What Should Be in an SLA for Order Fulfillment?
Katherine Wroth • June 26, 2024
At Barrett Distribution Centers, we know that not all SLAs are created equal. When partnering with a 3PL provider for order fulfillment services, a well-designed Service Level Agreement (SLA) is your blueprint for success. A strong SLA sets the stage for a productive and transparent relationship, ensuring both parties understand their roles and responsibilities. It also serves as a benchmark for evaluating the performance and effectiveness of the 3PL provider, promoting continuous improvement and accountability.
What exactly is a Service Level Agreement (SLA)?
A Service Level Agreement (SLA) ensures that all parties involved in order fulfillment are on the same page. An SLA is a formal contract between the 3PL provider and a client that outlines the specific services expected, the standards to be maintained and the metrics for measuring performance. At Barrett, we pride ourselves on providing personalized logistics solutions; having a well-defined SLA is key to maintaining trust and client satisfaction.
Here’s a comprehensive guide on what should be included in an SLA for order fulfillment:
- Service Description: The first element of an SLA is a clear and detailed description of the services provided. This should cover all aspects of order fulfillment, including receiving orders, processing, picking and packing, shipping and handling returns. It should specify the scope of services and any limitations. This clarity helps set the right expectations and ensures there are no ambiguities.
- Performance Metrics: Performance metrics are the backbone of any SLA. They define how the 3PL provider’s performance will be measured and reported. For order fulfillment, common metrics include:
- Order Accuracy: The percentage of orders correctly fulfilled without errors.
- On-time Delivery: The percentage of orders delivered within the agreed timeframe.
- Inventory Accuracy: The accuracy of stock levels as reported in the inventory management system.
- Return Processing Time: The time taken to process returned items and update inventory.
- Responsibilities of Each Party: An SLA should clearly delineate the responsibilities of both the 3PL provider and the client. The 3PL provider's responsibilities may include ensuring timely order processing, maintaining accurate inventory records and providing regular performance reports. The client’s responsibilities may include providing accurate order information, timely payments and adhering to agreed-upon procedures for returns and disputes.
- Issue Resolution and Escalation Procedures: Despite the best efforts, issues can arise. An SLA should include detailed procedures for resolving problems and escalating unresolved issues. This section should outline the steps to be taken during service failures, including who to contact, the timeframe for resolution, and how issues will be documented and reported. A clear escalation path helps quickly address and mitigate issues before significantly impacting the business.
- Service Availability and Support: This section should specify the availability of services and support. For example, it should detail the operating hours, availability of customer support and any provisions for after-hours or emergency support. This ensures clients know when to expect assistance and what support is available.
- Compliance and Security Standards: Order fulfillment often involves handling sensitive information, such as customer and payment information. The SLA should outline the compliance and security standards to which the 3PL provider will adhere. This may include compliance with regulations like GDPR or CCPA, data protection and cybersecurity standards.
- Performance Reporting: Regular performance reporting is crucial for transparency and accountability. The SLA should specify the frequency and format of performance reports. These reports should provide insights into key metrics, any service issues encountered and steps taken to resolve them. This helps maintain a transparent relationship and enables continuous improvement.
- Penalties and Incentives: To ensure adherence to the SLA, it’s common to include penalties for non-compliance and incentives for exceeding performance expectations. Penalties might include financial compensation for missed targets, while incentives could be bonuses for consistently meeting or exceeding service levels.
- Managing Capacity for Growing E-commerce Businesses: Many of our e-commerce clients are experiencing significant growth. Are you prepared to manage new markets and increase sales? When collaborating with your 3PL partner, it’s essential to consider how rising order volumes will affect your SLAs. Understanding your 3PL’s ability to scale alongside your growth while maintaining your brand promise is critical in your decision-making process.
