In business the contract is a powerful tool and in 2015 the Supreme Court declared, ‘the contract is king’. The case was nothing to do with logistics or transport, in fact it was concerning the service charge for holiday lets, but an authoritative statement all the same.

The contract is an agreement, enforceable by law, which binds the rights and responsibilities of two or more parties. Usually a buyer and a supplier.  It typically involves the exchange of either goods, services or money and is the starting point if a dispute arises.

In negotiating the contract, the buyer will be seeking to achieve the best price for the goods or service needed. Quality is often weighted against the price tag and unfortunately, all too often, the price tag wins.

I was recently involved in a tender where the evaluation criteria were 20% technical and 80% commercial. Whilst there are organisations buying goods and services dominantly based on price in this way, there will always be suppliers available to deliver a lower-grade service with an attractive price tag, some even willing to cut corners on quality. You don’t have to look too deep into the Traffic Commissioner’s Applications and Decisions to spot a few corner cutters.

Many buyers don’t understand the impact that low price has on quality in transport and logistics. Regulatory compliance, investment in people and social responsibility all feel the effect when money is tight. Good logistics operators generally bow out of a tender process when the bidding continues, but the quality level has met their minimum threshold.

There is a big difference between good value and low price. Take Bath and North East Somerset Council’s contract for the Newbridge Park and Ride extension a few years ago. Most won’t know anything about this but more of you will if I make reference to the 2015 headline ‘Bath tipper truck crash kills child and three men’. Yes, that vehicle was operating in the council’s supply chain working on one of its development projects, In the words of Benjamin Franklin ‘The bitterness of poor quality remains long after the sweetness of low price is forgotten’.

Buyers have a significant impact on the moral, economical and legal obligations within supply chains. Minimum standards addressing legal compliance, minimising road risk, reducing toxic emissions and driving operational efficiencies aren’t difficult to specify within contracts. Recognising existing industry good practice should not inflate contract costs.

A ‘Responsible Fleet Operations’ clause should be standard in every goods or service contract; simply stating that:

The road transport operation used to provide the services shall be managed to ensure a baseline level of compliance against all regulatory requirements relevant to the road transport operation, and in a way that it minimises risk to other road users, environmental impact and road network disruption.

For more information on how to use a contract to influence responsible fleet operations, check out FORS Champion status and the supporting specifier toolkit – it’s free.