By: Nitesh Shelly --
01 January, 2017
In this article, we focus on the catering industry SLAand KPI. These are very generic and they lead to improper performance management of suppliers. This in turn leads to supplier discontent and alienation. Therefore KPIand SLAshould be more focused onjoint development of supplier and buyer and should treat supplier as a partner. The article also lists some of the KPIand SLAthat are more company-specific.
The global contract catering market for business and industry sector is estimated to be $19 billion. Even though catering doesnot form a part of core or key decision-making process, the top management cannot neglect the importance of catering in their organization. Good food has direct impact on employee satisfactionand their morale. Apart from afore mentioned points, improper catering has direct impact on productivity of employees. As per Center for Disease Control and Prevention,more than one-third of US adults are obese which results in inefficient and unproductive environment. It is therefore important for companies to have correct SLAand KPIin place that benefit theservice provider (catering contractor) as well as the buyerby having supplier as a partner.
The KPI (Key Performance Indicators) and SLA (Service Level Agreement) form the base of any business contract between a buyer and a service provider. Currently, there are several challengesin terms of framing SLAand KPIas either the benchmark is too high or the parameters cannot be quantified. The situation becomes even more critical in catering industry as the service depends upon the individuals (such as chief cook), the quality of raw materials procured (such as fresh or organic vegetables) from the suppliersand buyers’ preferences. Catering is a unique business which involvesprocurement of product and service at the same time; this makes the definition of SLAandKPIeven more complexfor catering.
The SLAand KPIare usually discussed before signing the contract with the supplier. Most buyersfix the KPIand SLAfor entire contractual time period which leads to alienation of organizational objectives. If the buyerhas some specific demands or requirements, it can be discussed and added to the contract later. For example, a pharmaceutical buyer would prefer multi-layered packing using specific materials for a particular product to avoid the risk of contamination. Problems arise when KPIisnot defined properly ordue to lack of clarity in terms between two parties. For example,if the agreed lunch time for catering is from 1300 hours to 1400 hours and 70percentof employees arrive before 1330 hours the service quality of the supplier will drop. In such cases it will be unjustified to impose a penalty on the supplier. These situations can be avoided by having pre-contractual discussions with suppliers and carefully drafting SLAand KPIrelated to the same.
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