You do. SCS has no vested interest in the stock, because we don’t own it, so we can’t insure it. If there was an insurance claim, you would claim on your insurer, they would pay you out and then they would attempt to recover money from SCS, in which case we’d be obligated to demonstrate we have acted in good faith with an acceptable duty of care.
We hold bailees insurance. Please speak to your insurance provider to get a clear picture on the insurance you need.
Our understanding is that through an insurance company the answer is no. Our discussions with insurance companies is that they will not cover ullage on your material damages policy (or any other policy). They deem this to be your commercial risk.
SCS can elect to offer this insurance if asked after it has studied the statistical probability around the risk of error and understands the value that the risk represents in order to construct an “insurance‟ premium and we agree to do so.
Please do not assume ullage is insured under standard rates, it’s not. That would be like tendering 1M of diamonds to an airline carrier in your luggage and not telling them and then claiming 1M if there is a misadventure where the luggage goes missing.
If you need additional peace of mind regarding high value items and loss beyond reasonable thresholds/industry standards please specify this request. Also please check with your insurance company. We have only checked with our own providers to form this view (current as at Nov 2009).
Irrespective of our KPI in regards to picking errors, if we make an error we will cover the costs to remedy it. This is something extra SCS offers.
This is one of the most contentious issues in outsourcing. It becomes “he said”, “she said” and the reality is that the error may have occurred:
Because it is unclear where the imbalance occurred SCS won’t accept liability where our stock is accurate. Whilst it does happen from time to time, 9 times out of ten it is sporadic and it is the kind of issue that comes and goes (like an annoying noise on a car that you’re trying to explain to your mechanic that’s never there when looking closely for it!). Fortunately this issue accounts for a very small percentage of all orders.
We advise the best way to manage this is to manage the instances of issues and measure them against an acceptable materiality threshold and budget for it in your cost of goods, (this same logic applies to your car insurance, you could manage this yourself and self insure but its easier just to insure it to avoid the stress of managing the risk). If over a period of time the instances fall within the threshold then do nothing. If the instances exceed a reasonable threshold then escalate it so that more process and investigation can be applied to try and determine where the issue is stemming from.