Leveraging 80+ Years of Expertise to Enhance Your Customer Experience
锘�
With over 80 years of experience serving clients nationwide, we are well-equipped to provide the exceptional customer experience you need to help scale your business. Our extensive network of order fulfillment centers, Barrett experts, efficient processes and advanced technology ensure that we consistently meet your SLA requirements daily.
To learn more about our personalized 3PL solutions, contact us today.
Recent Blog Posts
The orders are coming in faster than expected. Your best seller is disappearing from inventory, a holiday promotion performed better than anyone predicted, and suddenly your biggest concern is not generating more sales. It is keeping up with the ones you already have. Exceeding your holiday forecast is exciting. It is also one of the fastest ways to test whether your fulfillment operation is truly prepared for growth. When More Orders Change the Plan A holiday forecast helps your 3PL prepare for expected demand, but customers do not always follow the forecast. A product can take off unexpectedly, an influencer can create a sudden rush, or a promotion can perform far beyond expectations. When that happens, the impact reaches much further than order volume. Inventory moves faster. More people may be needed to pick and pack orders. Packaging materials disappear sooner. Carrier volume increases. Receiving becomes more important if additional inventory is on the way. The challenge is keeping all of those pieces moving together without allowing the customer experience to suffer. Talk About the “What If” Before Peak Your peak season conversation should include what happens if sales are significantly higher than expected. Before the rush begins, make sure you and your 3PL have discussed: How much additional volume the operation can accommodate Which products are most likely to sell quickly How additional inventory will be received Upcoming promotions and product launches Whether extra packaging materials are available How custom packaging, gift messages, inserts, and kits will be maintained Who communicates with whom when forecasts start changing You may never need the backup plan. But holiday peak is a much better time to use one than create one. Do Not Let Growth Change the Customer Experience When orders surge, speed naturally gets more attention. Quality still matters just as much. Your customer does not know that your holiday promotion exceeded expectations or that thousands of other packages are leaving the warehouse that day. They know whether their order was correct, carefully packed, and delivered as expected. A successful peak season is not simply about getting through more orders. It is about handling growth while preserving the experience that helped customers choose your brand in the first place. Preparing for the Unexpected With Barrett At Barrett Distribution Centers, peak preparation starts with understanding each brand and what a successful season looks like for them. Our teams work closely with customers to prepare for changing order volume, inventory needs, special projects, and the details that still need attention when things get busy. With experience supporting growing ecommerce and omnichannel brands, Barrett is built to help customers navigate the moments when demand moves beyond the original plan. Because when sales exceed expectations, your fulfillment partner should be ready to grow with the opportunity, not become the reason you have to slow down. You cannot predict exactly how successful your holiday season will be. You can prepare for the possibility that it becomes much bigger than planned. Because exceeding your forecast should create excitement, not a fulfillment problem.
When people talk about seasonality in ecommerce, the conversation almost always gravitates toward the holidays. Black Friday arrives, orders climb, warehouses get busier, and brands prepare for what is often considered the most demanding stretch of the year. But not every brand follows the holiday calendar. For a swimwear company, summer might be the busiest period of the year. An apparel brand could experience significant demand around a product launch or seasonal collection. Other businesses may see sharp increases tied to promotions, retailer orders, or events that have very little to do with November and December. For Harrison Smith, Director of Commercial Revenue at Barrett Distribution Centers, understanding those patterns is an important part of understanding the business itself. “When I work with brands, I wanna understand everything about the business,” Harrison explained. Every Brand Has Its Own Rhythm Harrison has spent about 20 years in the 3PL industry and has been with Barrett for roughly four and a half years. His role touches pricing, transportation, new business, and existing customer relationships, which means much of his work begins with understanding how a company actually operates. That includes looking beyond annual order totals. “I wanna understand everything about the business,” Harrison said. “It’s looking at yearly trends, looking at within the year, what does that look like? Do you have those peaks?” Those peaks tell a story. A brand might look relatively consistent when viewed across an entire year, but a closer look could reveal several weeks when order volume changes