Third-party Logistics Providers Research Articles

Customer orientation, relationship quality, and performance

Purpose Drawing on the customer value-based theory and the resource dependency theory, the purpose of this paper is to investigate how Chinese third-party logistics (3PL) providers leverage their customer orientation to improve operational performance directly in a stable environment or through building and maintaining high-quality 3PL relationships in an uncertain environment.

Moving Medicine, Moving Minds: Helping Developing Countries Overcome Barriers to Outsourcing Health Commodity Distribution to Boost Supply Chain Performance and Strengthen Health Systems.

Until recently, women in Senegal who went to their local public health clinics seeking a means to prevent pregnancy had about a 3 or 4 in 5 chance of leaving empty-handed.1 Implants, pills, injectables, and other contraceptives, while promoted as part of Senegal’s commitment to improving maternal health and access to family planning, were routinely out of stock. The problem, all too common in developing nations, was improper supply chain management, specifically inventory management and delivery. To address this, the government of Senegal embarked on a major overhaul of its supply chain for 9 different contraceptives (with 2 more added later). Within 6 months, stock-outs ceased almost entirely.1,2 Key in the success of Senegal’s reform was the government’s strong commitment to, and effective implementation of, hiring private third-party logistics providers (3PLs) to manage orders and handle deliveries from district warehouses to local health facilities, with clear benefits for service levels and costs. One analysis compared cost and service through the use of private operators versus those of government employees performing the same activity in a different region of the country. The analysis found that outsourcing decreased the proportion of facilities experiencing stock-outs from over 80% to less than 2%1 while reducing distribution costs by 36% annually.3 By outsourcing supply chain logistics to private operators, Senegal decreased the proportion of facilities experiencing stock-outs from over 80% to less than 2%.

Impact of external integration capabilities of third-party logistics providers on their financial performance

Purpose – Outsourcing by corporations is increasing the demand for complex services (such as customization) from third-party logistics providers (3PLs). Effective integration between 3PLs and their customers, known as the external integration of 3PLs, not only allows 3PLs to respond rapidly to shippers’ needs but also to increase customer satisfaction and the effective allocation of resources while increasing operational efficiency (such as by proposing comprehensive plans for future logistics services to meet shippers’ demands). The purpose of this paper is to investigate the causal relationships among the external integration capabilities, cost advantages, and the financial performance of 3PLs. Design/methodology/approach – A survey of 3PLs in Taiwan and China was performed. The research model was tested using a structural equation modeling technique along with the partial least square (PLS-SEM/PLS) approach. Findings – The results herein demonstrated a positive relationship between 3PLs’ external integration capabilities and resource efficiency. The results also suggested that cost competitiveness positively affected the financial performance of 3PLs. Although the external integration capabilities of 3PLs were not found to directly affect their financial performance, the results in this study indicated that external integration capabilities enable a firm to improve financial performance by capturing cost advantages. Originality/value – This study provides useful information about the effects of external integration capabilities on the financial performance of 3PLs in a bi-regional context. The sample in this study was drawn from the 3PL industry in Taiwan and China, enabling a comparative analysis of these two countries of similar cultural backgrounds but different degrees of development of their logistics industry and different related demands.

Production and interplant batch delivery scheduling: Dominance and cooperation

In this paper, we consider scheduling problems in a supply chain with two agents, a manufacturer and a third-party logistics (3PL) provider. The manufacturer has to process a set of jobs at the upstream stage and at the downstream stage. The 3PL provider is in charge of transportation of semi-finished products from the upstream stage to the downstream stage. The manufacturer's objective is to minimize makespan Cmax and the 3PL provider's objective is to minimize transportation cost TC. We investigate three scenarios, corresponding to different types of contract: (i) decentralized scenario with strict responsiveness; (ii) decentralized scenario with flexible responsiveness; (iii) centralized (cooperative) scenario. We provide exact polynomial-time algorithms or prove the NP-completeness of the scheduling problems in these three scenarios. Moreover, we evaluate and compare various scenarios through a large set of computational experiments. The results show that cooperation may bring significant benefits to both actors. The benefit for the 3PL provider is particularly high if compared to situations in which the manufacturing sequence is fixed. Also the manufacturer can benefit from relaxing the job-by-job responsiveness constraint in favor of an integrated schedule which appropriately accounts for the role of the 3PL provider.

