Benchmarking: An International Journal

Benchmarking the interactions among barriers in third-party logistics implementation:

An ISM approach
Ali Diabat Abdallah Khreishah Govindan Kannan Vinay Panikar Angappa Gunasekaran

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Benchmarking: An International Journal, Vol. 20 Iss 6 pp. 805 - 824
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Benchmarking the interactions

among barriers in third-party
logistics implementation
An ISM approach

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Ali Diabat
Engineering Systems and Management,
Masdar Institute of Science and Technology,
Abu Dhabi, United Arab Emirates

Interactions
among barriers
in TPL
805
Received 17 June 2011
Revised 29 October 2011
26 January 2012
3 February 2012
Accepted 3 February 2012

Abdallah Khreishah
Department of Computer and Information Sciences,
Temple University, Philadelphia, Pennsylvania, USA

Govindan Kannan
Department of Business and Economics,
University of Southern Denmark, Odense, Denmark

Vinay Panikar
Department of Mechanical Engineering,
National Institute of Technology, Calicut, India, and

Angappa Gunasekaran
Department of Decision and Information Sciences,
Charlton College of Business, University of Massachusetts Dartmouth,
North Dartmouth, Massachusetts, USA
Abstract
Purpose The purpose of this paper is to analyze the interaction among some of the major barriers
that may hinder the implementation of third-party logistics (TPL) in manufacturing industries.
Design/methodology/approach This paper uses an interpretive structural modeling (ISM)
methodology to analyze the interactions among the barriers.
Findings It is beneficial for the management of any firm to be aware of significant barriers and to
diagnose those that could be integral to the organizations future survival. Many works have focused
on identifying barriers for TPL implementation, but a model for such barriers is lacking. This paper
attempts to develop a model for the barriers using an ISM methodology and analyzes the mutual
interactions among the barriers. The model differentiates between the barriers so that driving barriers,
which can intensify other barriers, and dependent barriers are identified separately.
Originality/value In this research, eight barriers are considered. Interactions between the barriers
are evaluated with the help of the ISM matrix. Of the eight barriers, three barriers, including the lack of
application and knowledge of advanced information technology, congested roadways and ports, and
fear of employees of the firm, demonstrate both strong driving power and strong dependence power, as
illustrated in the MICMAC analysis.
Keywords Logistics, Benchmarking, ISM, Supply chain
Paper type Case study

Benchmarking: An International
Journal
Vol. 20 No. 6, 2013
pp. 805-824
q Emerald Group Publishing Limited
1463-5771
DOI 10.1108/BIJ-04-2013-0039

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806

1. Introduction
During the last two decades, globalization has emerged as a major force shaping
business strategies, leading firms to develop products designed for a global market and
to source components globally (Cooper, 1993). Globalization of corporations and ensuing
competitive pressures have placed increasing demands on organizations to deliver
customer-adapted products all over the world quickly and on time (Sohail and
Al-Abdali, 2005). Logistics has been called the last frontier, and improvements in
logistics are key factors in providing good customer service in terms of delivery,
punctuality, timeliness, accuracy, and maintaining a competitive advantage
(Perego et al., 2011). Because a companys competitive advantage comes as much
from the delivery process as from the product itself (Muller, 1991b), logistics has been
upgraded from its traditional back-room function to a strategic boardroom function
(Foster, 1994). Accordingly, the management of logistics functions in modern
enterprises involves decision making for the complete distribution of goods and
provides services to maximize value and to minimize cost.
The concept of utilizing third-party logistics (TPL) is that a single professional
service provider will manage the logistics functions of a company, including inventory
management, warehouse operations, physical distribution of goods, shipment
consolidation, information systems, product returns, etc. The TPL concept
originated in the developed economies of Europe and America. The main objective
of involving a logistics provider is to relieve industries from huge logistics costs, more
focus on core activities, better transportation solutions, customized services, reducing
inventory, penetrating markets, use of sophisticated technology, and better equipped
logistics services. According to Christopher (1998), the increasing importance on core
competencies opened up many business opportunities for logistics service providers.
Cho et al. (2008) says that the use of TPL will increase a firms logistics capability and
enhance its performance by leveraging the third-partys expertise. Similarly, the
involvement of logistics providers in a supply chain can minimize cost and delivery
time (UNCTAD, 2006). Thus, Lai et al. (2004) consider logistics providers to act as
intermediaries in a supply chain that enable the organized movement of goods from a
point of origin to a point of destination (i.e. from shippers to consignees).
Various authors have used different terms like logistics alliance (Bowersox and
Daughtery, 1990), contract logistics (Kearney, 1995), contract distribution (Wilson and
Fathers, 1989) and TPL (Lieb and Randall, 1996). As per Cho et al. (2008), outsourcing,
TPL, and contract logistics generally have the same meaning. Similarly, many
academicians and researchers have defined logistics providers in several ways.
Bradley (1994a) says at least two services that are bundled and combined, with a
single point of accountability using distinct information systems that is dedicated to
and integral to the logistics process. Lambert et al. (1998) defines supportive members
as companies that simply provide resources, knowledge, utilities or assets for the
primary members of the supply chain. Bradley (1994b) states that there is no
difference between outsourcing logistical functions and any other procurement
process. As per Shapiro and Heskett (1985), the role of a TPL provider is like an agent
or middleman one who enters into a temporary or longer term relationship with some
other entity in the logistics channel. Lalonde and Cooper (1989) describe contract
logistics as a process whereby the shipper and the third-party/parties enter into an
agreement for specific services at specific costs over some identifiable time horizon.

