Typical terms in an MSA
After you select a supplier, you and the supplier need to formalize the terms of the contract. This relationship is defined by the master services agreement (MSA), which outlines the terms and conditions for how you will work with a contract manufacturer. This list outlines examples of terms that are typically included in an MSA. More details can be found in Chapter 14 of Product Realization. You should always get the advice of a lawyer when generating this document.
Intellectual property and information ownership
- Who owns the design, tooling, BOM, IP, etc.
- Management of IP
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Responsibility for the design of parts/subsystems
- If they are designing your product, are you obliged to stay with them for mass production or can you send their design out to bid?
- Responsibility for designing and supplying tools, fixtures , and test assemblies
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Quality management
- AQL levels
- How the RMA process (returned material authorization) works
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Costs and payments
- Access to actual factory costs (usually refused)
- Cost of parts, notification on cost increases, and markups
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Procurement and approval of supplier changes
- Supplier identification and contracting process
- Material procurement processes
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Distribution
- When you take ownership of the product (when it becomes FOB)
- Delivery responsibility
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Contract terms
- Term of contract
- Renewal terms
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Unexpected costs and how they are approved
- Cost of running design or process changes during mass production
- Payment for obsolete inventory
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