A service level agreement (SLA) as a control tool
A service level agreement (SLA) is a contract that lays down the performance indicators and quality criteria for the goods or services to be supplied so that these can be verified at a later date. An SLA formalizes the rights and duties of both parties. Thanks to an SLA, a customer is aware of which services the supplier will provide and at which costs, and the supplier can be held to account if the quality of service is not in line with the terms of the service level agreement. An SLA is therefore an indispensable control tool when outsourcing services or making company departments independent.
Setting up a service level agreement
Setting up a service level agreement with your logistics service providers, for instance, can be a challenging process, and even more so if the SLA must be defined within a legal document. Consulting firm Groenewout can help you to draw up, formalize and subsequently monitor a service level agreement. When preparing a service level agreement, our consultants pay consideration to matters such as:
- Which Key Performance Indicators (KPIs) are most suitable for measuring the service levels with regard to the objectives?
- Are those KPIs measurable, realistic and specific?
- How can you define the service levels?
- How can you avoid potential conflicts with your service provider?
SLA for Canon
In order to give you a sense of our approach when setting up a service level agreement, we are pleased to outline the project we completed for Canon. As a global market leader in digital imaging and solutions for consumers, Canon wanted to outsource its UK warehousing and distribution activities to a logistics service provider. The aim was to increase the company’s flexibility and reduce its business assets in preparation for an organizational change. We supported the tender process by evaluating four potential logistics service providers. Part of the final evaluation included a comparison of the quality of the quotations, a risk assessment and an evaluation of the overall impression of each supplier.
This included defining a service level agreement and determining the KPIs. We supervised and subsequently implemented the SLA process. After selecting the preferred supplier, we supported the due diligence and contract negotiation process between Canon and the logistics service provider. With our help, Canon succeeded in completing the due diligence and contract negotiations within a tight time frame including the preparation of, and agreement on, a complete tender contract regarding the definition of the service level agreement.
More SLA references
Would you like to know more about setting up a service level agreement (SLA)? If so, please feel free to contact our expert: