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Performance-based logistics is a model that was originally created for use by the United States (US) Department of Defense (DoD), but has since been picked up by other international defense organizations. The basic premise of performance-based logistics is a shift from raw-number data to actual applied logistics. For example, with older logistic models, a final tally of delivered food was compared to an overall amount of needed food. In the newer model, the amount of food delivered on time in one specific location is compared to the amount of food needed by that location at that time. Performance-based logistics has been both praised and scorned as a logistical model.
Logistics is a very old field that combines accounting, science and strategy into one complex package. In a military sense, logistics is the support. It covers everything from getting people where they need to be, when they need to be there, to having enough bullets on hand for conflicts. If it involves moving people or objects or anything needed by people or objects, then it is part of logistics.
As military operations became more complicated, the need for detailed and specific logistics became more important. The US government determined that, in an overall sense, it was unable to provide the necessary logistical support to the military on time and within budget. While certain parts of the system were doing fine, others were buried in unnecessary items or lacked basic necessities.
The US was using an older logistics model that functioned very well for many years. The difficulty with older models is often a lack of new technology incorporation. The speed, distances and endpoint requirements for a military operation are significantly different from a similar operation in 1950. Since the US government has, historically, had difficulties adapting to changing technologies in a timely manner, the concept of performance-based logistics and logistical privatization became a forefront methodology.
The new method threw out many of the previous raw-data methods of logistic value in favor of a more precise method. The new method involved taking bids and hiring private contractors for jobs that used to be performed using government workers. Since a private company could precisely control manufacturing and delivery costs, the method cut waste and improved resource availability. Since processes were itemized, individual accounts became responsible for specific activities.
These new methods have had mixed reviews from public watchdog groups and government insiders. On the one hand, performance-based logistics have saved the US government billions of dollars, and the amount saved increases every year. On the other hand, the private contracts have taken heat for supposed price gouging and cutting corners on quality over the previous government-produced materials. In addition, allegations of favoritism have hounded the programs since their inception; often stemming from a prominent politician sitting on the governing body of a hired company.
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