A Multi-criteria Decision-making Approach for Prioritizing Reverse Logistics Adoption Barriers under Fuzzy Environment: Case of Indian Electronics Industry

Reverse logistics (RL) practices are gaining attention due to environmental and waste disposal issues, enforced law, rapidly changing technologies and corporate social concern. Reverse logistics has been seen as a part of sustainable development due to reduction in pollution by using a product again after the end of its life. The goal of this article is to evaluate and rank the barriers of RL implementation so that companies can design strategies to tackle them on a priority basis. This article proposes multi-criteria decision-making (MCDM) model based on fuzzy analytic hierarchy process (FAHP) to prioritize the barriers of RL adoption. The proposed approach is revealed by empirical case of Indian electronics industry. This proposed method considered fuzzy framework that can handle impreciseness and uncertainty easily. Totally, 38 barriers were identified through literature review and experts’ opinions. These barriers were classified into seven major criteria. The result of the study indicates that customer acuity about RL, lack of coordination/collaboration with third-party logistics (3PL) providers and uncertain quality and timing of return are the three most important barriers of RL adoption. Organizations should overcome these barriers on a priority basis for effective RL adoption. Finally, the robustness of the model is checked by sensitivity analysis.

A new model for more effective supplier selection and remanufacturing process in a closed-loop supply chain

Reverse logistics increasingly gained interest in the past decade. It consists of operations related to the reuse of products, such as the collection of products from customers and general processes such as repairing, reusing, and recycling. Collected products are assessed based on demands and other factors, such as product process. In this paper, a general closed loop supply chain (CLSC) is examined which includes manufacturer, remanufacturer, and third-party logistics provider (3PLs), which collects used products. The proposed model comprises two phases: in the first phase, a framework which specifies the priority of products and dedicates a supplier for collecting each product, based on fuzzy AHP factors with the intention of decreasing the risk of remanufacturing process. In the second phase, multi-objective integer linear programming is proposed for determining an optimized number of products which should be provided by suppliers, and also the modules and components of each product which should be remanufactured in the CLSC network. The objectives of this study are to minimize the waste and cost of the processes and maximize the profit in the CLSC network. The proposed model is solved numerically using the LINGO software and an optimal solution is presented.

Implementing environmental sustainability in logistics operations: a case study

PurposeThe purpose of the study is to develop an in-depth understanding of how supplier–buyer relationships, particularly in operational coordination, are affected when a company introduces an environmental sustainability target (CO2emissions reduction) into its supply chain operations. The investigation focuses on the joint activities of the logistics function of the company (buyer) and the third-party logistics providers (3PLs) (suppliers).Design/methodology/approachThis single-case study takes the perspective of a sustainability-conscious Danish company that outsources logistics services to 3PLs but maintains internal logistics as a boundary function. The value offering point/order penetration point (VOP/OPP) methodology is used.FindingsThe results showed that the introduction of sustainability led to the emergence of multiple decoupling points in both the demand and the supply chains. The logistics function therefore began to play the role of “integrator” across both the functions in the company and the organizations in the supply chain. The findings indicate the need to develop clear cross-functional and inter-organizational coordination mechanisms.Research limitations/implicationsThis is a single-case study in a Danish context.Practical implicationsThe study provides rich insights into managing the implementation of sustainability in supply chain operations, and it exemplifies how the VOP/OPP tool can be applied by 3PLs to develop sustainable offerings.Originality/valueThe current research on sustainable supply chain management takes into account the entire supply chain. In contrast, this study focuses on the logistics function. The VOP/OPP concept is used to capture the processes used in actual practice, and both the buyer and the supplier are considered potential co-producers of value.

