Standardizing Service Level Agreements

When I became Purchasing Manager I found that the service level agreements were uniform, which resulted in high operational costs, besides there were no standards for the same kind of service, and besides, these agreements would only be ready and signed at least 6 months after a service started being provided.

 I identified all the services under contract at the company’s units in Brazil, such as: landscaping, restaurant, security, cleaning, contracting unskilled labor, etc.

From then on we proceeded to make all service agreements, regarding the same kind of service level, to have the same due date. This way we were able to negotiate with suppliers the possibility of having only one supplier, whenever feasible, carrying out a certain kind of service level at our several units, which provided the company a reduction of direct and indirect costs. We standardized contractual clauses, besides eliminating unnecessary clauses that only resulted in making the process more expensive.

            This type of contracting then became much faster, by simplifying all agreements, which now had the same due date for similar levels of service provided throughout Brazil. These agreements were implemented before the services started being provided, and we were able to achieve savings of up to US$500,000.

 

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