Any contract between a logistics service provider and an individual that identifies specific services that will be offered by the logistics provider in measurable terms is known as a service level agreement. The contract is useful in the management of logistics providers by customers. Service level agreements are very useful in the logistics sector and are needed for various factors. Some of these factors are listed below.
Many companies in the recent past have relied upon contract manufacturers to provide logistics to their companies. Increased reliance on these manufacturers has created a need for service level agreements in order to access and evaluate the best manufacturer. In most cases, the manufacturer chosen is the one who befits the requirements of the customer, in this case, the company.
These agreements assist them to access the performance of the manufacturers from which they choose to outsource services. Another reason service level agreements are needed in the logistics department is to evaluate the best manufacturing management principles that a corporation can adopt. Different logistics provider companies use different principles in the manufacturing that may include just-in-time or total quality management. The service level agreements reveal these important principles, and they are useful to the company in decision making.
The agreements are needed as they impact greatly on the experiences of the customer. This includes customer satisfaction and comfort. The level agreements are tailored to meet the needs of the customer and are, therefore, needed in the logistics department. Increased competition is also a factor that makes the agreements important in the logistics department. Comparison between the best in service delivery is a need that service level agreements fulfill. Service level agreements are also needed to measure the improvement levels in the information technology sector.