An empirical study of third-party purchase: New Zealand users’ perspective

ABSTRACTThis article investigates the potential for third-party purchase (3PP) services offered by third-party logistics (3PL) providers, from the perspective of 3PL users, based on transaction cost analysis. We conducted a survey of New Zealand 3PL users and received 163 usable responses. Structural equation modelling was used to test the conceptual model. We found that 3PL users are more likely to adopt 3PP service when there is greater uncertainty. Asset specificity, frequency and transaction size do not have a significant relationship with 3PP service adoption. However, 3PP service is significantly related to the value-to-client and benefit-to-3PL provider. This study is pioneering research on 3PP service as a value-added service offered by 3PL providers from the perspective of 3PL users. The findings suggest that offering 3PP service will provide mutual benefits and value for both 3PL users and their 3PL providers.

Halal value creation: its role in adding value and enabling logistics service

The need to implement halal value creation into logistics and supply chains has been recognised recently. Yet, there is a lack of efforts to leverage resources and capabilities in contributing to the halal value creation for competitive advantage and subsequently firm performance. The purpose of this paper is to understand the halal value creation of current practices and its role in adding value and enabling logistics service. A structure interview of seven third-party logistics (3PL) providers is conducted to provide more precise perception about works by viewing with the lens prescribed by practitioners rather than reviews. The results draw the novel practices of halal value creation in logistics, that have not been revealed and further identifies five emerging resources of ‘resource-based halal logistics’. These create innovation capability (ability to launch successful halal goods/services) in logistics services, which are transformed into benefits of profits for 3PLs and value for customers.

A third-party logistics provider: To be or not to be a highly reliable organization

This case presents information on the emergence of third-party logistics (3PL) operators in El Salvador. Salvadoran Logistics Provider (SLP) is one of such 3PL. The case uses qualitative and quantitative information to discuss gaps as compared with world-class operators. It describes in detail all in-warehouse operations: receiving, put away, storage, order picking, and shipping; distribution (layout) according to product family zones; and different storage systems and put-away systems used by SLP. Students will have to choose one of several warehouse options presented in this case to carry out the logistics operations of the largest retailer in El Salvador during the Christmas season. However, decision must go beyond a mere numerical estimation to include analysis of more quantitative and strategic factors. It is not a coincidence that since its inception, SLP has deployed the framework of Highly Reliable Organizations, to manage the risk and complexity of its customers' supply chains.

Third-party purchase: an empirical study of Chinese third-party logistics users

Purpose – Third-party purchase (3PP) is a new value-added service offered by third-party logistics (3PL) providers. The purpose of this paper is to examine the perception of 3PP service from the perspective of 3PL users. Design/methodology/approach – The authors conducted a survey of Chinese 3PL users and received 242 usable responses. The authors then employed structural equation modeling to test the conceptual model. Findings – The authors found that the likelihood of 3PL users using a 3PP service is significantly associated with uncertainty, but not with asset specificity or frequency or transaction size. 3PP usage is significantly associated with value-to-client. Originality/value – This research is the first survey study of 3PP as a value-added service offered by 3PL providers, from the perspective of 3PL users. The findings suggest that 3PL users are very positive about the value of 3PP service. The 3PP market is still in its infancy but it has great potential, especially for commodity items that have less demand uncertainty.

