ARI’s Partha Ghosh Provides Additional Thoughts on Service Level Agreements
Partha Ghosh, director of supply chain management for ARI, submitted a letter to the editor that was recently featured in Work Truck Magazine, providing additional thoughts on the advantages and disadvantages of service level agreements.
“Reputable and high-quality service providers naturally want to perform well for their clients and tend to do what’s needed to be successful — communicate often and clearly, execute consistently, and deliver results that almost always meet and often exceed the client’s expectations,” said Ghosh. “However, mistakes do occur, and in most cases, providers will do what’s needed to “make it right” for the client.”
The downside to an SLA is that it formalizes the expectations in a “contractual” context, which can be harmful to the relationship between the partners. “If a client still wishes to pursue an SLA, the recommendation would be to keep it fairly simple and limited, targeting only the most important objectives,” suggested Ghosh.
If you are considering an SLA, structure it in a way that is fair to both parties ensuring a long-term and successful business relationship. Ghosh added, “SLAs should be considered only as a last resort, as the focus for clients should be on identifying great business partners when working with an FMC and their vendor partners such as upitters and other critical service providers in the supply chain process. Building proper and effective relationships with the “best-it” FMC and their suppliers/vendors almost always precludes the need for an SLA, which can oten lead to a contentious and challenging experience for the client as well as the upitter or FMC.”
You can read the full letter below.