The Service Level Agreement (SLA) – The Neglected Animal

We often get caught up in the volume/price negotiation for products or the development of specifications/ price for that one big piece of equipment we often forget that there are still opportunities to be had. The Service Level Agreement (SLA) is a great vehicle to provide you, the purchaser, additional benefits.

Spending less than 5% of your time on the SLA? – Shame!

Thinking beyond the traditional customer service agreement, SLA’s can be a great method to close some gaps in your operations including;

  • Agreement to targeted cost saving objectives
  • Supplier funding for market development opportunities
  • Equipment performance guarantees with specified penalties
  • Supplier sponsored training and seminars
  • Shared roles and responsibilities for new product launches
  • Spare parts availability and pricing

These are just a few areas to explore. An internal SWOT analysis can provide other ideas.

Dealing with monopoly markets.

SLA’s are great when we are faced in negotiating deals when there is only one de facto supplier. When you feel like you are in a price taking situation – deflect the conversation. There is often less resistance from a supplier when looking beyond price, so focus the discussion to other areas. Negotiate hard -there is always something to gain.

What opportunities have you explored?

Gary Lajoie is an end to end supply chain professional with expertise in procurement, manufacturing & distribution. Renowned for improving margins by relying on Lean techniques and innovative thinking to progress the organization’s cost saving activities beyond the idea of “picking the low hanging fruit” and uncovering great opportunities “buried in the roots”. Described for his ability to balance the culture and vision of the organization with a hard driving passion for eliminating excess found, but seldom noticed, throughout the supply chain


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