How to avoid £500K penalties in logistics contracts

Your contract might look perfect… until it costs you £500K in penalties. Logistics contracts are one of the most deceptively dangerous documents in procurement. Unless you've walked through every clause - and considered what could go wrong, you’re playing a dangerous game. Here's what we’ve seen: 🔧 A warehouse contract with a hidden obligation to repair the roof. The cost? Over £1 million. 🧨 A logistics provider who consistently failed KPIs - but the contract defined "breach" so vaguely, we couldn't enforce anything. These weren't rookie errors. These were deals approved by senior teams and validated by “Big 4” consultants. The problem? ❌ No real operational input. ❌ No alignment between legal and procurement. ❌ No foresight on what happens when things go wrong. Great contracts are not written by lawyers alone. They're shaped by procurement and operational experts who know what risks matter. If you're signing your next 3PL or warehouse deal without this collaboration, you’re building your future disputes today. Ask yourself: - Who defines your breach clauses? - Have your KPIs been made enforceable? - Have you stress-tested your liabilities in an exit scenario? If you want to increase your "Smarts" talk to us sales@loguru.co.uk, or simply message me here. #contractdisaster #smartlogisticsbuying #logurultd

Your contract might look perfect… until it costs you £500K in penalties. Logistics contracts are one of the most deceptively dangerous documents in procurement. Unless you've walked through every clause - and considered what could go wrong, you’re playing a dangerous game. Here's what we’ve seen: 🔧 A warehouse contract with a hidden obligation to repair the roof. The cost? Over £1 million. 🧨 A logistics provider who consistently failed KPIs - but the contract defined "breach" so vaguely, we couldn't enforce anything. These weren't rookie errors. These were deals approved by senior teams and validated by “Big 4” consultants. The problem? ❌ No real operational input. ❌ No alignment between legal and procurement. ❌ No foresight on what happens when things go wrong. Great contracts are not written by lawyers alone. They're shaped by procurement and operational experts who know what risks matter. If you're signing your next 3PL or warehouse deal without this collaboration, you’re building your future disputes today. Ask yourself: - Who defines your breach clauses? - Have your KPIs been made enforceable? - Have you stress-tested your liabilities in an exit scenario? If you want to increase your "Smarts" talk to us sales@loguru.co.uk, or simply message me here. #contractdisaster #smartlogisticsbuying #logurultd

🛑 RECEIVERS IN THE SUPPLY CHAIN — STOP NORMALIZING ANOMALIES Your role is crucial in the supply chain process. It’s time we stop turning a blind eye to wrong practices and start enforcing the standards that protect the integrity of our operations. Just last week, I had a delivery issue. The supplier brought more than what was raised in the LPO, which means the invoice should be corrected and re-signed. That’s standard practice. But to my surprise, the supplier insisted that “he doesn’t alter invoices” — instead, the receiver should just indicate what was collected. He went as far as saying: “That’s how he treated such everywhere” and tried to school me on how things should be done. That was a big red flag. Unprofessionalism hiding under the guise of industry norms? No way. I stood my ground: either rectify the invoice or take back all This incident reminded me how easily anomalies are normalized in our industry — and how dangerous that is. 📌 Dear Receiver, your role is not just about collecting goods. You are the gatekeeper of accuracy, accountability, and operational integrity. Here’s a refresher on your core responsibilities: ✅ 1. Receiving and Inspection of Goods • Match shipments with purchase orders, delivery notes, and invoices. • Physically inspect items for damages, shortages, or incorrect quantities. • Confirm specifications match the PO. ✅ 2. Documentation and Record-Keeping • Accurately record receipts in the inventory system. • Sign off only on accurate and verified documents. • Report all discrepancies to procurement or inventory control. ✅ 3. Inventory Management Support • Label items with correct SKUs/barcodes. • Ensure proper stock rotation (FIFO/LIFO). • Place goods in the correct location. ✅ 4. Communication and Coordination • Work closely with suppliers, warehouse, procurement, and finance teams. • Escalate issues promptly and clearly. ✅ 5. Compliance and Safety • Follow proper handling procedures. • Maintain a clean, organized, and safe receiving area. • Comply with protocols for hazardous or sensitive goods. 📣 Let’s raise the standard. Being professional isn’t about being rigid — it’s about protecting your system, your team, and your company from errors that can snowball into bigger problems. Normalize integrity, not shortcuts. #SupplyChain #InventoryManagement #WarehouseOperations #Professionalism #ReceiverRole #Procurement #BusinessIntegrity #OperationsExcellence #Compliance #Logistics

