A PERFORMANCE AGREEMENT TO ALIGN THE OPERATION OF A LOADING DOCK AND A FLEET

Patricio Donoso (), Marcos Singer () and Alan Scheller-Wolf
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Alan Scheller-Wolf: Graduate School of Industrial Administration, Carnegie Mellon University

Abante, 1998, vol. 1, issue 2, 167-188

Abstract: This article examines a company whose distribution operation is carried out by a loading Dock and a Fleet of trucks. For a number of reasons, each department optimizes its operation locally, with no concern for the operational alignment of the overall system. To resolve this problem, a contract is proposed that will provide an incentive for improved operations, particularly at the loading Dock. The contract specifies a payment from the Fleet to the loading Dock calculated on the basis of a reduction in Fleet size made possible by improvements in the Dock operations. This methodology is applied to a mass consumption product distributing company in Santiago, Chile. Significant savings opportunities result, thanks to operational alignment.

Keywords: Performance Agreement; Alignment; Fleet; Incentive; Transfer; Chile (search for similar items in EconPapers)
JEL-codes: C61 (search for similar items in EconPapers)
Date: 1998
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