A Decision Making Tool for Selection of LSPs

Aicha Aguezzoul,Gilles Paché

doi:10.5539/ijbm.v13n5p95

Abstract

This research note aims to propose a multiple criteria decision making (MCDM) based on ELECTRE method to solve the logistics service providers (LSPs) selection problem. In the contemporary global market, this selection represents a strategic process and a complex issue, as it involves various qualitative and quantitative criteria as well as decisions. The proposed model consists of two phases: (1) a survey of French firms was carried out so as to identify the factors that should be considered in the LSPs selection decision; (2) an application of the model, as well as its comparison with the weighted sum, were conducted. The approach uses criteria that are important for the firms that participated to the survey. The results indicate that the ELECTRE method suggests a better ranking of the LSPs than the weighted sum, initially used in the case study. The proposed MCDM model can provide the guidelines and directions for the decision makers to effectively choose LSPs in the current competitive environment. In addition, this study fills a gap in the literature on LSPs selection problem, where MCDM methods are seldom used.

Highlights

Among the most significant mutations in the structuration mode of contemporary supply chains, the emergence, the consolidation of logistics service providers (LSPs) occupies a privileged place
For a long time limited to basic activities and techniques of transport and storage, which create little added value, “world-class” LSPs such as XPO Logistics, Kuehne+Nagel, Geodis and DHL Supply Chain are able to carry out operations relating them to real assemblers
The growing interest in logistics outsourcing is being facilitated by many other factors such as cost reduction thanks to the economies of scale generated by the LSPs or by a release of capital immobilized, a transformation of fixed costs into variable costs, allowing to concentrate its own resources on its production and on its own know-how, an increase in flexibility deriving from knowledge of markets and products, and privileged access to skills and professionalism of LSPs

Summary

Introduction

Among the most significant mutations in the structuration mode of contemporary supply chains, the emergence, the consolidation of logistics service providers (LSPs) occupies a privileged place. The rise of LSP results directly from the logistics outsourcing process driven by shippers for more than three decades This reality is well known and widely addressed in the literature (Cahill, 2007; Wallenburg, 2009; Fulconis et al, 2011; Saglietto & Cézanne, 2017). This research note is interested in the problem of LSP selection and in the application, to face it, of multi-criteria method ELECTRE. Such a choice is explained by the proven importance of supplier selection process theme in the industrial marketing literature since the 1970s (De Boer et al, 2001; Hsu et al, 2006), but without a real deepening of conclusions obtained is suggested at LSP selection level. The research note will end with a conclusion suggesting complementary research orientations in logistics and in supply chain management

The LSP Selection Problem

ELECTRE I: A

A Case Study in the French Context

Findings

Conclusion