🚫 The #1 mistake in procurement: chasing the lowest price. Price matters — but a “cheap” supplier who can’t deliver on time costs you more in the end. We’ve seen agencies get burned when shipments arrive late or products fail to meet compliance standards. At Polite Sourcing, we prioritize reliability. That’s why clients like LSU and regional facilities trust us — because for critical supplies, “on time and compliant” beats “cheap and risky.” 👉 Have you ever had a supplier cost you more than they saved? #Procurement #SupplierManagement #GovContracts

Procurement risks refer to potential challenges in a company’s process of obtaining goods, services, and resources, which may result in financial loss, operational setbacks, or damage to reputation. Typical risks include supplier defaults, supply chain interruptions, quality issues, contractual disputes, price volatility, and regulatory non-compliance. These risks generally fall into two categories: operational risks, which affect daily activities such as delays and cost overruns, and strategic risks, which influence long-term decisions like choosing suppliers and shaping market positioning. #procurement #procurementrisk #vendor #p2p #risks

#The_Procurement_Iceberg The Procurement goes far beyond sourcing, purchasing, and negotiating. Beneath the surface lies the unseen work—managing supplier delays, urgent escalations, compliance checks, audit preparation, and endless coordination. While challenges like backlogs, data errors, and contract redlines remain invisible to most, procurement professionals ensure business continuity and value creation every day. Let’s acknowledge the critical role procurement plays in driving efficiency, resilience, and sustainable growth. 👉Behind every PO and every processed invoice is an ocean of unseen effort.

⚖️ Performance Punishment: The Double-Edged Sword in Procurement A few years ago, I witnessed a dispute between a public-sector agency and a major equipment supplier. The supplier had delayed deliveries by 3 months, disrupting operations. The agency reacted swiftly: invoked penalty clauses, deducted payments, and blacklisted the firm from future tenders. On paper, it looked like a textbook enforcement of contract discipline. But what followed was worse: The supplier retaliated with legal challenges that dragged for 2 years. Other vendors, fearing “unfair punishment,” raised prices by 12–15% in subsequent tenders. The agency lost not just one supplier — but credibility across the entire vendor market. 👉 That’s when I realized: performance punishment can enforce discipline… but if mishandled, it destroys ecosystems. 📉 The Cost of Over-Punishment Studies show that excessive penalties increase supplier exit rates by 18%. Blacklisting without due process often reduces competition, raising procurement costs by 8–10%. Public-sector organizations relying heavily on punishment mechanisms see longer cycle times due to legal disputes. In other words, punishment solves the immediate problem but creates hidden costs downstream. 🔑 Smarter Ways to Enforce Performance 1. Tiered Enforcement Minor delays → warnings. Repeated issues → financial penalties. Critical breaches → contract termination. 2. Carrots with Sticks Pair penalties with incentives for over-performance. Balanced models improve supplier compliance by 25–30% (IACCM). 3. Transparent Governance Publish clear criteria for penalties to avoid perceptions of bias. 4. Supplier Development Instead of Just Punishment Some failures stem from capacity gaps, not malice. Co-investing in capability can prevent repeat underperformance. 🚀 The Leadership Lesson Procurement leaders must balance accountability with sustainability. Punishment has its place — but wielded carelessly, it turns suppliers into adversaries. Because in procurement, the goal isn’t to win against suppliers. The goal is to win with them. 💡 Question for peers: In your experience, have penalties improved supplier performance — or strained partnerships beyond repair? #Procurement #SupplierManagement #ContractGovernance #RiskManagement

