Announcement

Join us on Discord: https://discord.gg/nf43FxS
Dilbert_X
The X stands for
+1,733|5062|eXtreme to the maX
Ginormous legal affairs dept full of morons.
#FreeBritney
KEN-JENNINGS
I am all that is MOD!
+2,914|5588|949

"Best effort" is a term widely used in manufacturing contracts and supplier agreements. It's ambiguous on the face of it, but not really- if one side can prove the other was deliberately slowing or redirecting production to the detriment of the agreement, damages can be won. You don't want to be specific so you have more room to argue which actions could be deemed as "best effort" or not. It's a punt by both sides to defer to lawyers in case there is a disagreement instead of bogging down the contract negotiation process with clearly defined examples.

Every contract negotiation I have been a part of has very specific parameters for spreading risk (and I have been a part of many, and reviewed many more). There are no doubt contractual benchmarks to abide by, but without knowing those details it's difficult to assess blame. The EU may know it negotiated a bad contract and are using public pressure to resolve it. Or the EU may know AZ is in breach of the contract and rather than resolving this through legal channels, they are using public pressure to compel AZ to deliver according to their obligations. Maybe there were specifics regarding the location of production facilities. Tranport costs for millions of doses of vaccines will vary widely depending on where you are transporting them from and to. I saw industry projections where vaccine distribution is supposed to account for 1% of total global air freight in 2021. That's insane to think about.
Dilbert_X
The X stands for
+1,733|5062|eXtreme to the maX
I'll admit I've had minimal involvement in contract negotiations, the contracts I have seen don't say much more than deliver x by y subject to force majeure - thats all I need to worry about.

All the information will be in the contract, its mysterious why the two parties are saying the contract says different things.
Poor yield is bad luck, thats where 'best effort' comes in, I think the euro-fags are trying to wriggle out of their own contractual fuckup with bluster and bullying out of habit as much as anything.
#FreeBritney
KEN-JENNINGS
I am all that is MOD!
+2,914|5588|949

Poor yield is purely on the manufacturer, and never an excuse for "best effort". Yield rate is a cost-based variable, and as such needs to be understood by the manufacturer prior to negotiating pricing and lead times. You can't agree to produce a quantity of something by a specific time frame at a specific price without knowing that information. There's no doubt these pharma companies had to make certain gambles as far as materials procurement and production quantities in order to meet demand immediately after government approval, but without gigantic margins, there's no way a manufacturer can deal with yield rate fluctuations and still turn a profit.

The best effort tends to address things like redirecting production to other business, not securing capacity or components dependent on lead times and availability, failing to get proper regulatory compliance and approvals, etc.

I would almost guarantee there are specifics around where the manufacturing is being done and how that relates to lead times. That's probably why the EU is complaining.

As an aside, the only time I ever saw a force majuere clause used was when we had a container of product stolen in transit. Even the Japanese Tsunami that wiped out chip production didn't trigger that clause, because no one in their right mind is going to bitch and moan about something like that.
SuperJail Warden
Gone Forever
+459|2675
The only shipping term I know is "inherent vice". Do you deal in a lot of inherent vice, Ken?
KEN-JENNINGS
I am all that is MOD!
+2,914|5588|949

There's no inherent vice in supply chain management. The correct term is LCM- the lower of cost or market. You generally adjust the value of inventory down from time to time based on the latest market conditions in order to realize the loss against cost of goods instead of lost margin. It's an accounting trick to ensure you are valuing your inventory correctly to shareholders while still being able to record sales at a profit.
SuperJail Warden
Gone Forever
+459|2675
Did you ever hear from Hurricane? He majored in SCM. Did you convince him?
KEN-JENNINGS
I am all that is MOD!
+2,914|5588|949

No but i hope he is successful in whatever he does!

Speaking of which, i need to keep you updated on another thread
SuperJail Warden
Gone Forever
+459|2675
I eagerly await your update.
https://external-preview.redd.it/Iw5C4Gv5A6YmqCsAeaaeo4qQ1oBUeakMbQcdTzVnWTg.jpg?auto=webp&s=9a10e0cb166b5061032fd8005b39dd1f330c3792
Dilbert_X
The X stands for
+1,733|5062|eXtreme to the maX

KEN-JENNINGS wrote:

Poor yield is purely on the manufacturer, and never an excuse for "best effort". Yield rate is a cost-based variable, and as such needs to be understood by the manufacturer prior to negotiating pricing and lead times. You can't agree to produce a quantity of something by a specific time frame at a specific price without knowing that information. There's no doubt these pharma companies had to make certain gambles as far as materials procurement and production quantities in order to meet demand immediately after government approval, but without gigantic margins, there's no way a manufacturer can deal with yield rate fluctuations and still turn a profit.

The best effort tends to address things like redirecting production to other business, not securing capacity or components dependent on lead times and availability, failing to get proper regulatory compliance and approvals, etc.

I would almost guarantee there are specifics around where the manufacturing is being done and how that relates to lead times. That's probably why the EU is complaining.

As an aside, the only time I ever saw a force majuere clause used was when we had a container of product stolen in transit. Even the Japanese Tsunami that wiped out chip production didn't trigger that clause, because no one in their right mind is going to bitch and moan about something like that.
They're also on the limit of their production capability, its not as if they're overproducing to cover yield and can still deliver.
Anyway, like I said, its not really my thing.
#FreeBritney
KEN-JENNINGS
I am all that is MOD!
+2,914|5588|949

Yeah and I can imagine it's a fairly complex production process, so it's probably not as easy as ctrl c /ctrl v another production line like you more or less can in electronics manufacturing.
Dilbert_X
The X stands for
+1,733|5062|eXtreme to the maX
Sure, getting vaccines to breed is somewhat a black art and one miss-step or bad luck gives you 2000l of useless soup and you start again more desperate than before.
#FreeBritney
Dilbert_X
The X stands for
+1,733|5062|eXtreme to the maX
I think the only time we have invoked force majeure or something like it was when a customer handled the supply chain and delivered fake chips with nothing in them. The first few on the reel were OK.

Also was a bad time to choose to skip intermediate test and conformal coat before final test....

Paying someone to wait and do nothing when they could be doing something useful is an accounting trick which makes no sense to me.

Last edited by Dilbert_X (2021-01-28 17:19:01)

#FreeBritney
KEN-JENNINGS
I am all that is MOD!
+2,914|5588|949

When i sold electronic components on the secondary market we used to use a company to do quality checks on components sourced out of China. It was two big, burly dudes who would vet the supplier to make sure it wasn't a guy in a dirt stall in Shenzhen stripping cheap components and remasking/reprinting them as more expensive ones. I've seen some really funny pictures of dies that were re-stamped, model/serial number/brand logos coming off of a chip with a simple alcohol rub, misspellings, etc. I don't think it's as big an issue now as it was pre-RoHs and Pb-free days, but it was interesting to see firsthand.
Dilbert_X
The X stands for
+1,733|5062|eXtreme to the maX
We occasionally get asked to epoxy overcoat chips so they can't be reused.

I have plenty of first and second-hand horror stories, medical devices being 'washed' in a dirty bucket outdoors may be the best one.

Fake documentation and test data is as big a problem, often they just make stuff up or copy a competitor, literally copy someone else's documents and photoshop the company name at the top.
#FreeBritney
Dilbert_X
The X stands for
+1,733|5062|eXtreme to the maX
Shit just got real

Eurovision: Italy wins while UK's James Newman gets nil points

https://www.bbc.com/news/entertainment-arts-57198762
#FreeBritney

Board footer

Privacy Policy - © 2021 Jeff Minard