{"id":2310,"date":"2015-08-24T20:48:57","date_gmt":"2015-08-24T20:48:57","guid":{"rendered":"https:\/\/www.peeriosity.com\/shared-services\/articles\/?p=2310"},"modified":"2022-08-09T07:24:18","modified_gmt":"2022-08-09T07:24:18","slug":"creating-slas-in-o2c-for-factual-representations-of-performance","status":"publish","type":"post","link":"https:\/\/www.peeriosity.com\/shared-services\/articles\/2015\/08\/creating-slas-in-o2c-for-factual-representations-of-performance\/","title":{"rendered":"Creating SLAs in O2C for Factual Representations of Performance"},"content":{"rendered":"

With more companies moving from a decentralized \u201cclose to the business\u201d design for Order-to-Cash processes to multi-country, regional, or global designs for delivery via Shared Services, the need for setting clear service expectations quickly becomes apparent.\u00a0 While the type and complexity of service level agreements<\/a> (if this term is even used) can vary greatly, the purpose and related benefits of setting clear expectations and responsibilities are the same.<\/span><\/p>\n

A recent PeercastTM<\/sup> in Peeriosity\u2019s Accounts Receivable (O2C) research area<\/a> featured a large consumer products and services company with global operations sharing their experience in designing and administering service level agreements for Order-to-Cash for EMEA (Europe including Russia, Middle East, and Africa), Asia North, and Asia South (including Australia\/New Zealand) out of service centers located in the Philippines and China.\u00a0<\/span><\/p>\n

Prior to creating formal service level agreements the featured company had two measures: 1) order acknowledgment turnaround timing, and 2) completing case fill rates.\u00a0 The measured metrics were \u201call green\u201d (in other words, they were within performance expectations), however, the businesses served were not satisfied.<\/span><\/p>\n

To better understand performance issues, monthly business reviews were conducted to reach an agreement on the critical activities that impact service levels and costs.\u00a0 The effort included organizing and standardizing internal reports to allow the Order-to-Cash team to generate more accurate and meaningful performance reports for customers<\/a>.\u00a0 The Shared Services teams reached out to the Supply Chain teams in each of the three regions to compare, validate, standardize, and finalize key measures and targets.\u00a0 Finally, all proposed measures were reviewed with the Commercial and Finance teams of each business unit.\u00a0<\/span><\/p>\n

The purpose of the newly created service level agreements was: 1) to measure the performance of Global Shared Services in delivering services to customers and stakeholders, and 2) to identify opportunities for lower cost and improvements in efficiency<\/a>.<\/span><\/p>\n

The feature company identified three key lessons:<\/span><\/p>\n

    \n
  1. Make the service level agreement meaningful, as an effective tool to measure effectiveness with stakeholders, and as a tool for identifying process improvement opportunities.<\/span><\/li>\n
  2. Have a service level agreement that is a living document that can be changed and updated quickly and efficiently.<\/span><\/li>\n
  3. Communicate performance expectations to all Order-to-Cash team members, including what it means to the customer, what it means to the team, and what it means to each employee who is part of the process.<\/span><\/li>\n<\/ol>\n

    Several of the most important insights from completing the process of creating more effective measures of performance include:<\/span><\/p>\n