Inside Commercial Management – Day 13- Supply Chain Risk (Logistics · Inflation · Availability) Post in 2 Parts — from a Commercial Director’s lens Part 1 Foundations & Abbreviations Why it matters: Most cost overruns aren’t from drawings they’re from the supply chain. I manage three levers: Logistics (movement), Inflation (price), Availability (capacity). Get these wrong and you lose time, money, and spec. Key terms I use with my teams (with quick explainers): OTIF: On-Time In-Full: Did the shipment arrive on the date we needed, with the full/ correct quantity and quality? Core supplier KPI. HS Code: Harmonized System Code: Customs classification that drives duties/VAT and admissibility. Wrong code = holds and fines. IOR: Importer of Record: The legally responsible party for customs entry and compliance. If supplier isn’t IOR, you carry the risk. ETA: Estimated Time of Arrival: The current forecast arrival (port/site). We plan crew's vs ETA(P50) and protect milestones with ETA(P90). P50 / P90: Forecast Percentiles: P50 = most likely; P90 = conservative “9/10” outcome. Use both for time and cost. LOA: Letter of Award: Early commitment to lock factory capacity/price before full contract is inked—vital for long-leads. VO: Variation Order: Approved change to scope/cost/time. Needs notices, breakdowns, and clear entitlement trail. GASTAT: Saudi Statistics Authority: Source for indices (CPI, fuel, materials). I reference it in escalation formulas. FX: Foreign Exchange: Currency exposure on imported content. Align contract currency to cost base; hedge was material. NCR: Non-Conformance Report: Quality deviation that can block “release to manufacture.” Watch trends, not just counts. KPI: Key Performance Indicator: Targets we tie to payments/LDs where practical (e.g., OTIF%, approval cycle days). LDs: Liquidated Damages: Pre-agreed sums for delay/default. Must be a genuine pre-estimate and linked to milestones. SLA: Service Level Agreement: Service standards in logistics/maintenance appendices (e.g., max transit/response time). ASN: Advance Shipping Notice: Pre-alert (packing list, HS, ETA) that enables pre-clearance and site readiness. MOQ: Minimum Order Quantity: Impacts cash and storage; negotiate lot sizes early. DC: Distribution Center: Local buffer node; we hold safety stock for critical items to absorb port shocks. Incoterms: Trade Terms (FCA/FOB/CIF/DDP…): Who pays and carries risk at each step. Choose terms that give visibility and control.

Hidden costs. Vague SLAs. Rigid tech clauses. These are the 3PL contract traps that drain budgets and erode performance. Modern supply chain leaders are pushing for: → Flexible scalability clauses → Real-time reporting standards → Transparent risk-sharing frameworks If your logistics contract is outdated, your operation probably is too. Read more here: https://hubs.ly/Q03vR9070

In Supply Chain Management (SCM), especially in logistics and international trade, we will often hear about MBL/MAWB and HBL/HAWB. These terms are related to Bill of Lading (B/L) and Air Waybill (AWB), which are documents used in sea freight and air freight. 1. MBL (Master Bill of Lading) / MAWB (Master Air Waybill) Issued by: Main Carrier (Shipping Line or Airline) To whom: Freight Forwarder (or Consolidator) Purpose: Acts as the main transport contract between the actual carrier (shipping line/airline) and the freight forwarder. Shows: Details of the whole shipment consolidated under one booking. Example: If a freight forwarder collects cargo from multiple shippers and books one container/space with a carrier, the carrier issues MBL/MAWB to the freight forwarder. 2. HBL (House Bill of Lading) / HAWB (House Air Waybill) Issued by: Freight Forwarder (or NVOCC – Non-Vessel Operating Common Carrier) To whom: Shipper/Exporter Purpose: Works as the transport contract between the shipper and the freight forwarder. Shows: Each shipper’s details, cargo description, consignee, etc. Example: A small exporter gives shipment to a freight forwarder. The forwarder issues an HBL/HAWB to the exporter, while using an MBL/MAWB with the carrier.