What are Service Level Agreements, and how can you use them?

By Oleg Mikhailenko
Published in Solutions
June 10, 2022
2 min read
What are Service Level Agreements, and how can you use them?

Picture this. You’ve reached out to a world-class fulfillment partner, had a productive talk, and everything seems like it’s working out fine. You love everything about them. Their locations mean they can deliver to the majority of your customer base within a precious 2 day timeframe. Their value-added services are not only high-quality, but offered for an affordable price. And what’s more, they even have discounts pre-negotiated with a major courier company, which will translate to even more savings on your end. But suddenly, out of nowhere, they start talking about a service level agreement, and you start to sweat. What does SLA mean? You’re a bit embarrassed to admit you’re not sure what that is. Never fear. You’ll find the service level agreement definition and an analysis of the SLA acronym in this very article, meaning you’ll never be caught out while talking to a warehousing partner.

What is an SLA agreement?

So what does SLA stand for? A Service Level Agreement is an outline of the level of service you expect from a vendor. It lays out the metrics and measurements by which service is quantified, as well as remedies or penalties in case one party happens to fall short.  These are usually drawn up between companies and external suppliers, but occasionally two departments of the same company might make use of them as well. Most companies, at some point, will make use of an SLA meaning business use is pretty ubiquitous.

Why do I need one?

When you have an SLA definitions of services and the timeframes under which they’re expected to be carried out are no longer up to opinion. There’s a concrete, black-and-white document to refer back to, for both parties. This means everyone involved in the agreement has a certain amount of responsibility as well as legal protections should someone fail to hold up their end of the bargain. It’s a handy and useful bit of documentation that also acts as protection, so it’s smart to have one in all cases. However, watch out! These documents aren’t always transferable. If one company gets merged into another, the agreement will oftentimes have to be renegotiated.

Are there any SLA best practices I ought to adhere to?

Definitely. First, if you don’t have any legal training and your partner doesn’t have a pre-existing agreement drawn up, you can absolutely use any number of SLA services to help you out. Be sure a time window for services rendered, specifics of what will be provided, escalation procedures, and a dispute resolution process are all included to make sure everything runs as smoothly as possible. Metrics that ought to be measured include availability, defect rates, technical quality, and security. This last one is especially important- in the current day and age, security breaches can be costly and have harmful effects on the long term health of your business.

In conclusion

Service level agreements are valuable tools in any merchant’s arsenal to make doubly sure they’re going to get what they pay for. They don’t have to be intimidating, especially nowadays. There are a number of companies who can draft these documents up for you. P2Pseller is one of them. We pride ourselves on providing as much data to our merchant partners as possible, and have software available to automatically generate contracts and other documentation for your business.


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Customer demand and the reorder point

Oleg Mikhailenko

Co-Founder, CEO P2Pseller

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