Performance Based Logistics (PBL) Metrics - Overview
In a PBL Product Support Arrangement (PSA), a provider agrees to support an asset, inventory environment or other service at a certain performance level. This means that it is necessary to establish targeted metrics to incentivize the desired performance levels and to facilitate the capture of performance data in order to illustrate that the terms of the arrangement are being achieved.
DoD PBL Guidebook, A Guide to Developing Performance-Based Arrangements
Starting Early
PBL metrics for support should be identified early in strategy development, documented in the Life Cycle Sustainment Plan (LCSP), and refined as the program progresses into implementation of the PBL arrangement. Once the Program Manager (PM) and Product Support Manager (PSM) determine the appropriate support level (system, subsystem, or component), and combination of Integrated Product Support (IPS) Elements, the selection of metrics can begin.
Tying Metrics to Levels of Responsibility
For arrangements at the system level, the PSM may decide to delegate responsibility to a Product Support Integrator (PSI) for all aspects of product support with corresponding metrics of Materiel Availability (Am), Operational Availability (Ao) and Reliability (R). Other system-level metrics examples include ‘ready for tasking’ or ‘network connectivity.’ These metrics are only appropriate as part of the PBL arrangement if the PSI has control over all applicable aspects of product support that affect system availability and/or reliability.
Likewise, the PSM may decide to delegate responsibility for one or more (but not all) of the IPS Elements for the system to a PSI or directly to a Product Support Provider (PSP). The appropriate metric(s) would be those that measure performance against the specific IPS Element(s) over which the PSI/PSP has control. For example, if the PSP is responsible for performing training for an aircraft system, measuring the number or pilots qualified or maintainers certified per month would be an appropriate metric. If the PSM decides to delegate responsibility at the subsystem or component level, then holding the PSI or PSP accountable for Am of the entire system would be inappropriate. The provider cannot be held accountable for aspects of performance that are outside of its control. No matter how the support responsibilities are delegated, the PM/PSM always retains ultimate responsibility for the performance of the overall product support strategy.
As mentioned above, the IPS Element(s) will also impact the metrics selected. See Appendix F of the PBL Guidebook for a comprehensive listing of potential PBL metrics, and see the ACQuipedia article Sustainment Key Performance Parameter and Supporting Metrics for insight into how metrics fit into overall program management efforts.
Decomposing Metrics by Level
One of the most important considerations for selecting metrics is understanding how they link and contribute to top-level performance outcomes and each other. Therefore, in addition to understanding the relationship of metrics to the span of PSI/PSP control, it is also useful to decompose metrics to understand how they can be used to reinforce and complement each other.
A breakdown of a PBL metrics hierarchy is as follows:
- Level 1 metrics are the performance goal or attribute for the PBL arrangement. For instance, Level 1 metrics can be Ao at the system level or Supply Chain Delivery Reliability at the subsystem or component level. Level 1 metrics will vary according to the focus of the PBL arrangement.
- Level 2 metrics support Level 1 metrics. The relationship helps to identify the root cause(s) of the performance gap for a Level 1 metric. If the Level 1 metrics are Ao and Am, then Reliability, Maintainability, and O&S Cost would be considered realistic Level 2 metrics.
- Level 3 metrics support Level 2 metrics. For a Level 2 metric, such as Maintainability, Mean Time to Repair (MTTR) is an example of a Level 3 metric.
For a subsystem performance-based arrangement, a reasonable Level 1 metric or attribute may be a supply chain metric such as Supply Chain Delivery Reliability. A related Level 2 metric could be Perfect Order Fulfillment (POF), followed by Level 3 metrics of Percent of Orders Placed without Error and Percent of Orders Scheduled to Customer Request Date (CRD). In this case, Level 4 metrics may be appropriate such as Percent of Orders Received Damage-free and Percent of Orders with Correct Shipping Documents. This PBL metrics hierarchy is similar to the process metrics associated with the Supply Chain Operations Reference (SCOR) framework, which is applied and tailored to applicable IPS Element(s) addressed in PSAs. The goal of the hierarchy and decomposition is to demonstrate how metrics “roll up” into one another and contribute to overall Warfighter readiness and performance.
Metrics Selection for Performance and Reporting
When choosing metrics, it is helpful to remember, “what gets measured, gets done” and “less is more.” An effective PBL arrangement includes a manageable number of metrics (two to five) that reflect desired Warfighter outcomes and cost reduction goals. Metrics selection may be an iterative process, where metrics are reassessed based upon the provider's performance. In addition to metrics chosen to measure PSI or PSP performance, the PSM must establish a management framework in which metrics are aligned and communicated from the program through the PSI to the PSP. The arrangement execution is ultimately dependent on the continual communication and management response to performance against the metrics.
Click here to view a video on PBL Best Practices, featuring perspectives by Ms Lisa P. Smith, DASD(PS), and two Service practitioners describing successful PBL arrangements at the subsystem/component and system (platform) level.