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Service Level Agreements and Contracts

Description of Service

The formalisation of the level of service extended by the supplier & required by the operator in order to maintain the business.

Overview of Process

The current level of service is documented taking into account key items such as delivery regularity & delivery windows. This is then discussed with operational personnel & it is agreed what level of service is truly necessary to maintain the business. Other items that might be considered and other topics embraced within the discussion are as follows:

  • Order conversion
  • Volume statistics
  • Delivery performance
  • Discounts applicable on key products
  • Price changes
  • Price List distribution
  • Opportunity for electronic ordering

The above is not exhaustive but is meant purely to illustrate items that have a bearing on the agreement.

Benefits / Results

In the first instance service levels tend to be the result of individual demands based on a desire to reduce operational pressure. However this is done at a cost. The operating unit that insists on placing an order after the end of service at night also ensures that the supplier maintains a staff establishment to cope with that demand and the cost will be reflected in the charges. The outlet that insists on having a delivery between 08.00am & 09.00am ensures that the supplier maintains a bigger fleet of vehicles (with subsequent cost ramifications) than if the delivery time window was larger or more flexible. The level of service required is considered in an objective manner according to the needs of the business serviced.

Who would benefit

Any company that can be truly objective about delivery needs can benefit by reducing supplier overheads whilst taking advantage of invoice generated statistics.

Next Steps

In order to achieve this it may mean that personnel who place orders may need some help in placing more accurate orders to reduce the need for safety net suppliers prepared to deliver on short notice. Food Under Focus can help by training and formulating purchasing guides for use in house.


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