dramatically. Understanding when those moments occur can influence when inventory needs to arrive and what the fulfillment operation needs to be prepared to handle. As Harrison puts it, “ When do you need to bring your inventory in to service that holiday peak, or is it a summer peak because you sell swimsuits or whatever it might be?” The important part is not whether your peak happens during the holidays. It is whether you and your fulfillment partner understand when it happens and what it means for your business. Better Data Creates a Clearer Picture Seasonality is also one of the reasons Barrett asks brands for detailed information during the pricing and solutions process. Order history, inventory patterns, volume changes, and previous peaks help paint a much clearer picture than an annual average ever could. The more complete that picture becomes, the easier it is to understand what supporting the brand will actually require. “The better the data, the better our pricing,” Harrison explained. When information is incomplete, assumptions have to fill the gaps. Harrison notes that those assumptions naturally tend to be conservative because a 3PL has to prepare for what the operation might require. Better information allows the conversation to become much more specific to the business in front of you. That is why understanding your own seasonality matters before you ever reach the busiest week of your year. Plan Around Your Peak, Not Everyone Else’s Peak season should not be defined by the calendar. It should be defined by your customers. For some brands, that means preparing for the holidays. For others, the most important months could arrive much earlier. What matters is recognizing those patterns early enough to prepare inventory and have meaningful conversations with the people responsible for fulfilling your orders. At Barrett, that starts with curiosity about the individual business rather than assuming every customer behaves the same way. Because your busiest season does not have to be Q4 to deserve a plan. Whenever your customers are ready to buy, your fulfillment operation should be ready for them.
Choosing a 3PL often begins with a salesperson, a proposal, and a long list of capabilities. There are conversations about locations, technology, pricing, order volume, integrations, and everything your business might need as it grows. Those conversations are important, but they introduce you to only one part of the company you may eventually trust with your products and your customers. Once inventory arrives, the relationship becomes much bigger. There are general managers overseeing the facility, operations teams making decisions every day, systems experts supporting technology, and employees receiving, picking, packing, and shipping your products. These are the people who will learn the nuances of your business and work through the unexpected moments that inevitably come with growth. Bryan Corbett understands that distinction from both sides of the relationship. Before joining Barrett Distribution Centers, Bryan spent years as an entrepreneur running businesses that managed their own warehousing and fulfillment. He remembers unloading trucks with pallet jacks, operating his own warehouse, managing picking, and building fulfillment processes firsthand. After roughly 15 years as an entrepreneur, he moved into contract logistics, eventually joining Barrett, where he now works across sales and marketing. At the time of the conversation, Bryan had been with Barrett for about four and a half years. That operating background influences the way he approaches sales today. He knows that the person presenting the solution is only one piece of a much larger relationship. “You want to meet a good set of experts from every team because this is your supply chain. This is your company,” Bryan explained. And when you think about what a brand is actually handing over to a 3PL, that point becomes difficult to ignore. Get Beyond the Sales Conversation There is nothing wrong with having a great salesperson. That person can become an important advocate for your business and a valuable part of the relationship. But the salesperson will not be the only person responsible for delivering what was promised. Bryan is a salesperson himself, and he is remarkably straightforward about that reality. “I’m a salesperson,” he said. “So I need to know I can’t just say because I know operations.” His approach is to bring other Barrett experts into the conversation so prospective customers can hear directly from the people who understand different parts of the business. When asked about potential red flags brands should watch for when selecting a fulfillment provider, one of the first things Bryan mentioned was “not being encouraged to broadly meet larger teams besides the sales guy.” That is an important distinction because a polished sales presentation can tell you what a company is capable of doing. Meeting the people behind that presentation can help you understand what working with the company might actually feel like. Before choosing a 3PL, brands should have opportunities to: Meet facility leadership and understand who will ultimately be responsible for the building where their products are handled. Talk with operations teams about the realities and unique requirements of their business. Understand the systems support available when