CHSCM 3.0 - Unit 1 - SCM in the Humanitarian World

A memorandum of understanding (MOU) is a legal document describing a bilateral agreement
between parties. It expresses a convergence of will between the parties, indicating an intended
common line of action, rather than a legal commitment. It is a more formal alternative to a
gentlemen’s agreement, but generally lacks the binding power of a contract.
A good example of the use of MOUs is those signed between United Nations organizations and
NGOs. These MOUs may often be global agreements with International NGOs that describe the
agreement between both organizations.
It can be used to detail the basic principles and guidelines which the parties will use to work
together to accomplish their goals. A typical MOU will contain the following:
• Names of the parties
• Timescales and timeframes
• Scope and purpose of the MOU
• Signatures of both parties
• Responsibilities of both parties
SLAs and MOUs have traditionally been used in relationships between different organizations but
they can also be used to manage relationships between different functions within an organization.
MOUs can define the relationship between the functions and a clear understanding of each
function’s commitments/purpose and expectations. SLAs can define the service and service levels
that a supplier function will provide to another function.
Earlier, we identified the need in the service level agreement to put in place a mechanism for
monitoring and reporting on the actual service provided. A key part of managing any relationship is
to make good use of this mechanism. You have probably heard the phrase, “If you can’t measure it
you can’t manage it.” This is particularly true at the beginning of a relationship, which is why it is
important that any mechanism is put in place immediately so that information on performance is
available at the early stages of the relationship. We must not underestimate the work that might be
involved in putting this mechanism in place. This might involve developing an IT system that can
capture the information needed, and then process the information into the correct format. If the
mechanism is not in place, then either the information is not going to be available or there is a risk
that the information used will not be accurate.
It is difficult for a supply chain relationship to be successful if either party is not entirely comfortable
with the information used to assess actual performance and that they can both trust the accuracy of
the information.
In the early days of any relationship, communication is vital. Experience shows that it is in this early
stage that trust will begin to be developed; also misunderstandings and problems can be identified
and resolved. There is, however, the risk of too much communication between the two
organizations, and involving too many people. This is often referred to as information overload.