ARI’s Partha Ghosh Discusses the Potential Disadvantages of Using an Upfitter Service Level Agreement
Partha Ghosh, director of supply chain management for ARI, discusses some of the disadvantages of using an service level agreement (SLA), in a two part article published by Work Truck Magazine, “10 Disadvantages to Using an Upfitter Service Level Agreement.”
Service level agreements (SLA) with an upfitter can be beneficial but there are potential negative aspects that should also be considered. “The downside to an SLA is that it formalizes expectations in a contractual context, which can be harmful to the relationship between the partners,” said Ghosh. “Consequently, the service provider may likely be focused on just meeting the client’s minimal expectations, and not necessarily interested in exceeding expectations, as the consequences of failure may be significant enough to deter the provider from doing more than what’s required” he continued.
When using an SLA, the concern may be that it can potentially be counter-productive and create unintended consequences. “The focus for clients should be on identifying great business partners when working with an FMC and their vendor partners such as upfitters and other critical service providers in the supply chain process,” said Ghosh. “Building proper and effective relationships with the ‘best-fit’ FMC and their suppliers/vendors will almost always preclude the need for an SLA, which can often lead to a contentious and challenging experience for the client, as well as the upfitter or FMC.”
“Most business partners want a successful and long-term partnership, and they will usually do whatever is necessary to ensure the client has a positive experience, even when things go wrong. However, if circumstances or client practices require an SLA, then focusing on the objectives most critical to the client’s needs that address the key aspects of the supply chain process, and negotiating fairly and realistically with the FMC or the upfitter as a partner with a long-term relationship in mind will usually lead to a successful outcome.” added Ghosh.
You can read the full post here.