Measurement Issues in Performance Based Logistics
Abstract
Performance-Based Logistics (PBL) is an extension of Performance-Based Service Acquisition aimed at the logistic services for major weapon systems. The Quadrennial Defense Review mandated DoD to implement PBL to compress the supply chain and improve readiness for major weapons systems and commodities. PBL is intended to reduce life cycle costs, increase readiness, improve reliability, and reduce the logistical footprint of weapon systems. This paper takes for granted the ubiquitous nature of PBL initiatives, and takes as its starting point the question of how best to measure the degree of their success. In support of our prescriptions for measurement, we will draw not only on successful best practice, but also on the underlying logic and justification of outsourcing, as laid out in the economics and management literature. While measuring the performance of ongoing PBL initiatives is our starting point, we also intend this paper to inform valuation questions. From the initial question of whether to bring forward a weapon system or a major component of a weapon system as a candidate for PBL, to later design questions of "what form" of PBL is best applied to that candidate, measurement issues are endemic. After all, the logistic services to be outsourced will be priced contractually, and for some services, there is no clear market to determine that price. The paper focuses on the following questions: (1) Are the administrative costs incurred by government to mobilize and control the private sector less than the cost savings from more efficient production?; and (2) Are purchasers sufficiently rational and careful, and the quality of the service sufficiently definable and measurable, that effective, informed consumer sovereignty can be exercised?
Document Details
- Document Type
- Technical Report
- Publication Date
- Jun 30, 2004
- Accession Number
- ADA498508
Entities
People
- Donald R. Eaton
- Ira A. Lewis
- Kenneth Doerr
Organizations
- Naval Postgraduate School