A Comprehensive Framework for Measuring Performance in a Third-party Logistics Provider

Abstract

Today, Third-Party Logistics Providers (3PL) face a great pressure in order to meet its clients’ needs: customers demand a high level of time and place value for their deliveries, at lower prices, making the last mile activity not only a challenge whilst meeting the clients’ requirements but likewise in managing the profitability and the financial balance of the operation. In order to meet the logistics’ operation efficiency, several 3PL monitor their activity assisted by a variety of ex-post systems of performance indicators that assess the quality and efficiency of the logistic process. Whereas most of the times 3PL do not fully exploit the potentiality of those performance systems.The objective of this paper is to provide comprehensive and innovative performance measurement framework for a Third-Party Logistics Provider, transferrable for other stakeholders. The framework is supported in a thorough revision of the existing literature regarding performance indicators systems, with particularly significance in the field of logistics and freight transport.The rich variety of logistics’ performance indicators arrays frequently focus on a specific domain or follow a typical framework which includes metrics for cost and asset management, customer service, productivity and quality. In order to meet the specifics of a 3PL, we believe that a more detailed framework would be beneficial.The framework we propose is organized in three levels: the activities dimension (e.g. transport, warehousing, and customer service), the decision level dimension (operational, tactical and strategic) and the different actors dimension (e.g. carriers, 3PL and consolidation centers). A case study of Urbanos, a Portuguese 3PL firm, was used to validate the proposed framework.