Logistics Service Contract

7/21/2019 Logistics Service Contract

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Logistics

Service

Contract

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Logistics Service Contract

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Logistics service providers are the backbone of any Logistics System.

Todays logistics is very complex and critical. Top management expectslot from this department. It is genuine also, because Logistics service

providers are required at all the part of supply chain.

The value added services provided by the logistics service providers are

as under

1)Movement from Material at all levels. From Supplier till deliver to

the customer and bring back the defective material back (reverselogistics).

2)Cross docking It is one of the most important activity a logistics

service provider do. Material from many venders reaches the

main hub and from the main hub the material has to be sent

many customers in mix and match. So the logistics service

providers break-bulk the consignment, assort it, consolidate it and

repack and dispatch to the customers according to the

requirement. This reduces the delivery time.

3)In case of EXIM, logistics service provide plays an important role

of completing all the desired documents for export and import of

the material. The principal has to do nothing, just coordinate with

the service provider.

4)Reverse logistics is becoming very important now a day due e-

commerce activities. E-Hubs, like flipkart, amazon and other

sellers provide satisfaction guarantee to their customers. If the

goods are not liked, they can return back the same to the


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supplier. Due to this condition, reverse logistics has emerged as

an important part of supply chains.

5)Warehousing3PL and 4PL firms have become a very crucial part

of logistics services. They handle goods up to the delivery to the

end consumer.

6)Special Packing. Now packers have also working as service

providers due mix match of the products ordered and delivered

from a single location/hub. All the articles of a single order are

handed over to the specialist packers. Who take decision on the

type of packing to be done? This reduces the packing cost of the

order.

7)AuditsThere are special firms who do Logistics audits. They are

specialists in the job. They know the subject thoroughly.

There are many other jobs, which are outsourced now a days. In all the

cases, the service supplier organize assets, add manpower, move the

material, pack the material and deliver it. In some case the

commitment on the part of the service provides are very expenses and

charge the same from the company. More the risk, more complex will

be the contract. In some articles, which has self-life, penalty and

rewards are part of the contract. For a smooth and long run association

ship both the parties should sign a contract containing all the

conditions which both the party wants to have. Both has to work as per

the agreement. Following parts should be included in the contract

1)Name of place and date of agreement

2)Name and address of both the parties binding to the contract.


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3)Scope of the services to be rendered Area, Nature of the

logistics service, while giving services which part belongs to which

party.

4)

Payment Terms - %, Time

5)Delivery requirementLead time to be defined

6)Charges for the services, component wise.

7)Extra services, if any requirement from time to time.

8)Damage and Pilferages

- LossesDamage and pilferage

- Insurance Claims

- Delay in delivery penalty

- Delay in loading penalty

- In transit damages

9)KRAs and KPIsPerformance Measurement

10)Security deposits

11)Job Responsibilities

-

Different Functions- Employees requirement

- Warehouse management

- Inventory control and Management

- Movement of material

- Transportation of material

- Labour engagement

-

Safety and security of material- Office management

- Sampling

- Insurance Claims

- Order Booking, invoicing


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- Daily, weekly and Month MIS

- Payment Collection and deposit

- C Form Collection

-

ST returns with the department

- Compliance to the Govt. Rules and Law

12)Risk Sharing

13)Termination of the contract

- Notice period,

- Stock Handover

- Govt. Statutory compliance report

- Security refund

14)Notice for Claims and settlement

15)Deputing Authority in case of any dispute

This kind of contract are prepared by the legal experts of the company

and signed by the top-level management executives, preferably

proprietor. Lower / Middle management employees may transferred or

leave the company during the term of the agreement. In that case

agreement needs to be renewed.

In nut shell, Agreement should be signed by the top-management of

the companies, with clear terms and conditions, so that they work for a

long period under the same agreement. Frequent changes in

agreement are not advice able.


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Example of Agreement


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Author

Rajinder Singh Mann, B.Sc., PGDCS, MBA, MPhil. Having Experience of 25 years

in S&OP, Education, Logistics, SCM. Has worked in diverse industries like

Publishing, Fasteners, Paints and Varnishes, Food Processing, Education and

Training, Steel wares and Table-wares. Presently associated with Ceramics

Industry heading Supply Chain Department.

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as is basis, without warranty. Every precaution has been taken in writing this article, the

author shall not have any liability to any person or entity if any damage or loss has been caused

directly or indirectly by any contacts of this article.

For additional information contact:

Online:www.scm-re-engineering.comSupply Chain, Inventory Management,

Logistics, Vendor Management, Quality Circles, etc.,

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Logistics Service Contract