Third-party logistics in construction: the case of a large hospital project

The construction supply chain is of temporary nature and complex, with many interactions between multiple actors in different construction projects. This challenging context typically leads to relatively higher costs and lower productivity, compared to other industries. Supply chain management (SCM) has been put forward as a mean to better handle this challenging context. As a part of SCM initiatives some construction industry stakeholders have turned to third-party logistics (TPL) providers, especially in large construction projects. The use of TPL providers is a new, and under-investigated, phenomenon in the construction industry. The main purpose of this study is thus to explore the use of a TPL provider in a large construction project and to analyse its resulting effects. Driving forces and possible concerns for implementing TPL are identified and the possibility for TPL to be a facilitator for implementing SCM in construction is investigated. The research is based on a literature review and an explorative case study of a large hospital project in Sweden, where the client and the main contractor have initiated the use of a TPL provider to coordinate sourcing and materials handling activities on site. The results show positive effects on establishing an effective interface between the construction site and the supply chain. The results also show that a TPL solution facilitates an increase in productive work at the construction site itself, a reduction of costs and an increased utilisation of site assets. On the downside, the study also shows a lack of SCM knowledge amongst the involved actors in the project, hindering them to reap the full potential of TPL.

A conceptual analytic network model for evaluating and selecting third-party reverse logistics providers

Although the success of forward logistics depends on the performance of reverse logistics, some manufacturing companies are not able to manage their reverse logistics effectively and thus delegate this important process to third-party reverse logistics providers (3PRLPs). In such cases, the decision to evaluate and select an appropriate 3PRLP becomes highly significant. In this paper, we use the analytic network process (ANP) and propose an analytical framework to systematically model the complex nature of interactions among the selection factors. In this model, the factors determining the evaluation of 3PRLPs are initially valued using Likert scale questionnaires. Then, a screening process is implemented using the average alternative method. Finally, the factors selected are structured in a network framework following the ANP. We present a case study to demonstrate the applicability of the proposed framework and exhibit the efficacy of the procedures and algorithms. The results have important managerial implications for production managers and illustrate that, in our case study, quality is the most important factor when selecting a 3PRLP.

Integration of DEMATEL, ANP and DEA methods for third party logistics providers’ selection

Article history: Received October 28, 2015 Received in revised format November 28, 2015 Accepted March 22, 2016 Available online March 24, 2016 In a competitive environment many companies usually outsource their logistics functions to the Third Party Logistics (TPL) providers to focus on their core businesses. However, the selection of proper TPL provider is not an easy task because of conflicting quantitative and qualitative criteria. This study presents an integrated model based on three well-known methods Decision Making Trial and Evaluation Laboratory (DEMATEL), Analytical Network Process (ANP) and Data Envelopment Analysis (DEA) for the evaluation and selection of TPL providers. DEMATEL computes the effects between selection criteria while ANP derives the weights of each criterion related with TPL providers’ selection problem. Finally DEA presents a mathematical model for ranking TPL providers alternatives with respect to various criteria. The application of integrated model is demonstrated with a case study. The novelty of this study comes from the fact that there is no research in the literature integrating DEMATEL, ANP and DEA for the TPL selection problems. © 2016 Growing Science Ltd. All rights reserved.

Interpretive structural modelling to assess third party logistics providers

Third-party logistics (3PL) providers offer logistics outsourcing to firms so that companies can focus on their core competencies. Because the supply chain has such a large impact on a firm's cost and customer service, it is important to ensure that the selected 3PL understands and is capable of providing the services needed by a firm. This paper explores the use of interpretive structural modelling (ISM) in evaluating the selection of a 3PL. Based on expert opinions, the participants rated the relationships between 12 main criteria for 3PL selection and then ISM was applied. The results indicated that cost has the most dependence and least driving power, whereas financial stability has the most driving power and least dependence. Cultural alignment showed weak driving power and weak dependence. Dependent attributes which had weak driving power and strong dependence were cost, reputation, and quality. Locations, collaboration, range of services, and experience had attributes which have strong driving power and strong dependence. And finally, financial stability, flexibility, information technology, and metrics were found to have strong driving power and weak dependence.