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In this work, a well-known manufacturing company in Southern India is considered.

This company is planning to use the services of TPL providers. On the basis of the
relevant available literature and the recommendations of an expert team comprised of
technical and managerial experts of the manufacturing company and academicians,
eight barriers have been identified. Studying and analyzing the interactions between
the barriers, and applying the interpretive structural modeling (ISM) methodology, this
paper seeks to establish the following contributions:
.
First, an ISM-based hierarchical model is built.
This model provides the significance of the barriers in adopting TPL in the
manufacturing industry. Based on the significance, policymakers can prepare
the company to overcome or to minimize the risk from these barriers.
.
Second, with the ISM-based model, an impact matrix cross-reference
multiplication applied to a classification (MICMAC) analysis is carried out.
This analysis shows that there are no identified autonomous barriers. The
absence of autonomous barriers in this case study indicates that all identified
barriers have a significant role in the implementation of TPL providers.
Thus, the ISM-based model and the MICMAC analysis may be considered significant
contributions from this research work.
The rest of the paper is organized as follows. Section 2 presents the review of the
existing relevant literature. Section 3 provides the problem description. Section 4
explains the solution methodology. Section 5 deals with the application of the proposed
methodology in a case company. Section 6 presents results and discussion. Section 7
discusses the managerial implications. The paper concludes in Section 8.
2. Literature survey
Christopher (1992) defines logistics management as the supply chain process that
plans, implements, and controls the efficient, effective flow and storage of goods,
services and related information from the point of origin to the point of consumption in
order to meet the customers requirements. Vinay et al. (2007) recognize the tremendous
potential of logistics and its major strategic role in companies with increased global
competition to gain a competitive advantage. Because of this intense competition
among companies, logistics outsourcing has been rapidly expanding so as to achieve
competitive advantage and cost savings (Rabinovich et al., 1999).
A TPL provider is an external company hired to perform some or all of the logistics
activities that have traditionally been performed within an organization (Percin, 2009;
Halldorsson and Skjtt-Larsen, 2004; Bhatnagar et al., 1999; Coyle et al., 1996; Lieb et al.,
1993). A TPL provider is usually associated with the offering of multiple, bundled
services, rather than just isolated transport or warehousing functions (Leahy et al., 1995).
Many researchers note the involvement of TPL providers in various parts of the world.
Virum (1993) considers the development of TPL in Europe. In the European context,
studies on TPL have been done by researchers such as Lieb et al. (1993), Gooley (1997),
van Laarhoven et al. (2000), Van Hoek (2001), Hertz and Alfredsson (2003) and Wilding
and Juriado (2004). The usage of TPL in the USA has been discussed by Bardi and
Tracey (1991), Lieb and Randall (1996), Daugherty et al. (1996), Rabinovich et al. (1999),
Boyson et al. (1999), Murphy and Poist (2000) and Knemeyer et al. (2003). Sahay and
Mohan (2006) have done a commendable job in the Indian context. TPL in Mexico is

Interactions
among barriers
in TPL
807

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808

analyzed by Arroyo et al. (2006). Sohail and Al-Abdali (2005) study the usage of TPL in
Saudi Arabia. Sohail et al. (2004) gives the description about the TPL in Ghana.
Comparative analysis on the TPL services in manufacturing firms of Singapore and
Malaysia has been done by Sohail et al. (2006). Min and Joo (2009) propose a data
envelopment analysis to measure the financial efficiency of leading TPLs in the USA.
Percin (2009) proposes a two-phase analytical hierarchy process (AHP) and technique
for order preference by similarity to ideal solution (TOPSIS) approach to evaluate the
TPL providers in a Turkish automotive supplier company.
Kannan and Murugesan (2011) apply the fuzzy extent analysis to select the best
third-party reverse logistics provider for the battery industry. Rajesh et al. (2011)
develop a four-stage model to implement knowledge management solution for TPL
service providers. Studies on the strategic postures of TPL providers in Hong Kong
have been carried out by Yeung et al. (2006) and a similar study in Singapore by Sum
and Teo (1999). This work was extended to the mainland of China by Wang et al.
(2010). The development of the TPL industry in the USA, and the several economic,
regulatory, and technological trends driving the development is described by Sheffi
(1990). The study about the usage of TPL services by large Australian firms
(Dapiran et al., 1996) reveals that a number of operating units at many of the largest
Australian firms are utilizing the services of contract logistics providers. The various
studies and research work done about the TPL have been tabulated in Table I.
3. Problem description
Despite the fact that TPL industry is experiencing a rapid growth, it faces certain
barriers in implementation (Razzaque and Sheng, 1998). In this work, the company
Sl no.
1
2
3

