From the course: Managing Logistics
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Overcoming obstacles to integration
From the course: Managing Logistics
Overcoming obstacles to integration
- What gets rewarded gets done. I'm sure you've heard that before. Reward someone for a behavior and they will happily and efficiently do it over and over again. This is a pretty good principle for effective management. But I also think this is the number one obstacle to integration within your logistics network and along your supply chain. Let me give you an example. If you link your transportation manager's compensation to the average transportation cost per unit, they'll be highly motivated to reach that incentive by shipping everything from the factory in full truck loads. But this may not be in the best interest of your company. They will end up forcing full truck loads of products into the warehouses and drive up inventory costs for holding unneeded finished goods. They also may hold products at the distribution center or warehouse until a truck is full, causing stockouts at the retailer and lost sales when customers…
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