Common use of Cost Reduction Projects Clause in Contracts

Cost Reduction Projects. Flextronics agrees to seek ways (“Initiatives”) to reduce the cost of manufacturing Products by methods such as elimination of Materials, redefinition of Specifications and re-design of assembly or test methods. Before it undertakes an Initiative, Flextronics shall obtain Customer’s written confirmation using a confirmation sheet the format of which shall be mutually agreed by the parties. Upon implementation of a Flextronics Initiative which has been so confirmed by Customer and where the engineering effort to analyze and implement the Initiative has been paid by Flextronics, Flextronics will receive * of the demonstrated cost reduction that is over and above the * cost reductions contemplated by Schedule 10.2 (KPIs), for * after such implementation. Customer will receive 100% of the demonstrated cost reduction upon implementation of Initiatives conceived by Customer. Any cost reduction projects that involve changes to Customer’s design of the Product shall be agreed upon by the Parties and documented in a separate agreement. The parties shall use value added/value engineering reports as a tool for confirming which party conceived of an Initiative, the approvals needed for the Initiative to proceed and the amount of the resulting cost reduction.