10 OEM Terms You Need to Know

In the OEM business, there are many exclusive terms that are important to know for understanding how the system works. Anyone can buy a car, but keeping it and maintaining it with the proper equipment, that’s the hard part.

Understanding how the OEM market works and what certain terms mean will give you a better understanding of what kind of product you’re receiving. Below we’ve briefly outlined and defined some of the most important terms you should know, especially if you are a buyer of OEM or aftermarket parts.

1. OEM

An OEM is an Original Equipment Manufacturer. These manufacturers produce parts that are exactly like the original parts of a car. They are the same as the parts that are in the car when it comes off the line.

2. Aftermarket

Aftermarket parts are sold from an OEM directly to the customer. It can also means parts that are not engineered exactly like the original. They might function differently or be designed differently.

3. VAR

A VAR is a Value-Added Reseller. A VAR buys parts from an OEM and assembles parts to be sold to customers.

4. Intellectual Property

When a company patents a design or idea, the design or idea becomes their intellectual property. This gives them protection on their idea. Unfortunately it can be lost or stolen, and the Internet makes it easy to do in today’s age.

5. Open Design

An open design is a product or idea created using information from the public domain. These are products and designs that are not protected as “intellectual property”.

6. Secondary Market

In this market, parts are sold for uses other than what they were originally made for. The secondary market is at a potential risk for counterfeiting. Be careful that you are buying from a trustworthy supplier.

7. Economies of Scale

Economies of scale are the balancing act companies do when figuring out the cost of a product. They factor in the product’s value, how many are being manufactured, and what the ideal amount of products is.

8. Turnkey Product

A turnkey product is ready for use as soon as it is sold. Like when you buy a car, all you have to do is turn the key and drive it off the lot. It was ready to go when you bought it.

9. Systems Integrator

In a company, a systems integrator brings parts together and makes sure that they function properly. Then, the product can move on to the end product producer.

10. End Product Producer

The end product producer is the company that sells finished products to customers, after all parts are assembled and function correctly.

Remember how the OEM market works, and you will be sure that you’re getting the best product when it’s time to buy!