4
5
6
7
8

Table I.
Research work done
in TPL

9
10
11
12
13

Authors
Virum (1993)

Geographical focus of the work

TPL development in Europe with case

studies of three Dutch and two
Swedish providers
Lieb et al. (1993), Gooley (1997), van Laarhoven et al. TPL in the European context
(2000), Van Hoek (2001), Hertz and Alfredsson
(2003), Parker (1999), Wilding and Juriado (2004)
Bardi and Tracey (1991), Lieb and Randall (1996), TPL in the USA
Daugherty et al. (1996), Rabinovich et al. (1999),
Boyson et al. (1999), Murphy and Poist (2000), Sheffi
(1990), Knemeyer et al. (2003)
Sahay and Mohan (2006)
TPL practices in India
Sohail and Al-Abdali (2005)
TPL in Saudi Arabia
Sohail et al. (2006)
TPL services in manufacturing firms
of Singapore and Malaysia
Arroyo et al. (2006)
TPL in Mexico
Yeung et al. (2006)
Strategic postures of TPL providers in
Hong Kong
Sum and Teo (1999)
Singapore
Wang et al. (2010)
China
Dapiran et al. (1996)
Australia
Aktas and Ulengin (2005)
Turkey
Sohail et al. (2004)
Ghana

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chosen is a well-known manufacturing company in the Southern part of India. The

company wants to adopt the TPL system in order to triumph over the intense
competition of those seeking the same business. After a literature survey and a
discussion with the expert team, eight barriers to the implementation of TPL have been
identified. These barriers are explained as follows:

Interactions
among barriers
in TPL

(1) Loss of control to third-party providers

When some of the activities are contractually outsourced to a third-party, the company
(client) loses direct control over that activity. Understandably, that loss of control to
third-party providers appears to be the most commonly cited reservation that inhibits
firms/managers from using contract logistics (Byrne, 1993; Cooke, 1994; Lynch et al.,
1994). However, in reality, firms do not totally relinquish their control as outsourcing
does not absolve firms of the need to monitor their vendors (Bowman, 1994). To some
extent, this loss of control can be avoided by better coordination with the TPL
providers. Hence, the barrier of loss of control to TPL providers is considered to be a
prominent barrier in the implementation of the TPL.

809

(2) Lack of application and knowledge of advanced information technology

Chiu (1995) has highlighted the role of information technology (IT) in improving the
efficiency of the logistics value chain. The information and reporting systems for any
management systems is essential, as they drive the decisions based on the data collected
(Gunasekaran and Ngai, 2003). The application of IT facilitates the integration of
activities in logistics systems (Calza and Passaro, 1997). The web platform even allows a
company to overcome traditional logistics problems (Gunasekaran and Ngai, 2003).
According to van Laarhoven et al. (2000), the availability of state of the art IT is usually
referred to as one of the drivers of logistics outsourcing for companies operating in
Europe. Similarly, Byrne (1993) states that the lack of advanced IT linking the
manufacturer, the carrier, the warehouse, and the customer operations is a hindrance to
contract logistics management. Thus, if the application and knowledge of advanced IT
is lacking for a TPL provider, then the expected benefits cannot be derived by the firm.
(3) Lack of qualification for employees in TPL
According to Gibson and Cook (2001), three consecutive annual surveys of chief
executive officers (CEOs) perceptions, identified company employees/expertise as the
most important factor that gives their companies a competitive advantage. The CEOs
have identified finding qualified people as the most significant problem faced by TPL
firms (Lieb and Randall, 1996). So the lack of qualified employees in a TPL provider is a
barrier for a company to utilize such a vendor. The literature review identifies three
factors that contribute to the lack of qualified employees in TPL. First, the increased
demand for entry level and experienced logistics managers is cited by several
researchers (Daugherty et al., 2000; Lieb and Peluso, 1999; Lalonde and Pohlen, 1999;
Lalonde and Masters, 1998). Second, large TPL firms focus on sales revenue (Lieb and
Peluso, 1999), so when there is an increase in business, resources may be diverted to the
management level. Third, TPL relationships with customers are contractual, typically
spanning one-three years (Lieb and Randall, 1996). TPL providers are likely to wait until
a contract is signed before seeking the human resources required to provide the
specialized services.

