Rating Your Suppliers - Part Two of Four: Service Level Agreement Assessment

December 30, 2014

Service level agreements are documented, binding service performance standards.  SLAs, negotiated and mutually agreed between the company and each mobility supplier, define the guaranteed minimal level of service.  SLAs are the basis for evaluating a service provider’s performance.

Well-constructed SLAs will:

  • Create a common understanding of services, priorities and responsibilities
    • Define standards for performance and communicate expectations in the contract
    • Manage expectations as capabilities evolve
      • Reinforce performance and optimize supplier performance
      • Provide trend and operational data to serve as basis for adjustment
      • Build strong partnerships through strong communication (regular reviews and action plans)

Every SLA should have these components:

  • Performance measurement name
  • Threshold metric (quantitative or qualitative)
  • Weight of measurement
  • Frequency of measurement
  • Incentive/Penalty

SLAs should be:

  • Aligned with the desired business objectives and strategy
  • Well thought out, mutually agreed to, critical few measures (3 to 5)
  • Weighted to reflect the relative importance of each
  • Within the suppliers’ control (including their supply chain) and achievable
  • Easy to measure, track (supplier or mobility, but transparent to all) and analyze
  • Collectively understood and clear to everyone procuring or impacting the services
  • Adjusted as business needs change
  • Used to assess the ‘health of the relationship’
  • Used to create action plans for improvement
  • Motivating – penalties are fair, but not punitive, and incentives are attractive

Most important is to ensure that the evaluation of a supplier’s performance goes beyond measurement to actual performance improvement.

The Team at HR&Relo Advisors


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