1. Thedistributor satisfies Watlow's needs to reach and satisfy a customer.
2. The distributor performs this sales function more economically than Watlow.
3. The sale satisfied the profit needs of the distributor.

Watlow defines OEM business as the purchase of Watlow product to be used as a component of equipment which is manufactured or engineered for resale.
In general, Watlow expects to sell direct to OEMs and engineering/ consulting firms. Exceptions are at the discretion of the Watlow sales agent, which should be sold at Watlow's suggested OEM discount, and are based on the following criteria:

1. Customerdoesn't meet minimum billing.
2. Historical precedent.
3. Special pricing considerations.
4. Special stocking needs.
5. Value-added benefits provided by distributor.
6. Location of customer.

Typically, distributors handle end users. Exceptions are at the discretion of the Watlow sales agent, based on the following criteria:

1. Thereis no economic margin for the distributor to ensure the sale of Watlow product.
2. The distributor is not capable or does not wish to provide what the customer expects.

What are Watlow's concerns with small OEMs?

Sales volume of the OEM is not an issue because small OEMs can be cultivated into large OEMs. Watlow wants to handle small OEMs so this cultivation can take place. The difference between pricing from a distributor and from Watlow to an OEM could create an unhappy customer if Watlow were to start handling direct an OEM that had previously been purchasing from a distributor. The policy does define circumstances where a small OEM's interests might be better served by a distributor.

Is a panel builder an OEM?

According to the policy's definition, yes. Again, volume is not the determining issue. Watlow suggests that distributors use the OEM discount for small OEMs. This may present a problem for a distributor, so this is only a suggestion.