A Study on the Pricing Model for 3PL of Inventory Financing

Being a new research area, logistics finance solves the contradiction between banks and SMEs (small and medium enterprises) about financing; it is beneficial to financial market and logistics market development too. As a service innovation, it unites the interests of bank, 3PL (third-party logistics) providers, and SMEs and integrates material, finance, and information. Logistics finance has been developed in recent years in China, but the research is not enough on 3PL enterprises. On the background of that, the paper makes a research in the field of logistics finance with different pricing methods, based on the perspective of third-party logistics enterprises. This paper proposes a pricing model of inventory financing that can maximize the cash flow of 3PL enterprise, when the default rate of the small- and medium-sized enterprise is affected by the pledge price. And then this paper studies the model of inventory financing that can maximize the cash flow of enterprise under the condition of the existence of cash discount rate. The core factors affecting the loan-to-value ratio were established through analysis of mathematical model. We also consider the loan-to-value ratio of cash discount rate in the model. Results show that in the pledge of the known function and cash discount the price change can be calculated to meet enterprise cash flow lending rates and get biggest loan-to-value ratio.

Identifying profitable clientele using the analytical hierarchy process

This paper presents an analytical hierarchy process (AHP)-based quantitative framework to help a logistics provider rank prospective partner original equipment manufacturer (OEM) companies with the view of optimising its business development approach in the fast moving consumer goods (FMCG) sector. Key decision making factors are identified using primary and secondary research. A total score is calculated for each OEM company and this ranking is used to identify which OEMs a third-party logistics (3PL) provider should align with. 3PL providers can use this framework to prioritise their business developments efforts and to focus on the right clientele to achieve profitable and sustainable growth. The value of this paper lies in identifying the critical decision making factors that drive the business and its logistics functions.

Coordinating a Service Supply Chain under Arms Offset Program’s Intervention by Performance-Based Contracting

This paper investigates a support service supply chain for coordinating with a local third-party logistics provider by arms offset program’s intervention and develops a performance-based contracting framework for the coordinating problem, which remains scarce in the literatures. The performance-based contracting framework evaluates payments and profits for the support service by a game-theoretical approach with principal-agent model. We prove that the proposed framework is an effective tool in acquiring the balance between maximum profit and minimum payment for both parties in the coordinating problem without moral hazard issue. A numerical study consolidates the formulated schemes as contracting preference for both parties’ decision with a higher profit margin at a lower customer’s payment.

Appraisement and benchmarking of third-party logistic service provider by exploration of risk-based approach

AbstractIn the present era, Reverse Logistics Support has monitored as a momentous realm, where stuffs are transferred from point of consumption to origin. The companies who provide the logistic equipments, i.e. Truck, Joseph Cyril Bomford, and Shipment, etc. to its partner’s firms called Third-Party Logistics (3PL) service provider. Today, the feasible 3PL service provider evaluation-opt problem is yet an amorous dilemma. The appraisement and benchmarking of logistics service providers in extent of index; allied risk-based indices and their interrelated metrics; outlooked as a great tool for each international firm, in order that firm could obtain their core goals. The novelty of manuscript is that here, a hairy-based approach has been integrated and then implemented upon a novel developed multi hierarchical third-party logistics (3PL) service providers appraisement index in purpose to umpire the 3PL provider for their strong and ill’s core indices. Moreover, the overall score (Si) system has also been c...

Are We in This Together? The Dynamics and Performance Implications of Dependence Asymmetry and Joint Dependence in Logistics Outsourcing Relationships

AbstractThis study investigates the mechanisms through which two dimensions of interorganizational interdependence—dependence asymmetry and joint dependence—impact a customer's key attitudinal and behavioral dimensions in the relationship with a third-party logistics provider (3PL), as well as associated performance outcomes. Results of a survey with customers of a large 3PL in Brazil indicate that customers embedded in relationships with high levels of joint dependence exhibit higher levels of long-term orientation toward and operational information exchange with the 3PL, which positively impact their logistics outsourcing performance. In addition, it is found that the direction of the customer's dependence asymmetry—advantage or disadvantage—in the relationship with the 3PL enhances or hinders the effects of joint dependence. Specifically, while a customer's dependence disadvantage positively impacts its long-term orientation, a customer's dependence advantage negatively impacts its long-term orientation, which can be detrimental to its logistics outsourcing performance.