Fulfillment Service Level Agreements (SLAs) are a core part of a fulfillment contract and an essential part of the relationship between eCommerce businesses and their third-party logistics (3PL) providers. The SLA is the part of the contract that specifies the service level that the 3PL is expected to provide and outlines the metrics that will be used to measure their performance. However, there are some things about fulfillment SLAs that are not commonly discussed, and these factors can impact the accuracy and fairness of the SLA calculation. In this article, we will explore three things they don't tell you about fulfillment SLAs and how Capabl can help ensure a fair and objective SLA calculation.
One of the primary challenges with fulfillment SLAs is that there is no universally recognized methodology for calculating service levels. Different providers may have slightly different methodologies, and even within a provider, the methodology can vary from client to client. This can make it challenging for eCommerce businesses to compare SLAs across providers and ensure they are getting the best possible service.
In addition, without a recognized methodology, it can be challenging to ensure that the SLA calculation is fair and objective. Different providers may calculate the same metric in different ways, and these differences can impact the results of the SLA calculation.
Another challenge with fulfillment SLAs is that assumptions made throughout the calculation can bias the outcome of the calculation. For example, if there is a system issue on the provider's end that prevents some orders from making it through or if a brand has an unexpected spike above what they normally do and the provider falls behind as a result, should the provider be penalized for being outside of SLA? Maybe.
These judgment calls can impact the accuracy and fairness of the SLA calculation. It can be challenging for eCommerce businesses to catch these issues, especially if they are not monitoring their SLAs on a regular basis.
Calculating fulfillment SLAs can become very complex when considering things like time zones, hold times, holidays, expected volumes, or order channel. For example, if your business is utilizing a provider in Arizona where they are on MST half the year and PST the other half, are your working hour calculations automatically accounting for daylight savings time? Should you have different SLAs for ecom orders vs wholesale orders?
These complexities can make it challenging for eCommerce businesses to calculate SLAs accurately and assess the performance of the 3PL provider.
Capabl provides a neutral third-party view of the SLA calculation, which can help reduce the emotional charge that can come with SLA calculations. Brands can trust Capabl's objective and data-driven view of their fulfillment SLAs, which can help them make better decisions about their fulfillment network.
Fulfillment SLAs are an essential part of the relationship between eCommerce businesses and their 3PL providers. However, there are some things they don't tell you about fulfillment SLAs, including the lack of a universally recognized methodology, the potential for bias in the SLA calculation, and the complexity of the calculation.
Capabl can help address these challenges by providing an automated scorecard and analytics for eCommerce fulfillment. With Capabl, brands can have an objective and unbiased view of their fulfillment SLAs, which can help them make data-driven decisions about their fulfillment network. Capabl's system provides a standardized methodology for calculating fulfillment SLAs, which ensures that the calculation is fair and objective. In addition, Capabl's system is designed to handle the complexities of SLA calculations, including time zones, hold times, and expected volumes.
Capabl can be a valuable resource for eCommerce businesses looking to improve their fulfillment network and ensure that they are getting the best possible service from their 3PL providers. By using Capabl, eCommerce businesses can have confidence in their SLA calculations and make informed decisions about their fulfillment network.
