill current requirements for electronic manufacturing services but typically lack strategic capacity planning. Rapid scaling often requires finding additional manufacturing partners, creating supply chain complexity.
Quality and Change Control
ODMs implement rigorous engineering change control processes and continuous quality monitoring throughout the product lifecycle. DENSO WAVE applies the Toyota Quality Management System (TQMS), emphasizing defect prevention rather than defect detection. One customer reported: “When design and manufacturing quality were poor and quality costs were unnecessarily high, outsourcing to DENSO WAVE significantly improved quality-related costs.”
EMS quality control is limited to the production process itself. They can measure what you’ve designed but cannot improve designs to enhance reliability or reduce quality costs.
Supply Chain Stability
ODMs proactively manage component sourcing to reduce shortages and backorders, leveraging deep supplier relationships. DENSO WAVE, as part of a $50 billion parent organization, provides supply chain advantages that prevented disruption even during COVID 19-era challenges. The company maintained on-time delivery and even accommodated increased orders when customers’ other suppliers struggled.
EMS providers depend on customer-specified components and instructions, with limited ability to resolve supply chain disruptions. When components become unavailable, production stops until you redesign.
Long-Term Product Support
ODMs provide continuation engineering and lifecycle support for evolving market needs. DENSO WAVE’s relationship with one major controls manufacturer has continued for 40-50 years. As that customer observed: “While other ODMs informed us that production would end in just a few years, DENSO WAVE has continued to supply the same product for over a decade.”
EMS providers deliver electronic manufacturing services during the contract period. When the contract ends or when support issues arise, you’re on your own.
Single Vendor Accountability
ODMs take responsibility for both design and manufacturing outcomes. If quality issues emerge, supply problems occur, or field failures arise, one organization addresses the problem. This unified accountability streamlines issue resolution.
With EMS partnerships, responsibility splits between your engineering team and the manufacturer. When problems occur, valuable time gets lost determining whether the issue stems from design or manufacturing—and who pays to fix it.

ODM

EMS

When to Use ODM vs EMS Providers

Choose an EMS Provider When:
• You have complete, proven designs ready for production
• Your internal engineering team has capacity for ongoing support
• You need manufacturing capacity without design services
• Your product has reached maturity with minimal expected changes
• Cost per unit is your primary concern
Choose an ODM Partner When:
• You’re developing new products, especially outside core expertise
• You need faster time-to-market than internal resources can deliver
• You want to pursue multiple opportunities without adding permanent headcount
• Supply chain resilience and component lifecycle management are critical
• You need a partner that contributes ideas, not just executes specifications
• Long-term product support and evolution matter to your business model
The Velocity-Quality Challenge
The Velocity-Quality Challenge refers to the difficulty of balancing rapid product development and delivery (velocity) with maintaining high standards of performance, reliability, and precision (quality).
Recent research reveals a troubling pattern: companies that doubled their development velocity experienced a 40% drop in customer satisfaction within 90 days. Organizations increasing velocity by 50% or more face 38% more production bugs, 42% increase in customer complaints, and 2.3x technical debt accumulation.
The velocity trap emerges when internal teams push for faster development by cutting corners: shorter code reviews, reduced testing coverage and rushed design decisions.
ODM partnerships offer an escape from this false choice between speed and quality by introducing capabilities that eliminate the constraints creating the trade-off.
Strategic ODM engagement accelerates time-to-market through parallel development and integrated design-for-manufacturing expertise while simultaneously improving quality through automotive-grade standards and rigorous change control. Companies aren’t forced to choose between velocity and quality—they achieve both.

Making Your Decision Between an ODM vs EMS

The fundamental difference is clear: ODMs are innovation acceleration partners, while EMS companies are production contractors. There is a place for both, depending on a company’s product and strategic growth plan.
If you’re launching new products, entering adjacent markets or need to accelerate development timelines without sacrificing quality, an ODM partnership provides strategic advantages that EMS relationships cannot match. If you have mature, stable designs and require pure manufacturing capacity, EMS providers can efficiently meet your needs.
The question isn’t which model is “better” in absolute terms, it’s which model aligns with your specific situation, capabilities, and strategic objectives.
Or contact DENSO WAVE today to discuss your product requirements and determine whether ODM partnership makes sense for your organization.