SELECTION CRITERIA FOR PROVIDERS OF THIRD-PARTY

LOGISTICS SERVICES: AN EXPLORATORY STUDY

Core Idea: Examine the criteria to select the third party logistics services providers and how
the firm’s competitiveness and external environment affect this criteria.

Abstract: Study includes a set of criteria to be fulfilled so as to evaluate the prospective third
party logistics services providers. On-time shipments, meeting of promises, error rates,
availability of top management, performance and quality requirements are major driving
factors to evaluate the prospective third party logistics service providers. Dependent and
independent variables were formulated and correlation was done. The results were found and
so as the implications.

Methodology: A four page questionnaire having a list of 86 important items of services was
sent to 163 logistics services users in United States in 1994. They were sent to those who have
knowledge about outsourcing. 41 usable questionnaire were received. 25.2% was the response
rate. Three analyses were conducted to test for nonresponse bias. Nine questionnaire items
were finally used to conduct the selection criteria for dependent variables and other nine for
independent variables which included: competitive responsiveness (five items), environmental
dynamism (two items), and environmental hostility (two items). The dependent variables were
perceived capability and perceived performance. Correlation was adopted for final results.

Effect on Business: Perceived performance, perceived capability, and responsiveness are

important parameters to be considered when the business environment is competitive. On-time
shipments and deliveries, the ability to meet or exceed promises, superior error rates may be a
better basis of assessment than price, quality and service. In addition, the evaluation of provider
responsiveness to unforeseen problems, creativity, and financial stability could strengthen the
assessment process. The assessment process also includes price negotiations till the time
performance and quality requirements are fulfilled otherwise it will affect the business.

Change in Domain Knowledge: Lot of research is needed into the changing relationships,
buying, evaluating and managing the third party logistics. The analysis done here will be
fruitful in the buying process of other industries or not is difficult to be conveyed. It is not a
universally tested analysis. The availability of top management in looking after the
performance and quality is a must. Top management to be well versed with the scope of work.
Reference: Menon, M. K., McGinnis, M. A., & Ackerman, K. B. (1998). SELECTION
CRITERIA FOR PROVIDERS OF THIRD-PARTY LOGISTICS SERVICES: AN
EXPLORATORY STUDY. Journal of business logistics, 19(1), 121.

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 THE EMERGING ROLE OF THIRD PARTY LOGISTICS PROVIDER
AS AN ORCHESTRATOR

Core idea: this article gives an insight that how the role of logistics in business market has
changed from just a part of supply chain to the orchestrator of supply chain. The business
markets nowadays rely heavily on the way logistics is going to perform. For that a model has
also been developed which establishes 3PL as a part of strategy development.

Abstract: The connectivity and communication requirements of leading supply chains have
created the emergence of a more advanced role for third-party logistics providers 3PLs. They
have evolved from providing logistics capabilities to becoming orchestrators of supply chains
that create and sustain a competitive advantage. This article uses a theoretical perspective based
on resource-based theory, network theory and transaction cost economics, and a thorough
literature review, to develop a model with seven propositions. Finally, using structured
interviews of industry executives from a leading 3PL, we offer empirical support for the model
and propositions that can be used to define the orchestrator role of a 3PL.

Methodology: In this paper a single case study model was used to establish logistics as a supply
chain orchestrator. Data collection was done by recording and analysing in depth interviews.
Using secondary research and guidelines of purposive sampling the focus was on executives
of large and recognized 3pl firms with a wide range of customers that provided transportation
management services in United States. Open ended interview questions were designed to gain
in depth understanding of 3PL operations and services. Each interview lasted 60-90 minutes
and each of the interview was recorded and properly analysed. External validity is assured by
replication of findings.

Effect on Business Practices: 3PLcan work simultaneously with many firms and can provide
standardized data and processes and visibility to more than one firm. Therefore, four
interrelated constructs are proposed that define the 3PL role of a supply chain orchestrator.
They are: standardization, visibility, neutral arbitrator, and collaborator.
Standardized processes enable smooth handoff and flow of goods among all members of the
supply chain and facilitate planning. It is a prerequisite for the efficient functioning of a 3PL
as it consolidates goods and activities across multiple supply chains. With standardized

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processes, it is much easier to aggregate and analyze data, identify trends and opportunities,
and take actions to improve the efficiency of transportation in many different situations. One
of the first benefits or value propositions provided by the 3PL orchestrator is the development
of standard business rules and practices so that information and data can be easily shared. This
leads to the first proposition:
Proposition 1: The higher the degree of standardization provided by the 3PL, the greater the
value creation orchestrated by the 3PL.
Proposition 2: Standardization will positively impact visibility of the 3PL.
Proposition 3: The higher the degree of visibility provided by the 3PL, the greater the value
creation orchestrated by the 3PL.
Proposition 4: Visibility will positively impact neutral arbitration by the 3PL.
Proposition 5: The greater the degree of neutral arbitration provided by the 3PL, the greater the
value creation orchestrated by the 3PL.
Proposition 6: Neutral arbitration will positively impact collaboration of the 3PL.
Proposition 7: The greater the degree of collaboration provided by the 3PL, the greater the
value creation orchestrated by the 3PL.

