Jove
Visualize
Contact Us
JoVE
x logofacebook logolinkedin logoyoutube logo
ABOUT JoVE
OverviewLeadershipBlogJoVE Help Center
AUTHORS
Publishing ProcessEditorial BoardScope & PoliciesPeer ReviewFAQSubmit
LIBRARIANS
TestimonialsSubscriptionsAccessResourcesLibrary Advisory BoardFAQ
RESEARCH
JoVE JournalMethods CollectionsJoVE Encyclopedia of ExperimentsArchive
EDUCATION
JoVE CoreJoVE BusinessJoVE Science EducationJoVE Lab ManualFaculty Resource CenterFaculty Site
Terms & Conditions of Use
Privacy Policy
Policies

Related Experiment Videos

Aligning incentives in supply chains.

V G Narayanan1, Ananth Raman

  • 1Harvard Business School, Boston, USA. vnarayanan@hbs.edu

Harvard Business Review
|November 24, 2004
PubMed
Summary
This summary is machine-generated.

Related Concept Videos

You might also read

Related Articles

Articles linked to this work by shared authors, journal, and citation graph.

Sort by
Same author

Are cost advantages from a modern Indian hospital transferable to the United States?

American heart journal·2020
Same author

Time-driven activity-based costing of multivessel coronary artery bypass grafting across national boundaries to identify improvement opportunities: study protocol.

BMJ open·2015
Same author

Medicine's continuous improvement imperative.

JAMA·2015
Same author

Health care's service fanatics.

Harvard business review·2013
Same journal

The Case for Capitation.

Harvard business review·2016
Same journal

How to Pay for Health Care.

Harvard business review·2016
Same journal

How to Preempt Team Conflict.

Harvard business review·2016
Same journal

The Secrets of Great Teamwork.

Harvard business review·2016
Same journal

Leading the Team You Inherit.

Harvard business review·2016
Same journal

Wicked Problem Solvers.

Harvard business review·2016
See all related articles

Supply chain success hinges on fair distribution of risks, costs, and rewards. Misaligned incentives harm performance, but aligning them through contracts or technology can improve efficiency and collaboration for all partners.

Area of Science:

  • Supply Chain Management
  • Operations Research
  • Business Strategy

Background:

  • Companies often assume supply chain partners will act in the network's best interest, akin to an 'invisible hand'.
  • In reality, individual partner priorities frequently lead to suboptimal supply chain performance.
  • Supply chains involve multiple functions and companies, each with distinct goals.

Purpose of the Study:

  • To investigate the impact of incentive misalignment on supply chain performance.
  • To identify the root causes of poor supply chain outcomes.
  • To propose strategies for aligning incentives across supply chain networks.

Main Methods:

  • Analysis of over 50 supply networks.
  • Examination of company behaviors and their impact on network efficiency.

Related Experiment Videos

  • Identification of common incentive misalignment issues.

    • Main Results:

    • Companies often prioritize their own interests over those of their network partners.
    • Misaligned incentives are a primary driver of poor supply chain performance, including excess inventory and stock-outs.
    • Fair distribution of risks, costs, and rewards is crucial for effective supply chain operation.

    Conclusions:

    • Supply chain partners' fates are interlinked; collaboration driven by aligned incentives benefits all.
    • Addressing incentive misalignment requires acknowledging the problem, identifying root causes, and redesigning incentives.
    • Strategies like revenue sharing, information sharing technology, and intermediary-facilitated trust-building can improve alignment.