Common use of Authorization of Work Clause in Contracts

Authorization of Work. PROCUREMENT OF MATERIALS --------------------------------------------------- The following terms will apply assuming Customer's credit has been established to Plexus' satisfaction: a) The purpose of this section is to define the methods under which Plexus will procure materials to support manufacturing of product for the Customer. The intent is to provide the Customer with flexibility to alter and/or cancel schedules within a reasonable period of time while at the same time minimizing Plexus liability that is a result of those alterations and cancellations. In order to offer the best possible price, Plexus does not attempt to build unanticipated carrying charges into its price. When changes in Customer requirements occur that cause Plexus to incur unanticipated expenses that are the result of Customer actions, the Customer is expected to reimburse Plexus for the costs incurred. For each assembly to be manufactured, Plexus establishes a manufacturing lead time, which is the number of business days it will take, on average, to receive and kit all components, assemble, test and ship the lot. Manufacturing lead time shall be established during the pre-production phase of the program. Plexus schedules all components for a particular lot of assemblies to arrive one manufacturing lead-time prior to the Customer due date. Plexus then uses this information, together with the Forecast and Purchase Order information as defined below, to place commitments to its suppliers for materials. b) Customer shall place purchase orders for the first six (6) months of production and maintain six (6) months of firm purchase orders on a month to month rolling basis. Customer will provide Plexus on a monthly basis with a minimum of twelve (12) month schedule of demand for product. The schedule will show firm orders for months 1-6 and forecasted demand for months 7/12. Customer authorizes Plexus to procure, as material lead times dictate, the material to support 100% of Buyers forecasted requirements for months 7 through 9. On a quarterly basis Plexus will place orders for material for months 7 through 9 of the current forecast in order to lot size Printed Circuit Board Assemblies and to determine economic order quantity buys or components or unique parts. Months 10, 11 and 12 are provided for Plexus *** Material has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC. visibility and may be utilized by Plexus to request additional material authorizations from Customer. Prior to entering full production Customer and Plexus will review the final ▇▇▇▇ of material, discuss material lead times and production ordering parameters. Customer and Plexus agree to develop a material ordering plan which will ensure timely delivery of material to meet production objectives, while limiting the exposure to materials in the event of a program shut down.