Get 20M+ Full-Text Papers For Less Than $1.50/day. Subscribe now for You or Your Team.

Learn More →

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

Explaining the effectiveness of performance‐based logistics: a quantitative examination 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. Design/methodology/approach – A multiple regression model was developed, tested and validated to explain the effectiveness of PBL. The model was externally validated with exploratory cross‐sectional survey data of 61 practitioners. Findings – This study strongly supports recent PBL theory explaining PBL effectiveness. Key antecedents include investment climate, relational exchange, PBL leadership, and business sector. Further, government organizations lag behind their commercial counterparts in PBL effectiveness and PBL leadership. Practical implications – PBL business arrangements are more effective in more favorable investment climates. Thus, leaders should welcome new ideas, empower employees, and encourage entrepreneurship. Since PBL effectiveness increases with relational exchange, building trust and communicating with suppliers is key. Leadership is also important to PBL effectiveness. Leaders should accept risk, focus on long‐term affordability and performance, and align activities to achieve end‐user goals. Originality/value – This research is the first quantitative test of previously posited factors affecting PBL effectiveness. Additionally, this research unveils key differences in business sectors' use of PBL strategies. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png The International Journal of Logistics Management Emerald Publishing

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

Loading next page...
 
/lp/emerald-publishing/explaining-the-effectiveness-of-performance-based-logistics-a-V0DAExHu5j

References (81)

Publisher
Emerald Publishing
Copyright
Copyright © 2011 Emerald Group Publishing Limited. All rights reserved.
ISSN
0957-4093
DOI
10.1108/09574091111181354
Publisher site
See Article on Publisher Site

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. Design/methodology/approach – A multiple regression model was developed, tested and validated to explain the effectiveness of PBL. The model was externally validated with exploratory cross‐sectional survey data of 61 practitioners. Findings – This study strongly supports recent PBL theory explaining PBL effectiveness. Key antecedents include investment climate, relational exchange, PBL leadership, and business sector. Further, government organizations lag behind their commercial counterparts in PBL effectiveness and PBL leadership. Practical implications – PBL business arrangements are more effective in more favorable investment climates. Thus, leaders should welcome new ideas, empower employees, and encourage entrepreneurship. Since PBL effectiveness increases with relational exchange, building trust and communicating with suppliers is key. Leadership is also important to PBL effectiveness. Leaders should accept risk, focus on long‐term affordability and performance, and align activities to achieve end‐user goals. Originality/value – This research is the first quantitative test of previously posited factors affecting PBL effectiveness. Additionally, this research unveils key differences in business sectors' use of PBL strategies.

Journal

The International Journal of Logistics ManagementEmerald Publishing

Published: Nov 1, 2011

Keywords: Logistics management; Leadership; Performance‐based logistics; Investment climate; Sustainment; Outcome‐based contracting; Post‐production support; Logistics; Supportability

There are no references for this article.