Service Level Agreements and
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.
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.