Change in Domain Knowledge: The role has changed from initially offering transportation
services, to offering a broad array of bundled services that also includes warehousing, inventory
management, packaging, cross docking, and technology management. More recently, however,
the 3PL has taken on a more comprehensive strategic role as supply chain activities become
more critical to the business.
Reference: Zacharia, Z. G., Sanders, N. R., & Nix, N. W. (2011). THE EMERGING ROLE
OF THE THIRD-PARTY LOGISTICS PROVIDER (3PL) AS AN
ORCHESTRATOR. Journal Of Business Logistics, 32(1), 40-54. doi:10.1111/j.2158-
1592.2011.01004.x

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 A DECISION MODEL FOR SELECTING THIRD PARTY REVERSE
LOGISTICS PROVIDER IN THE PRESENCE OF BOTH DUAL ROLE
FACTORS AND IMPRECISE DATA

Core Idea: the author is trying to establish the importance of selecting a proper logistics
provider using a mathematical model of DEA which can serve the purpose of reverse logistics
as well as forward logistics

Abstract: This paper introduces a model for dealing with selecting third-
party reverse logistics (3PL) providers in the presence of both dual-role
factors and imprecise data. The proposed model is based on data envelopment analysis (DEA).
A numerical example demonstrates the application of the proposed method.

Methodology: Various research papers were analysed to get secondary data, the earlier models
used for selecting reverse logistics services. It considers both cardinal and ordinal data for 3PL
provider selection. It considers imprecise data in a precise manner. Considers both dual role
factors and imprecise data simultaneously

Effect on Business Practices: Mathematical models provide important information that can
be used by managers in making strategic or operational decisions. Managers can gain
information about those 3PL providers that exhibit best practice so that they may gain from the
experience of the more efficient, and this can lead to benefits derived from collaboration among
the 3PL providers. Furthermore, the process of defining efficiency for a particular type of
operation through the selection of the important inputs and outputs has significant strategic
value.
The proposed model, in the presence of imprecise data, determines whether in a DMU the
factors are behaving predominantly like inputs, hence the DMU would benefit from having less
of the factors, like outputs where more of the factors are desirable, or where they are in
equilibrium. Meanwhile, these ideas were connected to those involving increasing, decreasing
and constant returns to scale.

Change in Domain Knowledge: Utilizing 3PL providers in a closed-loop supply chain will
be effective in ensuring sustainability since efficient reverse logistics services enable businesses

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with the opportunity to increase their profit margins, to differentiate their services from those
of the competitors, to attract new clients to these services, and to enhance their status in the
global supply chain network. On the other hand, if returns are not handled effectively, that is,
when returned assets are not processed quickly or completely, considerable value may be lost.
Hence, it is important to select an efficient 3PL provider to partner with the organization in the
reverse logistics process.
Reference: Saen, R. F. (2011). A DECISION MODEL FOR SELECTING THIRD-PARTY
REVERSE LOGISTICS PROVIDERS IN THE PRESENCE OF BOTH DUAL-ROLE
FACTORS AND IMPRECISE DATA. Asia-Pacific Journal Of Operational Research,28(2),
239-254.

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 KEY SUCCESS FACTORS AND THEIR PERFORMANCE
IMPLICATIONS IN THE INDIAN
THIRD-PARTY LOGISTICS (3PL) INDUSTRY

Core idea: This papers identify the key success factors that are related with the performance
of the third logistics providers in India by analysing the relationship between success factors
and the performance.

Abstract: In the current era all the companies are looking to business practices though which
they can have an competitive edge in the market by influencing their operational and financial
success which is possible through outsourcing the work or processes which who be difficult to
acquire or would be costly to build to third parties which excel in those processes. This paper
has bought out insights about the key success factors that affect the performance of the
organization. This paper talks about the key success factors of relationship with customers was
highly influenced by the operational processes. Also its talks about the relationship with the
third party logistic should be significant irrespective of the size of the organization or firm.

Methodology: A Questionnaire was designed and mailed to the CEO of 283 logistics service
providers. Out of which on 95 companies responded which was the sample size for the study.
The questions were kept simple and they were rated using a Likert scale. The questions was
based upon the revenues of the companies and the value added services they offer than the
correlation coefficient was found out between the revenue and the number of value added
services offered.

