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To avoid the unnecessary cost of service interptions, SLA is useful in the following criterias.
To gurantee a minimum charge (V or W) per shipment
To avoid unnecessary time that is wasted between origins
To cover fluctuation between peak seasons
Orders to move bulk orders such as unit train
Private fleet distruption or Labor issues
More recently, logistics departments in major companies have adopted the idea of writing a service level agreement so that services for their suppliers
The more KPIs, the more difficult the negotiation process. It can take months to negotiate a complex SLA/KPI document, as you go back and forth with your logistics provider so the document becomes a “win-win” for both parties.
There should also be a QBR or Quarterly Business Review on the transportation company you choose. This should also be a contract with agreements and milestones. A specific SLA/KPI document follows. This extensive document will have to be presented in phases as it is large and was agreed upon as a “win-win’ document. Important comment: Always use collaboration and trust in your dealings with a logistics provider. Not everything is costs or price discussions. Let the logistics provider show you his ability to be the professional you partner with in this “win-win” partnership together. You and your logistics partner’s theme should be: What gets measured gets accomplished. If not, why not? What are your experiences in Logistics Service Level Agreements or SLAs in any industry? Have they been effective? What KPIs would you want to see?
Service Level Agreement (SLA) are used by logistics provider in order to effectively showcase specific services for their customers (users in other departments within the company) so that those services can be measured, justified, and perhaps compared with those of outsourcing network providers.
In terms of importance, SLA provides visibility and accountability to both provider and customer.
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"The KPIs of a Logistics Service Level Agreement".
There are many more KPIs that can be added to this basic SLA agreement. The more KPIs, the more difficult the negotiation process.
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