Performance Based Logistics (PBL)

is the term used for an innovative approach by the US Department of Defense (DoD), which effectively reconciles the interests of all parties in a contract. It cuts costs by using an intelligent, novel form of contract formation for the procurement of weapon maintenance and operational services.

Under the PBL contract model, the supplier or service provider is paid for the number of hours that the system operates, and in exchange for this income the contractor is obliged to carry out any maintenance and repair work required without any additional payment ("power by the hour"). The PBL service provider has to operate with a completely different business model than used previously.

The PBL approach has led to demonstrable success in cutting costs for the maintenance and operation of weapon systems, while obtaining higher availability. Furthermore, it has already been noticed that the concept is spreading from the military aviation industry in the USA to the civil aviation industry. It also expands to more industrial sectors than just the aviation industry since turbines are not only used in airplanes. Availability is an extremely important dimension for suppliers of capital goods.

Within a laboratory environment at the SAP Center of Excellence (CoE), GOPA IT Consultants have developed and configured a system environment for a fictional company. In the first phase, the focus has been on the viewpoint of a chief program manager at the PBL service provider. Proposed solutions for five selected "pain points" were shown at SAPPHIRE 2008 in Orlando and Berlin.

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