A False Finish—Ineffective supplier relationship management
Service Level Agreements (SLAs) are agreements and contracts between the buyer and the supplier on the metrics that govern operational output of the outsourced activity or contract labour. The key activities around building an SLA include determining service level expectations for each offering and outlining corrective measure
While creating an SLA, companies need to identify key efficiency measures, determine enforcers of the agreement, and set guidelines for monitoring service delivery. A False Finish---Most companies we visited do not dedicate adequate resources to managing the outsourcing relationship after contract closure and this has given room to very lousy traditional legacy suppliers. Key Steps in SLA Creation—SLAs set and govern standards of the vendor-buyer relationship and services:
- Identify Key Performance Indicators (KPIs) that serve as a guideline for the vendor’s performance
- Identify and scope service/product offerings to be used as part of the relationship
- Ascertain key metrics for each service/product offering
- Determine frequency and nature of interim assessments
- Identify actions/activities that are liable for corrective action
- List the penalties for non-compliance of SLA and non-achievement of service levels
- Revisit and update the SLA within the service period
- Include a clause that gives the buyer the right to conduct interim audits
- Write simple and direct SLAs to allow less room for ambiguity
- Negotiate final SLA along with vendor
- Follow the SLA in the spirit
Comprehensiveness and simplicity are the hallmarks of an effective SLA. Complete, comprehensive, and simple-to-understand SLAs are well-defined and do not allow room for misunderstanding and misinterpretation.
Supplier-buyer relationships need to be assessed on an ongoing basis to ensure that vendors are continually performing against pre-set standards and improving performance and service levels. The key categories for ongoing supplier assessment include quality of supplier personnel, price competitiveness, service quality/issue resolution, and operational efficiency, technology, and innovation contributions.
Procurement Director, Asplundh
6 年Easy to follow, thank you Dominic! I would say that the last bullet is worth elaborating on, regarding the spirit of the SLA. When performing, reviewing performance, and/or discussing an outlook, the customer and provider should remember what brought them together, but also incorprate what has been learned while executing. Adaptation in order to satisfy the overarching objectives of the customer organization in hiring the provider should be fully considered, as opposed to rigid agreement conformity.
Founder & Owner / RPA / KPI / Dashboard / Process / IT Project
6 年Acá guía con pasos claves para la creación de Acuerdos de Niveles de Servicio entre clientes y proveedores
Managing Director, at DISYS
6 年There are several instances where "un-accomplishable SLA'S are utilized by clients here in Jakarta for the sole purpose of capitalizing on the penalty for not delivering in time. This puts tremendous amounts of stress on the entire supply chain.
Msc, Project Management, Consultant Certified Arbitrator/Appraiser PMP,RMP,PBA,CPE,SFC Member/KAArb,CIArb,PMI,RICS
6 年When close the project, first we try to finish the contract thru as contractual finish/close. Any minor snag list and outstanding matter that does not impact project purpose could be left as SLA. Immediately after finish all outstanding works mentioned in the SLA, the contract shall then be administratively finished/closed. SLA should be detail enough to follow all outstanding issues as soon as possible after contractual finish.