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Design manufacture service (DMS) is a business model that combines contract product design with contract manufacturing as a service to other companies that have insufficient or do not possess the required resources. Often the customer is focused on other aspects of their business or their existing resources may simply be overloaded. DMS providers may also provide other services such as order fulfillment, logistics and aftermarket service.
A business model describes the rationale of how an organization creates, delivers, and captures value, in economic, social, cultural or other contexts. The process of business model construction and modification is also called business model innovation and forms a part of business strategy.
A contract manufacturer ("CM") is a manufacturer that contracts with a firm for components or products. It is a form of outsourcing. A contract manufacturer performing packaging operations is called copacker or a contract packager.
Logistics is generally the detailed organization and implementation of a complex operation. In a general business sense, logistics is the management of the flow of things between the point of origin and the point of consumption to meet requirements of customers or corporations. The resources managed in logistics may include tangible goods such as materials, equipment, and supplies, as well as food and other consumable items. The logistics of physical items usually involves the integration of information flow, materials handling, production, packaging, inventory, transportation, warehousing, and often security.
Because of the high skill-levels required in each field, DMS firms specialize in different product categories. These might include medical devices, medical instruments, automotive, communications, etc. Typically, these are areas that require a relatively higher level of internal infrastructure or regulatory controls than the customer possesses. Certain industries including aviation and medical devices [1] require special development and manufacturing practices required by international, Federal and local regulations.
One of the key differences between the DMS model and other contract manufacturing such as original design manufacturer (ODM), is the way intellectual property (IP) is treated. [2] In the DMS model, IP comes from three basic sources. These include (a) IP previously owned and contributed by the customer, (b) IP previously owned and contributed to the product by the DMS and (c) new or original IP created at the request of and paid by the customer. The latter (c) is commonly referred to as "work for hire". With DMS, the customer ultimately has rights to all of the IP embodied in the product. This is especially important in industries like medical devices where customer owned IP is critical. [3] Some contract product development models, including Original Design Manufacturing (ODM), [4] allow the developer, instead of the customer, to retain IP rights.
An original design manufacturer (ODM) is a company that designs and manufactures a product, as specified, that is eventually rebranded by another firm for sale. Such companies allow the firm that owns or licenses the brand to produce products without having to engage in the organization or running of a factory. ODMs have grown in size in recent years and, as of 2015, many have the scale to handle production in-house for the products that are branded by the buying firm. This is in contrast to a contract manufacturer (CM).
Intellectual property (IP) is a category of property that includes intangible creations of the human intellect. There are many types of intellectual property, and some countries recognize more than others. The most well-known types are copyrights, patents, trademarks, and trade secrets. Early precursors to some types of intellectual property existed in societies such as Ancient Rome, but the modern concept of intellectual property developed in England in the 17th and 18th centuries. The term "intellectual property" began to be used in the 19th century, though it was not until the late 20th century that intellectual property became commonplace in the majority of the world's legal systems.
In the copyright law of the United States, a work made for hire is a work subject to copyright that is created by an employee as part of his or her job, or some limited types of works for which all parties agree in writing to the WFH designation. Work for hire is a statutorily defined term, so a work for hire is not created merely because parties to an agreement state that the work is a work for hire. It is an exception to the general rule that the person who actually creates a work is the legally recognized author of that work. According to copyright law in the United States and certain other copyright jurisdictions, if a work is "made for hire", the employer—not the employee—is considered the legal author. In some countries, this is known as corporate authorship. The entity serving as an employer may be a corporation or other legal entity, an organization, or an individual.