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810

(4) Environmental issues

Environmental issues are another important barrier to consider, one among many that
must be made before outsourcing (Leenders and Nollet, 1984). Environmental issues in
the supply chain have been explored using a variety of related practices, such as green
supply, environmental purchasing, product stewardship, life-cycle analysis, and
reverse logistics (Zsidisin and Siferd, 2001). Many logistics activities will be affected by
the growing need to conduct business in an environmentally sensitive way. New forms
of packaging will have to be developed that offer acceptable levels of protection while
either being recyclable or biodegradable. Transportation will have to be accomplished
in ways that reduce energy consumption and minimize pollution. Reverse logistics
channels will have to be established to return greater numbers of defective and
worn-out products to some designated point for recycling. The use of
chlorofluorocarbons (CFCs) in air conditioned and refrigerated freight transport
vehicles and cold storages is often attacked by environmentalists as a leading cause of
the destruction of the protective ozone layer in the earths atmosphere.
(5) Lack of sufficient warehousing and specialized storage facilities beyond major cities
Another barrier is the limitation of infrastructural facilities like sufficient warehousing
and specialized storage facilities beyond major cities, especially in a country like India.
The end result of this barrier in implementing TPL service providers is that it will
restrain from offering warehousing services across the country (Manda, 2006).
European countries publicly protested when their governments sought to expand
public warehouses at local, regional, and national levels.
(6) Congested roadways and ports
Congested roadways and ports result in significant delays in the movement of goods
and affect the performance of TPL service providers (Manda, 2006). The antiquated
transportation resources will definitely affect the responsiveness of logistics firms. The
port facilities, road systems, railroad service, and airports in many countries are
generally not sufficient to keep up with contemporary demands.
(7) Complicated tax structure, deep-rooted corruption, and high bureaucratic control
The complicated tax structure, deep-rooted corruption, and high bureaucratic control is
another barrier faced by TPL service providers (Manda, 2006) in providing the best of
logistics solutions for their clients. However, despite the existence of challenges,
several factors are driving the growth of TPL market in India.
(8) Fear of retrenchment by employees of the firms
Similarly, another barrier to TPL implementation is the fear of retrenchment for a
companys employees. When a company chooses an outsourcing vendor, their logistics
employees become apprehensive about their personal job security (Cooke, 1998; Muller,
1991a). The fear of retrenchment due to outsourcing may prompt current employees to
sabotage the process (Maltz, 1995).
Eight barriers have been identified. The interactions between the barriers are to be
studied using the methodology of ISM. An ISM-based hierarchical model is to be
developed.

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4. ISM methodology
ISM methodology is primarily intended as a group learning process, but can also be
used individually (Kannan and Haq, 2006). Sage (1977) has pointed that the ISM
methodology transforms unclear and poorly articulated models of systems into visible
and well-defined models. When we have a complex issue and a systematic and logical
thinking approach is needed, then ISM is used. This provides order and direction for
numerous complex relationships among the variables (Sage, 1977; Singh et al., 2003;
Jharkharia and Shankar, 2004). Saxena et al. (1992) use ISM methodology for modeling
the variables of energy conservation in the Indian cement industry. In this work, the
key variables are identified using both direct and indirect interrelationships.
Sharma et al. (1995) apply ISM methodology to achieve the future objective of waste
management in India. Kannan and Haq (2006) propose ISM methodology for analyzing
the interactions of criteria and sub-criteria for the supplier selection for the original
equipment manufacturing company which works in a build-to-order supply chain
environment. Diabat and Kannan (2011) develop an ISM model of the drivers affecting
the implementation of green supply chain management. Diabat et al. (2011) proposes an
ISM model for risk supply chain management in food industry.
This methodology is not free from drawbacks. The main demerit of the
methodology is that of the bias of the person who is judging the variables. The relation
among the variables always depends on that persons knowledge and familiarity with
the firm, its operations, and its industry (Kannan and Haq, 2006). This bias will affect
the final build model. Similarly, ISM does not give any weights associated with the
variables. The aim of this research is to identify interactions of the barriers in
implementing a TPL by a manufacturing company. This work differs from the
previous work done by Barve et al. (2007) in terms of the barriers identification in the
study for our case company and its implementation environment.
The various steps involved in the ISM methodology are given below (Kannan and
Haq, 2006):
.
Step 1. The barriers in the implementation of TPL in a manufacturing company
are listed.
.
Step 2. A contextual relationship is established for each barrier with respect to
the other barriers.
.
Step 3. Based on the contextual relationship between the identified barriers, a
structural self-interaction matrix (SSIM) is developed. This matrix indicates the
pair-wise relationships between the barriers under consideration.
.
Step 4. A reachability matrix is formed based on the SSIM, and the matrix is
checked for transitivity. The transitivity rule states that if a variable A is
related to B and B is related to C, then A is necessarily related to C.
.
Step 5. The reachability matrix obtained in Step 4 is partitioned into different
hierarchical levels.
.
Step 6. Based on the relationships in the reachability matrix, a digraph is drawn
with direction. The transitive links are removed from the digraph.
.
Step 7. The resultant digraph is converted into an ISM by replacing variable
nodes with statements.

