Service level disagreement

We asked for references and specified even the smallest detail. And we found a good builder. Yet there was a whole dimension to the disruptions that I never thought to discuss up front.

There is so much more to managing a supplier relationship than the contractual order. The recent E.coli outbreak has brought misery to those affected. It must also be taken as a learning experience, understanding how the wider supply chain has been impacted, across many European vegetable suppliers.

When all is well, service level agreements (SLAs) are still seen as an unnecessary complication to the relationship with a supplier.

Purchasing think they threaten their authority and undermine tightly negotiated contracts. Supply chain would love to discuss the details around the exchange of forecasts; stock information; expected levels of flexibility; escalation protocols; but they are too shy to ask.

Where they are in place, SLAs have proved to be a powerful tool for improving supplier trust and performance. They force all parties to sit down and clarify practical aspects that will never be covered by traditional contracts. They are also a respected reference point for both sides of the table when exceptional situations arise.

I am not saying that the E.coli outbreak would have been avoided with an SLA. But I know of daily misunderstandings and frustrations that could be solved across many businesses, if they sat down with their key suppliers to draft joint SLAs. The idea is to be open on the basic house rules and agree them before you feel that they are being broken. Alas, it's already too late for our kettle.