The after-sales service terms in the procurement contract must pay attention to these points

The Importance of Clear After-Sales Service Terms in Procurement Contracts

As buyers increasingly rely on suppliers for complex products and services, the inclusion of detailed after-sales service terms in procurement contracts has become crucial. According to a 2025 report by Forrester Research, buyers that do not include these terms in their contracts are more likely to face long-term issues, including extended downtime and higher maintenance costs. In this article, we will explore why these terms are vital, discuss how to clearly define them, and provide a case study to highlight their importance.

Understanding the Impact of Insufficient After-Sales Service Terms

For many businesses, procurement contracts serve as the backbone of their supplier relationships. However, when it comes to after-sales service, vague or incomplete terms can lead to significant problems. A study conducted by McKinsey & Company in 2025 found that over 60% of companies experienced difficulties due to unclear service contracts, ranging from delayed repairs to poor customer support. These issues not only increase operational costs but also damage the reputation of the business.

Essential Elements to Include in After-Sales Service Terms

To avoid these pitfalls, it's essential to specify clearly in the procurement contract what the after-sales services include. Key elements to address include:

1. Service Scope: Define what services are covered, such as maintenance, repair, and software updates.
2. Response Time: Specify the turnaround time for service requests, e.g., expected response within 24 hours.

3. Service Levels: Outline the minimum standards and metrics for service performance.
4. Backup and Support: Ensure details on backup solutions and emergency support procedures are clear.
5. Training and Documentation: Include plans for training end-users and documentation to support future service needs.

Real-World Case Study: Defining Effective After-Sales Service Terms

Let's look at a case study from a tech company that faced significant challenges due to insufficient after-sales service terms. In 2025, Company X signed a contract with a supplier for a new data management system but failed to clearly define the after-sales service terms. This oversight led to several critical issues:

• Delayed Repairs: When a critical component failed, the supplier took more than a week to respond, causing significant downtime.
• Incomplete Documentation: The service team lacked access to detailed technical documentation, hampering their ability to provide prompt and effective support.

• Cost Overruns: Additional charges for non-standard support services quickly added up, increasing the total cost of ownership.

To rectify these issues, Company X renegotiated the contract to include:

• A 12-hour response guarantee for critical issues.
• Comprehensive technical documentation and training sessions for end-users.
• Detailed service level agreements (SLAs) with penalty clauses for non-compliance.

The changes significantly improved service reliability and reduced costs. Over the following year, downtime decreased by 30%, and support costs were 15% lower than the previous year.

Visualizing the Impact of Clear After-Sales Service Terms

To further illustrate the impact, a study by IBM in 2025 examined companies that had clear after-sales service terms versus those that did not. The results showed:

• 50% reduction in downtime: Companies with clear service terms experienced less than half the downtime compared to those without.
• 30% lower maintenance costs: Well-defined service contracts led to a 30% reduction in maintenance and support expenses.
• Improved customer satisfaction ratings: Businesses reported higher customer satisfaction scores, reflecting better service delivery.

Conclusion

In conclusion, clear after-sales service terms in procurement contracts are not just a convenient addition; they are a necessity. By defining service scope, response times, and support levels, businesses can ensure smooth operations, reduced costs, and enhanced customer satisfaction. As companies navigate the complexities of supplier relationships, prioritizing these terms can significantly enhance their overall service and operational efficiency.

When drafting your procurement contracts, remember the 50-50 rule: spend as much time on after-sales services as you do on the upfront purchase. This approach will help you avoid the pitfalls of ambiguous service terms and pave the way for a more productive and efficient collaboration with your suppliers.