Interactions
among barriers
in TPL
811

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Step 8. The ISM model developed in Step 7 is reviewed for conceptual

inconsistency. If necessary, modifications are made.

The flow chart for the ISM methodology is shown in Figure 1.

812

5. Application to the case illustration

In this section, the above illustrated methodology of ISM is applied to the case
company to model the various barriers for the TPL implementation.

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5.1 Overview of the company

The case company studied in this work is a manufacturing company in the Southern
part of India. The management of the case company wants to outsource some of its
List of barriers related to adoption of third
party logistics in a manufacturing industry

Literature review

Establish contextual relationship between

variables i and j
Develop Reachability matrix
Develop a Structural Self-Interaction
Matrix (SSIM)

Partition the Reachability Matrix into

different levels
Develop the Reachability Matrix in its
conical form

Develop digraph

Remove transitivity from the digraph

Yes
Is there any
conceptual
inconsistency?

Replace variables nodes with

relationship statements

No

Figure 1.
Flow chart for the
ISM methodology

Represent relationship statement into model for the

barriers related to adoption of third party logistics in a
manufacturing industry

Source: Modified from Kannan et al. (2009)

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logistics activities to a TPL provider, so that they can widen their market and enhance
their customer service. This work will enable the management of the company to
analyze the interactions among the barriers while implementing TPL system in the firm.
As a first step, the process of implementation of TPL in the case company has been
discussed with the expert team. Eight barriers have been identified after several rounds
of discussion and supported by existing available literature. The identified barriers,
explained above, are tabulated in Table II.
After the analysis of interactions among the barriers, an ISM-based model is
proposed following the steps discussed in Section 4.

Interactions
among barriers
in TPL
813

5.2 Structural self-interaction matrix

Based on the contextual relationship between a pair of barriers, the relationship
between those two barriers i and j and the associated direction of this relation is
discussed. The four symbols given below are used to denote the associated direction of
relationship between any two barriers (i and j):
V

barrier i will help to alleviate barrier j.

barrier j will be alleviated by barrier i.

barrier i and j will help each other to be alleviated.

barrier i and j are unrelated.

The SSIM for the barriers is provided in Table III.

As the SSIM for barriers indicates (Table III), it is understood that barrier 3, the lack
of qualification for employees in TPL providers, alleviates barrier 8, the fear of
employees of the firm, and vice versa. Hence, the symbol X is denoted at the
intersection between barriers 3 and 8. Barrier 6, congested roadways and ports, will
alleviate barrier 7, the complicated tax structure, corruption and bureaucratic control.
But in this case, the vice versa is not valid. Hence, the symbol V is denoted at the
intersection between barriers 6 and 7. If we compare barrier 1, loss of control to
third-party, and barrier 8, fear of employees of the firm, there is no relation between
them. Hence, the symbol O is denoted at the intersection between barriers 1 and 8. The
relation between barrier 1, loss of control to TPL providers and barrier 6, congested
roadways and ports, is that barrier 6 complicates barrier 1, but the vice versa will not
happen. The relationships are made for the remaining barriers in Table III. Each
column in Table III is represented with the serial number of the corresponding barrier.
Sl no.

Barrier

1
2
3
4
5
6
7
8

Loss of control to third-party providers

Lack of application and knowledge of advanced information technology
Lack of qualification for employees in TPL
Environmental issues
Lack of sufficient warehousing and specialized storage facilities beyond major cities
Congested roadways and ports
Complicated tax structure, deep-rooted corruption, and high bureaucratic control
Fear of retrenchment by employees of the firms

Table II.
Selected barriers for the
implementation of TPL

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Table III.
SSIM for barriers

1. Loss of control to TPL providers

2. Lack of application and knowledge of advanced information
technology
3. Lack of qualification for employees in TPL
4. Environmental issues
5. Lack of sufficient warehousing and specialized storage facilities
beyond major cities
6. Congested roadways and ports
7. Complicated tax structure, corruption, and bureaucratic control
8. Fear of retrenchment by employees of the firm