technology, integrations, or data questions arise. Walk the warehouse and see the environment where their inventory could eventually live. Ask who will be involved when something unexpected happens and how communication will work. Pay attention to the people and culture because those relationships will matter long after the proposal is signed. You are not trying to collect another round of rehearsed answers. You are trying to understand whether the expertise promised during the sales process actually exists throughout the organization. Walk the Building Before Your Inventory Does Bryan also believes brands should see the operation for themselves. When discussing red flags, he specifically mentioned “not doing site” visits alongside receiving prices too quickly and failing to meet the broader operations team. A warehouse tour gives a brand something a presentation cannot fully recreate. You can see how the facility operates, watch how people interact, ask questions in the environment where the work actually happens, and begin meeting the people who could eventually become responsible for your business. Bryan shared a piece of advice from a former colleague that has stayed with him: “You’re only as good as the GM in your building.” The point is not that buildings, systems, and technology are unimportant. They matter tremendously. But ultimately, people still make decisions, solve problems, communicate with customers, and determine how well those resources are used. Bryan sees that same principle within Barrett. When talking about what he enjoys most about the company, he repeatedly returns to the people around him. “Work should be fun,” he said. “You should be able to be yourself, have an opinion, have a view, have a point of view.” That sense of openness matters externally too, especially when a customer needs an answer that is more complicated than yes. A Good Partner Will Not Always Tell You What You Want to Hear One of the more revealing things Bryan says in the conversation has nothing to do with warehouse size, technology, or shipping speed. “We’ll tell you if you don’t need us.” For a sales leader, that is a meaningful statement. Bryan explains that Barrett says no to business when the fit is not right. Sometimes a company may not need a 3PL yet. Sometimes another provider may be better suited to what the business requires. For Bryan, forcing a relationship simply to win the business undermines the trust that a long term partnership eventually requires. “You show your expertise through your honesty and your trustworthiness. You can’t separate the two,” he said. That philosophy also means accepting that neither side will be perfect. Bryan is candid about mistakes and the realities of long term customer relationships. “Sometimes the customer’s not always right. And sometimes Barrett’s not always right. Sometimes we make mistakes.” The goal is not to pretend problems will never occur. It is to create enough trust between the people involved that when something does happen, everyone can communicate honestly, respond quickly, and work toward the same outcome. You Cannot Fake a Partnership The word partner appears constantly in the 3PL industry. Bryan believes the relationship behind that word has to be genuine. “You can’t fake it.” He talks about developing relationships with customers over months and years, learning about their companies, understanding what matters to their teams, and eventually reaching a point where the relationship becomes much more personal than inventory sitting inside a warehouse. That same philosophy influences the way Barrett talks about its customers publicly. Rather than making every story about Barrett, Bryan believes some of the strongest marketing comes from elevating the brands Barrett serves and allowing their success to speak for the relationship. He has seen something similar happen inside the warehouse. “I’ve seen our operators develop next level relationships with the clients,” Bryan said, explaining that those connections help “humanize the relationship.” The products stop being anonymous units moving through a building. There are people behind them. There is a business trying to grow, employees depending on its success, customers waiting for their orders, and a reputation attached to every package that leaves the facility. That understanding can change the way people approach the work. Meet the People Behind the Promise A 3PL can have impressive buildings, sophisticated technology, competitive pricing, and an extensive list of capabilities. Those things deserve careful consideration. But you are ultimately trusting people to use them well. Bryan perhaps summarizes that idea best when he talks about what successful sales relationships require: “People don’t buy from fake. You can’t speak like a robot. You have to know what you’re talking about. You have to be a human being.” Before choosing a 3PL, meet those human beings. Walk the facility. Meet the general manager. Talk with operations. Ask questions that go beyond pricing and square footage. Find out who will answer the phone when something unexpected happens and whether the people in the building understand what your products represent to your business. Because once the sales process is over, those are the people who will help turn the promises in the proposal into your customer's everyday experience.
