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TOOLING AGREEMENTS
What every procurement pro must negotiate to avoid costly tooling surprises.
Issue 061
When you’re sourcing stamped or molded components, it’s easy to focus on price per part, lead times, or production capacity. But there’s a silent asset at the heart of every stamped part: the tooling.
Here’s the tough reality: tooling only works for you if you own it—and protect that ownership in writing.
I’ve seen too many procurement teams blindsided by tooling agreements that look fine on the surface. You may pay for the tooling, but without the right clauses, you might not fully control it. And if a supplier relationship changes—or worse, if a factory closes—you could be stuck, forced to rebuild a six-figure die from scratch, delaying production for months.
Let’s walk through what your supplier agreement needs to keep you in control of your tooling from day one.
The Problem: Tooling Is a Strategic Asset—But Often an Unprotected One
Think of your tooling like the key to your product’s kingdom. Without it, production stops cold. And unlike spare parts, you can’t just reorder it from stock.
➡️ Progressive dies today can take 10 to 26 weeks to build, depending on complexity, supplier backlog, and material availability.
Once built, tooling is site-specific. Moving it to another supplier is possible—but only if:
✅ You legally own it
✅ It’s maintained to a documented standard
✅ It’s designed for transfer (not tied into proprietary systems)
Without these protections, you’re locked in. And in today’s world—reshoring booms, supplier consolidations, and more compliance pressure—you need flexibility more than ever.
📝 The Plan: 4 Critical Clauses Your Agreement Needs
If you want to safeguard your tooling investment, make sure your supplier agreement spells out:
1️⃣ Ownership Rights [🔐]
Be explicit: once paid, the tooling belongs to you. Watch for small print that lets the supplier retain liens or claim shared rights. The tooling is yours—period.
2️⃣ Maintenance & Upkeep [🛠️]
Define how the tool will be maintained throughout its life. A progressive die can last millions of hits—but only with proper sharpening, wear part replacement, and cleaning. Set clear maintenance intervals and require maintenance logs you can review if needed.
3️⃣ Refurbishment & Life Cycle Expectations [🔄]
Include expectations for refurbishment. For example: a high-volume progressive die might need a major overhaul after 2 to 4 million hits. You don’t want an unexpected failure—or a surprise invoice to rebuild a worn-out tool halfway through production.
4️⃣ Transferability & Access [📦]
Specify the process if you need to move the tool: disassembly, packing, shipping, documentation. Require the supplier to keep CAD files, setup sheets, and process specs in a transferable format.
💡 Bonus Tip: If possible, negotiate an inspection clause upfront—giving you the right to inspect tool condition (through a third party) before any transfer. Not every supplier will allow this by default, so secure it early if you want the option.
🚀 The Outcome: Flexibility, Continuity, Control
With these clauses in place, you’re not just buying tooling—you’re buying production continuity.
If your supplier relationship changes (and let’s be honest, they often do), you’re ready:
✅ You can move your tooling without legal hurdles
✅ You avoid surprise costs or delays
✅ You maintain quality with documented tool condition
And more companies in 2025 are even layering in tooling insurance or shared-risk models to further protect production continuity—another tool to consider.
Bottom line: you stay in the driver’s seat.
🕒 Don’t Wait Until It’s a Crisis
If you’re sourcing stamped, molded, or formed parts and haven’t reviewed your tooling agreements lately, now’s the time. A few proactive clauses can save you months of downtime—and hundreds of thousands in rebuild costs.
Let’s make sure your tooling isn’t a hidden liability.
Want to sanity-check your current tooling agreement—or build one that protects you? Let’s connect. I’m happy to talk through it.
Gromax Precision Die & Mfg., Inc. specializes in designing and manufacturing precision metal stamped parts and tooling, including progressive stamping dies and custom equipment. With an on-time delivery rate of 99.68% and a defect rate of just 0.066%, the company ensures exceptional reliability and quality.
Gromax is ISO 9001:2015 certified and ITAR registered, serving industries such as medical, defense, aerospace, industrial automation, and automotive with high-quality, innovative solutions.