O
X
O

O
O
V

V
V
A

V
O
A

V
V

O
O
O

X
V

5.3 Reachability matrix

The SSIM is transformed into a binary matrix by replacing the symbols V, A, X, O in
the SSIM by 1 and 0 as per the rule of substitution given below. This is called as initial
reachability matrix:
.
If the (i, j) entry in the SSIM is V, then the (i, j) entry in the reachability matrix
becomes 1 and the ( j, i ) entry becomes 0.
.
If the (i, j) entry in the SSIM is A, then the (i, j) entry in the reachability matrix
becomes 0 and the ( j, i ) entry becomes 1.
.
If the (i, j) entry in the SSIM is X, then the (i, j) entry in the reachability matrix
becomes 1 and the ( j, i ) entry also becomes 1.
.
If the (i, j) entry in the SSIM is O, then the (i, j) entry in the reachability matrix
becomes 0 and the ( j, i ) entry also becomes 0.
Following these rules, initial reachability matrix for barriers is formed as shown in
Table IV.
The final reachability matrix for the criteria is obtained by incorporating the
transitivity rule as discussed in Section 4. The final reachability matrix for barriers is
reached as shown in Table V.

Driver
1 2 3 4 5 6 7 8 power

Table IV.
Initial reachability matrix
for barriers

1. Loss of control to TPL providers

2. Lack of application and knowledge of advanced information
technology
3. Lack of qualification for employees in TPL
4. Environmental issues
5. Lack of sufficient warehousing and specialized storage facilities
beyond major cities
6. Congested roadways and ports
7. Complicated tax structure, corruption, and bureaucratic control
8. Fear of retrenchment by employees of the firm
Dependence power

1 0 0 0 0 0 0 0

1 1 0 1 1 1 0 0
1 1 1 1 0 1 0 1
0 0 0 1 0 0 1 0

5
6
2

1
1
0
0
5

4
5.
2
2

0
0
0
0
2

0
0
0
1
2

1
1
0
0
5

1
1
1
0
4

0
1
0
0
3

1
1
1
0
4

0
0
0
1
2

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Driver
1 2 3 4 5 6 7 8 power
1. Loss of control to TPL providers
2. Lack of application and knowledge of advanced information
technology
3. Lack of qualification for employees in TPL
4. Environmental issues
5. Lack of sufficient warehousing and specialized storage facilities
beyond major cities
6. Congested roadways and ports
7. Complicated tax structure, corruption, and bureaucratic control
8. Fear of retrenchment by employees of the firm
Dependence power

1 0 0 0 0 0 0 0

1 1 0 1 1 1 1 0
1 1 1 1 1 1 1 1
0 0 0 1 1 0 1 0

6
8
3

1
1
1
1
7

4
5
4
6

0
0
0
1
3

0
0
0
1
2

1
1
1
1
7

1
1
1
0
6

0
1
0
1
4

1
1
1
0
6

0
0
0
1
2

5.4 Level partitions

The reachability and antecedent set for each barrier is found from the final reachability
matrix. The reachability set for a barrier consists of the barrier itself and the other barriers
it may help to alleviate. The antecedent set consists of the barrier itself and the other
barriers, which may help in alleviating the barrier itself. After finding both sets, the
intersections between these sets are derived for the barriers. If it happens that the
reachability set and the intersection set are the same for any barrier, then that barrier is
given the top-level in the ISM hierarchy (Kannan and Haq, 2006) which would not help
alleviate any other barrier above their own level. This is the end of iteration 1 as shown in
Table VI(a).
From Table VI(a), it is understood that the barrier due to loss of control to TPL
provider and the environmental issues is at Level I. Thus, it would be positioned at the
top of the ISM model. After the identification of the top-level element, it is discarded
from the other remaining variables, and iteration 2 is done with the same procedure
above. This iteration is continued until the levels of each barrier are found out.
In the second iteration as shown in Table VI(b), the lack of sufficient warehouses and
specialized storages beyond major cities and the barrier due to complicated tax structure,
corruption and bureaucratic control is at Level II. Similarly, the congested roadways and
ports at Level III, lack of application and knowledge of advanced information technology
at Level IV and finally lack of qualification for employees in TPL provider and fear of
employees of the firm at Level V. The remaining iterations are shown in Table VI(c)-(e).
5.5 ISM model
From the level partitions (Table VI(a)-(e)) the ISM model is built as shown in Figure 2.
It is observed from Figure 2, that the barriers due to the lack of qualification for
employees in TPL provider and fear of employees of the firm at Level V are very
significant barriers in adopting TPL in manufacturing industry as they become the
base of the ISM hierarchy (Table VII).
5.6 MICMAC analysis
With the help of the ISM model developed, a MICMAC analysis is done. Based on the
dependence and driver power of the variables under study (Duperrin and Godet, 1973),

