Performance contracting in after-sales service supply chains

摘要

Purpose:rnTo develop a multitask customer-supplier model for analyzing various implications of performance — based contracting in after sales service supply chains.rnSummary:rnAn introduction is given to the existing practice of using performance-based contracting, particularly, in capital-intensive industries such as aerospace and defense. It is attempted to provide a 'performance based logistic' model to replace traditionally used fixed-price and cost-plus contracts to improve product availability and reduce the cost of ownership. It is observed that such a model is possible by tying a supplier's compensation to the output value of the product generated by the customer. The application of the proposed performance contracting model to a problem based on aircraft maintenance data is illustrated. It is discussed about how the allocation of performance requirements and contractual terms change under various conditions.