Performance‐Based Logistics and Interfirm Team Processes: An Empirical Investigation

Abstract

P ractitioners are using performance-based logistics (PBL) strategies to reduce cost and improve value in industries such as defense, transportation, manufacturing, and healthcare. PBL is part of a group of increasingly popular buyer-supplier strategies that focuses on outcomes as oppose to the delivery of products or services. A key tenet of PBL is the use of innovation to create cost avoidance that benefits buyers and suppliers. In this research, we explore the interfirm team-level factors associated with innovation in successful PBL strategies. This research brings together business, organizational behavior, and engineering literature to study PBL team success. The study entailed interviews with 17 managers involved in large scale PBL projects. The interviews and follow-on member checking sessions resulted in a model composed of eight emergent categories and associated propositions. Both practical and theoretical implications are provided.

Supply chain collaboration in performance-based contracting: an empirical study

“…The results empirically confirm that SCC increases the financial, operational and non-financial benefits of PBCs. Thus, we conclude that better SCC is critical to creating innovative investment in order to increase benefits by avoiding future costs in PBC (Randall et al, 2015). This finding is consistent with and provides empirical proof for the statements of Randall et al (2011), in which the authors emphasize the importance of this investment climate and relational exchange of suppliers for continuous value creation in PBC.…”

“…This knowledge also includes technical expertise concerning the entire system, while a new knowledge source leads to innovation in the whole chain. In the study by Randall et al (2015), where the authors investigated inter-firm team-level factors associated with innovation in successful PBC, they found that Supply chain collaboration interdependent goals align with inter-firm relationships to create innovative investment solutions in PBC. Additionally, in their experimental study, Guajardo et al (2012) illustrated how product reliability is 25%-40% higher under PBC than under TBC.…”

“…Based on studies to date, the supplier, in order to achieve the desired outcomes by achieving the performance metrics, must enhance the reliability of products rather than increase spare stock. This requirement to improve product reliability in the supply chain needs collaborative efforts to transfer their resources, knowledge and skills to innovative solutions that increase benefits and the proposed value to the buyer (Randall et al, 2012(Randall et al, , 2015. To sum, due to the unique characteristics of the PBC, the suppliers are motivated to find cost avoiding solutions in the future, requiring collaborative efforts and innovative solutions to confront existing problems for the purpose of efficiently achieving their objectives.…”

“…So, the most effective and efficient solutions can be realized with collaboration between key suppliers. This collaboration within the entire supply network entitiesinvolving processes, material and information around the same goalsis critical to creating innovative solutions to increase the readiness of systems with less cost (Randall et al, 2015).…”

Performance-based contracting: contextual factors and the degree of buyer supplier integration

“…In view of the increasing practical relevance, the number of studies on PBC has increased recently (Selviaridis, 2011), but still surprisingly few academic publications have researched this subject (Buchanan and Klingner, 2007;Hypko et al, 2010;Selviaridis, 2011). In particular, there is a lack of empirical evidence (Holmbom et al, 2014), even if first empirical studies analyze PBC (Randall et al, 2014) or develop hypothesis from case studies or interviews for later empirical testing (Caldwell et al, 2009;Selviaridis and Norrman, 2014;Randall et al, 2015). At the same time, many authors stress on the uniqueness of each PBC, their situation and case-specific design and focus on the "one size does not fit all" of PBC (Hicks, 2012;Sols et al, 2007;Burkett, 2009;Geary and Vitasek, 2008).…”