Interactions
among barriers
in TPL
815

Table V.
Final reachability matrix
for barriers

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816

Table VI.
Overall level partition
for barriers

Reachability
set
(a) Iteration 1
1 Loss of control to TPL providers
2 Lack of application and knowledge of advanced
information technology
3 Lack of qualification for employees in TPL
4 Environmental issues
5 Lack of sufficient warehousing and specialized
storage facilities beyond major cities
6 Congested roadways and ports
7 Complicated tax structure, corruption, and
bureaucratic control
8 Fear of retrenchment by employees of the firm
(b) Iteration 2
2 Lack of application and knowledge of advanced
information technology
3 Lack of qualification for employees in TPL
5 Lack of sufficient warehousing and specialized
storage facilities beyond major cities
6 Congested roadways and ports
7 Complicated tax structure, corruption, and
bureaucratic control
8 Fear of retrenchment by employees of the firm
(c) Iteration 3
2 Lack of application and knowledge of advanced
information technology
3 Lack of qualification for employees in TPL
6 Congested roadways and ports
8 Fear of retrenchment by employees of the firm
(d) Iteration 4
2 Lack of application and knowledge of advanced
information technology
3 Lack of qualification for employees in TPL
8 Fear of retrenchment by employees of the firm
(e) Iteration 5
3 Lack of qualification for employees in TPL
8 Fear of retrenchment by employees of the firm

Antecedent
set

Intersection
set

1
124,567

1,235,678
238

1
2

12,345,678
457
1,457

38
2,345,678
234,567

38
457
457

14,567
1,457

2,368
234,567

6
457

123,468

38

38

2,567

238

235,678
57

38
23,567

38
57

II

567
57

2,368
23,567

6
57

II

2,368

38

38

26

238

2,368
6
2,368

38
2,368
38

38
6
38

III

238

IV

238
238

38
38

38
38

38
38

38
38

38
38

V
V

barriers can be classified into four sectors, namely: autonomous, dependent, linkage,
and driver/independent. The driving power and dependence of each of the elements is
calculated in the final reachability matrix. The autonomous elements (I) have weak
driver power and weak dependence. The dependent elements (II) have weak driver
power, but strong dependence. The linkage elements (III), on the other hand, have both
strong driver power and dependence, but are unstable because any action on these
elements will affect the others and also feedback on themselves. The driver or
independent variables (IV) condition the rest of the system. It is observed that the key
variables with strong driver power fall into the category of independent (IV) or linkage
elements (Ravi and Shankar, 2005).Using the MICMAC analysis, a driving power and
dependence power diagram for barriers is plotted as shown in Figure 3.

Barrier 1. Loss of Control to

TPL provider

Interactions
among barriers
in TPL

Barrier 4. Environmental issues

817

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Barrier 5.Lack of sufficient

warehouses & specialized
storages beyond major cities

Barrier 7. Complicated tax

structure, corruption and
bureaucratic control

Barrier 6. Congested roadways

and ports

Barrier 2. Lack of application &

knowledge of advanced
Information technology

Barrier 3. Lack of qualification

for employees in TPL provider

Figure 2.
ISM-based model for
barriers

Barrier 8. Fear of employees of

the firm

Levels
1.
2.
3.
4.
5.
6.
7.
8.

Loss of control to TPL providers

Lack of application and knowledge of advanced information technology
Lack of qualification for employees in TPL
Environmental issues
Lack of sufficient warehousing and specialized storage facilities beyond major cities
Congested roadways and ports
Complicated tax structure, corruption, and bureaucratic control
Fear of retrenchment by employees of the firm

I
IV
V
I
II
III
II
V

Among barriers, loss of control to TPLP (barrier 1), environmental issues (barrier 4),
lack of sufficient warehouses and specialized storages beyond cities (barrier 5),
complicated tax structure, corruption and bureaucratic control (barrier 7) and lack of
qualification for employees in TPLP (barrier 3) fall as dependent elements with strong
dependence power and weak driver power. The remaining barriers are independent or
linkage elements with both strong driver power and dependence power.

