Evaluation and selection of third-party logistics providers using an integrated multi-criteria decision making approach

Abstract

Today with business globalisation, the use of third-party logistics service providers (3PLSPs) is becoming prevalent. With the worldwide increasing use of 3PL services, the need for carefully evaluating and selecting the best 3PL is becoming much more critical. Supply chain managers always face the dilemma of selecting the right 3PL. The current study presents an efficient data envelopment analysis (DEA) and analytic hierarchy process (AHP)-based decision framework for 3PL evaluation and selection for an outsourcing arrangement. The analysis results demonstrate the effectiveness of the integrated DEA-AHP model as a simple and flexible decision analysis tool for 3PL evaluation and selection. Further, the application of decision framework has been demonstrated with a real case situation. Finally, the study discusses the implications of the results in a real-life context and concludes with the managerial insights identifying a few inherent limitations of the approach utilised.