Common use of Customer and Supplier Clause in Contracts

Customer and Supplier. shall always strive to improve the production process. To that end, Supplier shall form with Customer a continuous improvement team to work collaboratively to identify opportunities for cost reductions throughout the Term of this Agreement, including implementing process enhancements and selecting alternative sources for materials. Customer and Supplier shall formally identify and agree upon cost reduction opportunities in each quarterly business review (each referred to as a “Cost Reduction Project”). Each Cost Reduction Project should include a description of the difference between the current process or procedure and the proposed change, as well as detailed cost estimates, which reflect the implementation of such cost reduction initiatives and their projected impact, as well as the anticipated timeframe for implementation. Unless otherwise specified for a particular Cost Reduction Project, and in the spirit of cooperation, Supplier and Customer shall each benefit from the Cost Reduction Projection by sharing the benefit on a [***] In the event that the savings are fully originated by the Customer, primarily because of some sourcing of materials initiative or design improvement, the benefit should be given to the Customer in full from the actual implementation time. In the event that one party agrees to and actually invests in equipment or modifications to the manufacturing area in order to realize the savings, that party shall get 100% of the savings until fully reimbursed for its investment, at which point Supplier and Customer will start sharing the benefit on a 50/50 basis as described above. Notwithstanding the foregoing, Supplier agrees that the cost-savings initiatives listed in Exhibit 1 of this. Agreement have been undertaken by Customer prior the Effective Date and that, as a result, Supplier shall not share in the proceeds of such initiatives.