Don’t Fall into the Activity Trap

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Kate Vitasek

There are many "perverse incentives" in buyer-supplier relationships that can disrupt or even doom outsource relationships, but perhaps none of them are as perverse and downright dangerous as the one I call the Activity Trap. Transaction-based operating and pricing practices create this perverse situation. Why? Because the suppliers or service providers get paid for every transaction processed, whether or not it’s really needed. The more transactions processed, the more revenue for the...
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