50 | R i g h t C h a i n ™ Working together, these objective functions illustrate the impact of the decision on the financials of distribution (transportation and warehousing) and inventory (inventory carrying and lost sales). A recent client example highlights the criticality of considering the financial impact on all four. A few years ago I received a phone call from the VP of Distribution from one of the nation’s largest retailers. I was surprised that he was calling to ask for our assistance with a new supply chain strategy because I knew from our benchmarking work that their company was one of the country’s most efficient retailers. When I got on site I started to understand their dilemma. I asked the VP of Distribution how he was compensated. He said that his bonus was based on continuing to lower the delivered cost per unit to their retail stores. I asked him how he accomplished that. He said that is was by choosing inexpensive transportation modes, inexpensive carriers within those modes, maximizing container utilization by holding containers at their warehouses until they were completely full, and by maximizing warehouse labor utilization by holding and releasing store replenishment orders in large batches. I told him that I remembered from my benchmarking work that they were evidently doing a good job along those lines. He

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