That`s why Cohen, Netessine and Kim have taken the next step: they`ve launched an empirical research project to properly define PBL and determine why and when PBL or Power works on time. You work with both customers and suppliers familiar with the PBL environment and contractual arrangements to develop a classification of PBL and PBH relationships; Identify key factors for improving performance Identifying incentive effects in PBL and PBH; and analyze the requirements for successful implementation of PBL and PBH. As part of AJW`s Power-by-the-Hour service, we can offer rental packages to meet many requirements ranging from basic main kit to online outstation. Leasing allows you to avoid costly depreciation and ensures immediate access to high-priority components. According to Netessine, “With a performance-based control or hour-by-hour performance, basically you pay for the equipment when it works. And you don`t pay if it`s not. I don`t pay for repairs or spare parts. I buy a plane that works, and if it works, I`ll pay you. If it is not the room, I will not do it. There is no doubt, they say, that this new strategy is rapidly becoming an important part of supply chain management for after-sales services, with implications that could extend beyond defence and aerospace contracts, and in some retail sectors. And if their future analysis of risks and incentives in awarding contracts is accurate, they predict that the optimal customer-supplier relationship will be achieved by combining performance-based collaboration with more traditional service agreement elements. At the conference, Cohen acknowledged that the concept of defined benefit contracting was “already there, and some would argue that commercial application is ahead of the military.” He pointed out that the term “Power by the hour” was used by Rolls-Royce more than 20 years ago to describe their performance-based contracts for engines and other avionics products sold to commercial airlines.
Today, “the engine manufacturers General Electric, Pratt and Whitney and Rolls-Royce all have defined benefit contracts with commercial airlines in which their remuneration is linked to the availability of products (flight hours),” the authors write in their study. With the Power-by-the-Hour program, the tenant is protected from the unexpected costs of premature engine failures or the cost of capital for the refurbishment of their own engines, which must be replaced due to the LLP process, AD compliance or loss of power. According to a GMI report, the world`s hourly market power is expected to reach $30 billion by 2025. The growth of this PBH market is due to the growing demand for passenger and cargo movements from India, China and Africa, as well as new aircraft deliveries worldwide and favourable government policy in Asia-Pacific and Africa. Increasing technological advances, such as artificial intelligence (AI) and augmented reality/virtual reality (AR/VR), are driving the market.