A service level agreement (SLA) is a contract between a logistics service provider and a customer that typically measurably determines the services that the logistics service provider will provide. Many logistics service providers make an SLA available to their customers. More recently, logistics departments of large companies have embraced the idea of writing a service level agreement so that services to their customers (users of other services within the company) can be measured, justified, and possibly compared to those of outsourcing network providers. 61 There are many other CPCs that can be added to this basic SLA. The more PPAs there are, 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 service provider, so the document becomes a “win-win” situation for both parties. After the approval of the SLA/KPI by both the customer and the logistics service provider, this document and its contents must first be checked monthly and then quarterly. Both parties will know how the partnership fits into the objectives of this SLA/KPI document. Without SLA/KPIs, it is not possible to measure the performance of both parties.
Don`t be surprised if a logistics service provider doesn`t jump on an SLA/KPI with the statement “Let`s just hold it”. . . .