Effect on Business Practices: The firms are getting competitive advantages by outsourcing
the processes in which they do not have their core competencies to third parties which are
helping them influence their operational processes as well as financial statements. It is very
important to build relationships with the service providers irrespective of the size of the firm
and not just focus on the investing in information technology.

Change in Domain Knowledge: The third party logistics providers have started offering a
number of value added services to the firms and the number of services they offer increases

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with the growth of these service providers. And they ultimately help the firms to improve their
operations and financial statements by gaining edge over others.
Reference: Mothilal, S., Gunasekaran, A., Nachiappan, S., & Jayaram, J. (2012). KEY
SUCCESS FACTORS AND THEIR PERFORMANCE IMPLICATIONS IN THE INDIAN
THIRD-PARTY LOGISTICS (3PL) INDUSTRY. International Journal Of Production
Research, 50(9), 2407-2422. doi:10.1080/00207543.2011.581004

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 STUDY ON 3PL LOGISTICS FIRMS SERVICE MANAGEMENT
Core Idea: This paper about how the competition has increased in the marketplace due to
globalization because of which the services have become very important to gain an edge over
others. Due to which the third party logistics providers have evolved and now have started
providing integrated services to the organizations.

Abstract: As globalization is taking place the completive pressure has been increasing and it
has become very important for the organizations to manage their processes and supply chain.
Also these days the organizations are developing logistics as a part of their corporate strategy.
Even the manufactures and the retailers want fast delivery of their goods in the markets. All
the organizations have started making an differences through the services which they offer in
the markets and they expect the third part logistics providers to offer them not just
transportation service but integrated services.

Methodology: To understand the logistics attribute Tongji University investigated 80 firms in

Shanghai Pudong whih is in the top of logistics providers in china. These 80 firms was a mixed
of state owned enterprises, collective owned , stock, joint stock, and foreign capital enterprise.
The numbers of services these 80 firms provide was than studied.

Effect on Business Practices: These days the products being offered by the companies are
considered to be same or homogenous by the customers what is making a difference is the
services the companies provide due to which the companies are going for third party logistics
that have started to provide a bundle of services to the companies which ultimately reaches the
customers. Also by doing so the companies are able to compete in the market place which is
becoming difficult day by day due to globalization.

Change in domain knowledge: The companies these days are expecting the third party logistic
providers to reduce their cost on transportation and give them integrated services which include
tracking services because services are which helps the companies to differentiate themselves
from their competitors.
Reference: Hong, X., & Hongxia, G. (2013). STUDY ON 3PL LOGISTICS FIRMS
SERVICE MANAGEMENT. International Journal Of Advancements In Computing
Technology, 5(4), 713-719. doi:10.4156/ijact.vol5.issues4.85

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DESIGNING AND AGENT BASED B2B MARKET PLACE FOR THIRD
PARTY LOGISTICS SERVICE PROVIDERS

Core Idea: This paper present insight on development and designing of agent based
marketplace. It also presents the details of the implementation of the agent based market place
prototype. It also throws light on how internet and widespread of e-markets has impact on
supply chain, by providing ease to B2B service providers

Abstract: The basic purpose of the paper is to provide an understanding and describe the
communication about the system between users of the system and the developers. The logistic
process was divided into two categories which are: Inbound and outbound logistics. In B2B
market there is a mechanism which coordinates buyers and sellers and helps the buyer to get
the various details of the various goods and services offered in the market.

Methodology: In this paper two objectives were used for logistics service providers, one is
for buyer and other is for seller. Unified modeling language framework was used for B2B
market place.

Effect on Business Practices: With the growth of internet there and emergence of the e
markets has a widespread impact on supply chain by providing easy and convenient way for
business partners around the world. E market places have also emerged as a major information
in the supply chain network, because of this the process can be aligned in order to support the
growing needs of the market, it also reduces the transaction as well as the operation cost and
also identify the new businesses and improves their efficiency.

Change in domain knowledge: The model works on ‘Double Auction’ principle for winner
determination, where every buyer check for the price quotes, mean and variance lead time of
deliveries, and also depending upon the quote of the seller, quote can be updated for variance
of the lead time and mean delivery time. This market mechanism function will help in
maximizing overall satisfaction of the present market stakeholders.
Reference: Kumar, A., & Dulluri, S. (2011). DESIGNING AN AGENT-BASED B2B
MARKET PLACE FOR THIRD-PARTY LOGISTICS SERVICE PROVIDERS (3PLS). IUP
Journal of Operations Management, 10(4), 7.

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