Table VII.
Overall level partition
for barriers

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8
7

IV
8

818

Driving power

III

2
6

5,7

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3
I

Figure 3.
Driving and dependence
power diagram

II

3
1

1
1

Dependence power

6. Result and discussion

The objective of this work is to study and to analyze the interactions between the
barriers for the implementation of services of TPL providers in a well-known
manufacturing company in the Southern part of India. An ISM-based hierarchical
model has been developed to study the significance of the barriers in adopting TPL in a
manufacturing industry. Based on the ISM model, a MICMAC analysis is done.
The ISM-based model provides a hierarchy of actions to be taken against the
barriers for the implementation of services of TPL providers in the case company. The
managers can get an insight of these barriers and understand their relative importance
and interdependencies. The observations from the proposed ISM-based model is that
the barriers due to the loss of control to TPLP and the environmental issues are at
Level I and form the top of the ISM hierarchy. These barriers have weak driver power
and strong dependence power.
The rest of the barriers are catalogued on different levels as follows:
.
Level II. Barriers such as lack of sufficient warehouses and specialized storages
beyond major cities and complicated tax structure, corruption, and bureaucratic
control is found.
.
Level III. Barrier faced because of the congested roadways and ports.
.
Level IV. Barrier due to the lack of application and knowledge of advanced
information technology.
.
Level V. Lack of qualification for employees in TPL provider and fear of
employees of the firm.
Finally, Level V forms the base of the ISM hierarchy and can be considered a
significant barrier in adopting TPL in the case company. These barriers have the
highest drive power and lowest dependence power; hence, they form the bottom level of
the hierarchy. This implies that the lack of qualification for employees in TPL

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providers and fear of employees of the firm play a significant role and work as the
main driver in the implementation of third-party services in the company. In the
practical point of view, the fact that the lack of qualification for employees in TPL
providers and the fear among the employees of the firm will always pull the company
back from implementation of TPL services.
By performing MICMAC analysis, the driver-dependence diagram is plotted which
provides information about the relative importance and the interdependencies among
the barriers. From Figure 3, it is found that there are no autonomous barriers. It is
inferred that all the barriers considered in this work will influence the implementation
of TPL providers in manufacturing industries. Among the eight barriers considered in
this study, five barriers are falling in the dependent cluster in driver-dependence
diagram and it is understood that these barriers will depend on other barriers. The
remaining barriers like lack of application and knowledge of advanced information
technology (barrier 2), congested roadways and ports (barrier 6) and fear of employees
of the firm (barrier 8) fall under the linkage element category; they are unstable and
possess both strong driving power and strong dependence.
Hence, the proposed ISM-based hierarchical model and MICMAC analysis will
support and strengthen the decision-making process of managers. The study will
provide a clear picture about the significance of the various barriers.
7. Managerial implications
ISM methodology is a tool that enables managers to develop a map of the complex
relationships between various factors or elements involved in a decision-making
process. The theoretical implication of this methodology is that it can simplify a
complex system into a hierarchical model composed of multiple levels. Its practical
implication is to make use of the managers experience and knowledge to provide a
fundamental understanding of a complex situation, followed by a course of action for
problem solving.
The ISM model developed in this work will provide an insight to the management of
any manufacturing industry about the barriers for the implementation of a TPL. Using
this model, the managers can prioritize the barriers, take corrective steps to overcome
them, and reap the full benefits of TPL. The MICMAC analyses indicate that there are
no autonomous barriers in the process of implementation of TPL providers.
Autonomous barriers are weak drivers and weak dependence, and, hence, do not have
much impact on the system. The absence of such autonomous barriers indicates that
all the considered barriers are significant in the study. This ISM-based model and
MICMAC analyses are the unique contributions of this research work.
8. Conclusion
The case company under consideration in this work, in order to triumph over the
intense competition wants to adopt the TPL system. Based on the available literature
and a discussion with the expert team, eight barriers to the implementation of TPL in
the case company have been identified. The interaction between the barriers is
analyzed and modeled using ISM methodology.
The ISM-based hierarchical model finds that the barrier due to the loss of control to
TPL provider and the environmental issues is at Level I and forms the top of the ISM
hierarchy. Similarly, the remaining barriers are found on different levels and, finally,

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820

the lack of qualification for employees in TPL providers and fear of employees of the
firm form the base of this model. This ISM-based model provides the significance
of the barriers in adopting TPL in this manufacturing industry. The barriers that form
the base of the hierarchy must be given significant consideration by the policymakers.
Thus, the awareness about these barriers will help the company to overcome or to
minimize the risk from barriers. Similarly, the MICMAC analysis is carried out on the
identified barriers using the driver power and dependence power. The analyses show
the absence of autonomous barriers among the barriers. Their absence in this case
study indicates that all identified barriers have a significant role in the implementation
of TPL providers. Thus, ISM-based model and MICMAC analyses can be considered as
significant contributions to the literature.
In this work, a relationship model between the barriers has been developed using
ISM methodology. The model is formulated on the basis of the interactions between the
barriers as suggested by the expert team comprising of technical and managerial
experts of the manufacturing company and academicians. This model needs to be
statistically validated using structural equation modeling, a project for future research.
Hence, a generalized model for the manufacturing industries adopting the services of
TPL providers may be built.
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