1. Information Sharing
Information is power. Hence the information base is needed for an organization to adjust its controllable variables so that optimum profits are achieved. Information is also required for risk minimization. Hence, it is crucial for the organization to share the information among the organization functions. In the logistics organization where the 3PL service provider is a partner, the guidelines for information need to be set so that trade secrets are properly guarded.
2. Distribution of Benefits
Equitable redistribution of the benefits across the organization is important. However, establishing a method for passing the benefits between logistics partners and the channel members will keep them acting in concert.
3. Conflict Resolution
The causes of conflicts are inequitably in the benefits, overlapping of responsibilities, duel reporting system and faulty performance evaluation system. The conflicts may also crop up due to vested interests. The policy formulations and procedural guidelines help in reducing the conflicts. Two major and distinct informal mechanisms, power and trust, can be used to generate cooperation in a logistics chain. These mechanisms are usually regarded as alternatives to each other. Power is a central concept, because its mere existence is thought to condition others. Power is also seen as a central tenet in achieving cooperation. In contrast, it is theorized that central to relationship marketing is the presence of trust, not power, and its ability to condition others. Through proper training, conflict mitigation in the logistics organization is possible to a greater extent. Another informal mechanism is trust, which is found to be central to the process of achieving cooperative problem solving and constructive dialogue. A major precursor of trust is communication, which can be defined broadly as the formal as well as the informal sharing of meaningful and timely information between organizational members. Information sharing is one of the five building blocks that characterize solid supply chain relationships. Another precursor of trust is shared values. Shared values are the beliefs in common that partners have about what behaviours, goals and policies are important or unimportant, appropriate or inappropriate and right or wrong. Thus, shared values lead to trust and commitment and, in turn, cooperation. In a supply channel, channel members are likely to share common economic goals.
Source: Sople V.V (2013), Logistics Management, Pearson Education India; Third edition.