A framework for performance based logistics: A system of systems approach

Performance Based Logistics (PBL) represents a highly successful supply chain strategy. This success comes from PBLs ability to strategically align cross-functional and inter-organizational processes of multiple firms, customers, and bill payers. This is accomplished through use of multi-year contracts, performance metrics, and incentive structures that converts the year-to-year cost streams associated with the spare and repair of the traditional return on sales, return to specification, approach to post-production support, into cost avoidance pools to be harvested under a return on investment, reliability improvement post-production support strategy. Academic research into PBL is just emerging, and is very promising. As an emerging research area there is no overall, definitive framework that succinctly describes the essence of PBL, and lays a foundation that guides an overall PBL research agenda. This paper uses a system of systems (SoS) approach, informed by a grounded theory analysis, to inductively derive such a framework. The investigation involved an extensive review of both academic and practitioner literature dealing with PBL, a review of Government Accountability Office (GAO) Reports pertaining to PBL, involvement in PBL conferences and workshops, and 60+ recorded and transcribed interviews with practitioners actively engaged in managing the sustainment of complex and high cost systems. This research presents an overall framework that encapsulates and guide PBL research and practice.