Service Level Agreement
AI-generated
A Service Level Agreement (SLA) is a contract or contractual component that sets binding, measurable performance targets between a client and a service provider. It governs metrics such as on-time delivery, availability, and response times, as well as the consequences of deviations.
What is a Service Level Agreement?
A Service Level Agreement – or SLA for short – is a contractual arrangement that defines specific, measurable performance standards between a client and a service provider. In intralogistics and supply chain management, SLAs are used wherever external partners provide logistics services: in warehouse operations run by a 3PL, in transport execution by carriers, in IT support for a WMS or TMS, and in procurement. An SLA is not a standalone contract document, but typically an appendix or integrated component of a master agreement.
How does an SLA work in practice?
At its core, an SLA defines three things: what is measured, how it is measured, and what happens in the event of deviations. Typical metrics in logistics SLAs include:
- OTIF (On Time In Full): the proportion of deliveries that arrive complete and on time
- Response and resolution times for incidents or complaints
- System availability for IT-related services
- Error rates in picking or goods receipt
- Cut-off times and throughput times in fulfillment
It is essential that all metrics are clearly defined: when is a delivery considered "on time",