Third-Part Logistics (3PL) Provider Assessment by Using Fuzzy AHP-VIKOR Apptoach

Abstract

Economic contractions, new communication technologies, and new market search have forced companies more outsourcing by shifting its operations geographically to distant countries. Transferring all or part of the logistics activities to the external firm(s) can be defined as outsourcing. Some of the opportunities to add value to companies through outsourcing: supply security, cost reduction, gaining flexibility in the supply chain, shortening average order cycle times, expanding market boundaries. When it is time to select a third-party logistics (3PL) provider for a particular use, companies should carefully evaluate candidates to ensure win-win relationships. In this study, we address the issue of selection of third-party logistics (3PL) providers, taking into account the needs or requirements that match manufacturers. In this study, a framework is proposed for evaluating 3PL provider selection using an integrated multi-criteria solution approach Analytical Hierarchy Process (AHP), ViseKriterijumska Optimizacija I Kompromisno Resenje (VIKOR). This approach has three phases: i) Determination of criteria of 3PL provider selection QFD, ii) Evaluation of the criteria weights by Fuzzy AHP, iii) Rating of 3PL providers performances against the evaluation criteria by VIKOR. This approach is conducted by a German automotive company to redesign its logistics operations and select a global logistics service provider.