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Route to Market & Supply Chain Blog

A Marriage of Inconvenience? Service Level Agreements (SLA)

Posted by Dave Jordan on Tue, May 21, 2024

If you do not specifically agree on what is expected between two parties before you start a relationship then anything and everything but success is likely.

Would you buy a used car from a politician?

You buy a new car and you get a contract that tells you what is covered by the guarantee and for how long in time or in distance travelled. From your side you will be expected to pay the same people to periodically maintain the equipment at peak condition. You both keep your side of the bargain and everyone should be happy.

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Air Today, Gone Tomorrow.

Travelling by air? You buy a ticket to Bucuresti and you know when and where it will take-off (and hopefully land) and how much baggage you can take. There are rules in place for delayed take off and excess and lost baggage. You might not like these rules but that is what you have agreed to by investing in the ticket. (Before you think it, I know certain airlines stretch the boundaries here yet people still fly on them. You know who they are!)

You scratch my back and I won't stab yours!

While it may not be as popular as it used to be, marriage is still perhaps the most widely used Service Level Agreement (SLA). The names of the two parties are made very clear to a number of witnesses and depending on your brand of religion there follows a list of statements you should agree to or the marriage ceremony does not continue. You even get a certificate which is in effect a contract or your Service Level Agreement. Of course, this does not go down to the detail of who does the washing up or who gets up at 3am to feed the baby but it does set out clear expectations.

Should the husband run off with the woman from the chippy then a divorce is highly likely. Think of the arguments about who gets to keep Eric the hamster if there is a parting of ways. Alternatively, you could use one of those 'pre-nuptial' agreements favoured by plastic, reality TV-types who think a long relationship is several minutes in their strange world so far away from actual reality.

In all cases, it reflects an agreed, balanced, mutually beneficial approach.

SLA is the only way.

Despite SLAs being a vital part of daily life, why do FMCG companies fail to have the same in place for their suppliers, customers and internal departments within an S&OP framework? Such an approach holds people accountable for the service they provide and at the same time making the penalties clear in the event of failure.

SLAs do not have to be a lengthy, unreadable tome of text but should contain enough data and information for both parties to be 100% clear about what is expected from the relationship. Include some relevant and why not stretching KPIs and you have the basis of a relationship that may flourish rather than end up in the divorce courts. You can even start to think about bonuses for exceeding expectations!

No relationship in business or in private life is perfect but why not start out by writing down what level of service you expect to provide to each other?

Help! I need somebody.

If you have any Supply Chain problems or opportunities you would like to discuss then please reach out to Enchange.com via telephone, email, or live chat.

Tags: FMCG, Route to Market, Logistics Service Provider, Dave Jordan, Performance Improvement, Supply Chain, CEE, Traditional Trade, Logistics Management

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