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Service Levels and Scope of Work

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Customers and suppliers often negotiate minimum service levels into agreements, particularly when agreements pertain to services (as opposed to products).

Many defined service levels are generic and are included in an agreement regardless of the product or service being provided. Examples include an agreement to provide sales or usage reporting on a regular basis, quarterly account reviews, or a dedicated sales representative.

Other service levels are more specific to the product or service provided and are often referred to as the scope of work. Examples include a minimum amount of cleaning per week for a janitorial agreement or the maximum number of service calls accepted for a hardware maintenance agreement. Understanding the scope‐of‐work details is important when introducing your requirements to alternate vendors and for validating an apples‐to‐apples comparison of proposals.

For example, if you are about to engage in a sourcing effort for janitorial services, your real requirement is keeping your building clean. However, this requirement is fairly subjective, and most lawyers will not allow that type of guarantee into an agreement. On the other hand, outlining a schedule for the frequency of the cleaning (three days a week) and listing the types of cleaning services (dusting, vacuuming, bathrooms, windows, etc.) can give some assurances that the building will be satisfactorily cleaned. If, later on, you find that the building is not properly cleaned, you can refer back to the scope of work and verify that the supplier is performing the list of services specified in the contract.

Managing Indirect Spend

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