Understanding Operational Availability in Performance-Based Logistics and Maintenance Services

Performance-based service contracting is envisioned to reduce the assets ownership cost while ensuring the system performance. Operational availability is considered as the key performance measure to assess the system reliability outcome. This paper presents a unified modeling approach that comprehends eight key performance drivers underpinning the operational availability. These drivers include inherent reliability, usage rate, maintenance, spare parts, fleet size, repair-by-replacement time, and parts repair and reconditioning turn-around times. We investigate the maintenance logistics in a single-site repairable inventory setting, yet the result can be appropriately extended to more complex logistics networks. This study shows that high operational availability could be attained even under low parts availability. This finding is contradictory to the traditional belief that low operational availability is ascribed to excessive parts backorders. The study has the great potentials to shift the service business paradigm from traditional material-based contracting to performance-based contracting.