Explaining the effectiveness of performance-based logistics: a quantitative examination

Abstract

Purpose – Performance-based logistics (PBL) strategies are providing governments and for-profit organizations with a contractual mechanism that reduces the life cycle costs of their systems. PBL accomplishes this by establishing contracts that focus on the delivery of performance not parts. PBL establishes a metric based governance structure where suppliers make more profit when they invest in logistics process improvements, or system redesign, that reduces total cost of ownership. While work has been done to outline an overall PBL theoretical framework, the underlying theory explaining the enablers that lead to organizational and team-level, team-goal alignment associated with the PBL governance structure requires testing. The purpose of this paper is to quantitatively test previously posited relationships between enablers of PBL and PBL effectiveness. An additional objective is to explore any differences in PBL effectiveness between different business sectors.