Supplier Data Protection

💡 Plain English Explanation

Supplier data encompasses the network of business relationships that make manufacturing possible: who supplies your materials, what prices you negotiate, the terms of your contracts, and the specifications you require. This supply chain intelligence can be just as valuable as product formulas because it determines your cost structure and production reliability.

In manufacturing, supplier relationships are often built over years. A competitor who learns your supplier network could approach those same vendors, potentially disrupting your supply chain or gaining insight into your cost structure and production volumes.

Key supplier data categories:

• 1
  Pricing information: Negotiated prices, volume discounts, payment terms, and cost structures that affect your competitive pricing ability.
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  Contract terms: Supply agreements, exclusivity arrangements, minimum purchase commitments, and termination provisions.
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  Material specifications: Custom specifications developed with suppliers, approved vendor lists, and qualification data.

⚠ Why This Clause Matters

For the Disclosing Party: Your supplier relationships represent significant investment in qualification, negotiation, and relationship building. Competitors could use your supplier information to negotiate better terms, target your key suppliers for disruption, or reverse-engineer your cost structure to undercut your pricing.

For the Receiving Party: Supplier data may overlap with commonly known industry suppliers. You need clarity on what is protected to avoid inadvertently violating the NDA by working with suppliers you already knew about or subsequently discover independently.

Third-Party Considerations: Supplier data often involves information about third parties (the suppliers themselves). Some supplier contracts may have their own confidentiality provisions that affect what can be shared and with whom.

📄 Clause Versions

"Supplier Data" means confidential information relating to the Disclosing Party's supply chain and vendor relationships, including but not limited to:

(a) Supplier Identity and Relationships: The identity of suppliers for critical or custom materials, components, or services, where such relationships are not publicly known; strategic supplier designations; and the nature and history of supplier relationships;

(b) Pricing Information: Negotiated prices, unit costs, volume discounts, rebates, payment terms, and any pricing formulas or methodologies specific to the Disclosing Party's supplier agreements;

(c) Contract Terms: Material terms of supplier contracts, including volume commitments, exclusivity provisions, quality requirements, delivery terms, warranty provisions, and termination rights;

(d) Material Specifications: Custom material specifications, approved vendor lists (AVLs), supplier qualification data, and material certification requirements developed by or for the Disclosing Party; and

(e) Supply Chain Strategy: Sourcing strategies, supplier diversification plans, inventory policies, and supply chain risk assessments.

The Receiving Party agrees to maintain Supplier Data in confidence and not to use such information to:
(i) Approach the Disclosing Party's suppliers to obtain similar terms;
(ii) Interfere with the Disclosing Party's supplier relationships; or
(iii) Disclose Supplier Data to any third party, including the suppliers themselves.

This clause does not restrict the Receiving Party from:
(a) Working with suppliers that are generally known in the industry;
(b) Continuing existing supplier relationships that predate this Agreement; or
(c) Independently developing supplier relationships without use of the Disclosing Party's Supplier Data.

"Supplier Data" means all information, in any form, relating to the Disclosing Party's suppliers, vendors, material sources, and supply chain operations, including without limitation:

(a) All supplier and vendor identities, including names, contact information, and location of all material, component, equipment, and service suppliers, regardless of whether such suppliers are publicly known;

(b) All pricing information, including quoted prices, negotiated prices, price histories, volume discounts, early payment discounts, rebates, credits, and any pricing methodologies, formulas, or models;

(c) All contractual information, including the terms and conditions of supplier agreements, purchase orders, blanket orders, requirements contracts, exclusivity arrangements, minimum purchase commitments, and supply guarantees;

(d) All material and component specifications, including custom specifications, drawings, tolerances, material grades, performance requirements, testing protocols, and acceptance criteria provided to suppliers;

(e) All supplier qualification and performance data, including audit results, quality ratings, delivery performance, defect rates, corrective action records, and supplier scorecards;

(f) All supply chain operational information, including order quantities, delivery schedules, inventory levels, safety stock requirements, lead times, and logistics arrangements;

(g) All supplier development information, including supplier improvement initiatives, technology transfer plans, and capacity development investments; and

(h) All supply chain strategy documents, including sourcing plans, supplier consolidation or diversification strategies, and supply risk assessments.

The Receiving Party agrees that during the term of this Agreement and for a period of [three (3)] years thereafter, it shall not:
(i) Contact, solicit, or approach any supplier identified as a supplier of the Disclosing Party for the purpose of obtaining materials, components, or services of the type supplied to the Disclosing Party;
(ii) Use Supplier Data to negotiate terms with any supplier, whether or not such supplier is a supplier of the Disclosing Party;
(iii) Assist any third party in identifying, contacting, or negotiating with the Disclosing Party's suppliers; or
(iv) Disclose any Supplier Data to the suppliers themselves or to any third party.

All supply chain information disclosed in connection with this Agreement shall be presumed to be Supplier Data unless the Disclosing Party explicitly states otherwise in writing.

"Supplier Data" means only the following information, when provided in writing and clearly marked as confidential:

(a) Specific negotiated pricing, including exact unit prices, discount percentages, and rebate amounts, under the Disclosing Party's current supplier contracts;

(b) Specific contractual terms that are not standard industry terms, including any unique exclusivity provisions, custom warranty terms, or non-standard payment arrangements; and

(c) Custom material specifications developed specifically for the Disclosing Party that are not based on industry standards or publicly available specifications.

The following shall expressly NOT constitute Supplier Data:

(a) The identity of suppliers that are generally known in the relevant industry, including major material manufacturers, distributors, and service providers;

(b) Supplier capabilities, product offerings, and general pricing ranges that are publicly available or can be obtained directly from suppliers through standard inquiry;

(c) Standard industry terms and conditions for supply agreements;

(d) Material specifications that are based on industry standards (ASTM, ISO, SAE, etc.) or publicly available material grades;

(e) Information about suppliers that the Receiving Party knew of or had relationships with prior to this Agreement;

(f) Information about suppliers that the Receiving Party independently discovers or develops relationships with after the date of this Agreement, without use of the Disclosing Party's information; and

(g) Supplier information that becomes generally known in the industry through no fault of the Receiving Party.

Nothing in this Agreement shall restrict the Receiving Party from:
(a) Continuing or developing relationships with any supplier in the ordinary course of business;
(b) Obtaining quotes, pricing, or terms from any supplier;
(c) Negotiating supply agreements with any supplier; or
(d) Using general knowledge of industry suppliers and supply chain practices.

The Disclosing Party acknowledges that the Receiving Party operates in the same industry and may have existing or future relationships with the same or similar suppliers, and nothing in this Agreement creates an exclusive relationship or restricts the Receiving Party's supply chain activities.

💬 Key Considerations

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  Check your supplier contracts. Your agreements with suppliers may have confidentiality provisions that affect what information you can share with third parties and under what conditions.
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  Consider the industry context. In some industries, supplier networks are well-known. In others, identifying the right supplier for a specific component can take years of research and qualification.
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  Address pre-existing relationships. The receiving party may already work with some of your suppliers. Clarify how the NDA applies to existing relationships versus newly disclosed information.
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  Be realistic about enforcement. Proving that someone used your supplier information versus independently discovered the same suppliers can be challenging. Focus protection on truly proprietary elements.
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  Consider non-solicitation separately. If supplier non-solicitation is important, consider whether it belongs in this confidentiality clause or in a separate restrictive covenant with its own terms.