eng
About   |   Newsletter
Demand & Supply Chain Management Evolution


Supply Chain Glossary

Glossary  >  C  >  Contract, Performance Based  


 

Contract, Performance Based


Source: Procurement Glossary
Author: Paul Rogers
Institute: CIPS - UK

Courtesy of


 

Performance based contracts seek to focus upon the output required from the contractor, and create measures and remuneration mechanisms which align the contractor’s performance with the outcomes desired.  This contrasts with traditional approaches in that the specifications focus less on the ‘how’ and more on the ‘what’ through a clear statement of expected work outcomes.  The statement of work shows the detailed work elements including a performance standard, acceptable quality levels, how performance will be measured and monitored, and the percentage of the contract price each service represents.  Performance based contracts require clear definition of what is needed and measurement processes which relate directly to actual performance levels.

For example, supposing a buyer pays a maintenance provider for supporting a pump.  The fees are 15% of the initial acquisition cost, and the fee is paid annually.  The fee structure is unrelated to the actual cost expended by the supplier, and the supplier may or may not focus on achieving the required uptime levels - assuming that these are specified and measured.  A performance-based contract might reward the provider for uptime, the provider will only be paid if the pump is functional, and the provider will be paid less - or not at all - if the pump reliability is less than specified.  This would be a performance-based contract, and align the contractor to delivering the required pump availability.  See also Risk and Reward.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 




Job Opportunities
 
Material Handler
     
     Latham, New York  -  PERM  -  Philips

Procurement Engineer, Philips Healthcare, (Cambridge,MA.)
     
     Cambridge, Massachusetts  -  PERM  -  Philips

Sr Manufacturing Mechanic/ Sr Craftsworker ( 3rd Shift)
     
     New Jersey - Branchburg  -  PERM  -  Roche

Quality Assurance, Manufacturing Team Lead
     
     Carlsbad, California  -  PERM  -  Philips

Senior Supply Planner, Medical Consumables and Sensors
     
     Cambridge, Massachusetts  -  PERM  -  Philips

Logistics Coordinator
     
     Gainesville, Florida  -  PERM  -  Philips

Logistics Supervisor (Second shift)
     
     Carlsbad, California  -  PERM  -  Philips

Manufacturing Engineer, Philips Healthcare, (Latham, NY.)
     
     Latham, New York  -  PERM  -  Philips

Warehouse Manager
     
     Winston Salem, NC  -  PERM  -  SCM Talent Group

CAR-T Site Supply Chain Manager
     
     Warren - NJ  -  PERM  -  Bristol-Myers Squibb

Manager, Global Supply Chain Planner
     
     United States  -  PERM  -  Bristol-Myers Squibb

Supervisor, CAR-T Warehouse Operations
     
     United States  -  PERM  -  Bristol-Myers Squibb

Order Management Specialist
     
     Nashville, Tennessee  -  PERM  -  Philips

Manufacturing Engineer, Philips Healthcare, (Latham, NY.)
     
     Latham, New York  -  PERM  -  Philips

Senior Procurement Engineer
     
     Bothell, Washington  -  PERM  -  Philips



 
           Circular Economy     Industry 4.0     Blockchain 

     Internet of Things     Omni Channel 


Join us on


News & Trends
 

Last update 2 Jul 2020
Record rise in manufacturing PMI amid looser COVID-19 restrictions
   Source: Markit US Manufacturing PMI   -  IHS Markit
United States 


Retail

The retail sector is always on the move. Whether this involves shopping centres, shops in inner city locations or at airports – trends change very quickly and the goods change just as rapidly too. To keep up with these developments, highly complex and process driven supply chains are needed. With our...


Deloitte Global Chief Procurement Officer Survey 2019: Faced With Economic and Trade Threats, CPOs Pressured to Cut Costs

Key takeaways The complex role of the chief procurement officer (CPO) now faces emerging economic and political risks in every direction they turn — and they feel pressured to cut costs along the way. This year&...


Education
 

Local & Regional Agenda
 


Resources
 
PPG INDUSTRIES, LTD.

Company Established in 1883, PPG Industries manufactures protective and decorative coatings, sealants, adhesives, metal pretreatment products, flat glass, fabricated glass, continuous-strand fiberglass products, and...

'Digitalization and the supply chain: Where are we and what's next?'

The report reveals that new technologies and solutions are developing at a fast-pace and disrupting industries on multiple fronts, with supply chains struggling to keep up. The global survey of nearly 350 supply chain...


International Agenda