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Logistics

Service
Contract

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Logistics Service Contract

Logistics service providers are the backbone of any Logistics System.


Todays logistics is very complex and critical. Top management expects
lot 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 (reverse
logistics).
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 ecommerce 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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Logistics Service Contract


supplier. Due to this condition, reverse logistics has emerged as
an important part of supply chains.
5) Warehousing 3PL 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) Audits There 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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Logistics Service Contract


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 requirement Lead 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
- Losses Damage and pilferage
- Insurance Claims
- Delay in delivery penalty
- Delay in loading penalty
- In transit damages
9) KRAs and KPIs Performance 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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Logistics Service Contract

12)
13)

14)
15)

- Daily, weekly and Month MIS


- Payment Collection and deposit
- C Form Collection
- ST returns with the department
- Compliance to the Govt. Rules and Law
Risk Sharing
Termination of the contract
- Notice period,
- Stock Handover
- Govt. Statutory compliance report
- Security refund
Notice for Claims and settlement
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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Logistics Service Contract


Example of Agreement

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Logistics Service Contract

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Logistics Service Contract

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Logistics Service Contract

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Logistics Service Contract

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Logistics Service Contract


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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