# What is SLA – Service Level Agreement?

What is SLA – Service Level Agreement? A contract between a merchant and a service provider (3PL, carrier, customer service) defining: delivery times, order…

## How it works in practice

An SLA is the 'silent contract' that protects you. A 3PL without an SLA can be late with no accountability. With an SLA: 'Delivery within 24 hours of order. Below 99% accuracy = penalty.' An SLA creates an incentive for performance.

## Related metrics

- 3PL — an SLA is essential in a 3PL contract
- Carrier — an SLA with the shipping company
- Customer Service — an SLA for response time
- Last Mile — an SLA on delivery success rate

## Common misconception

'SLAs are only for big companies.' No. A small store signing with a 3PL without an SLA can't hold them accountable for failures. A simple SLA (1-2 pages) protects you. Any commercial partnership without an SLA is a toothless agreement.

## How to fix it

Supplier not meeting the SLA? (1) Document every breach with date and outcome, (2) Hold quarterly review meetings comparing KPIs to the SLA, (3) Invoke penalty clauses if they exist, (4) If there's no improvement, invoke the termination clause.

## Real-world example

Apparel store with a 3PL with no SLA: a 3.8% picking error rate (4x the benchmark). Switched to a new 3PL with an SLA: 99.5% accuracy, a $4 penalty per error. Errors dropped to 0.4% within two months.

## Where to start

Sign an SLA before any logistics partnership. Minimum: accuracy rate, processing time, on-time delivery rate, escalation process. A lawyer isn't required — a template SLA from professional sites is enough for small stores.

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Category: Logistics · From the [Jimmy OS KPI Glossary](https://jimmy-os.com/glossary/kpi.md) · Source page: https://jimmy-os.com/glossary/kpi/sla-service-level-agreement