Performance Metrics for Evalutaion & Selection of 4PL

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BUSM 3878 Practice-based Logistics Research Project 1

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Research

Performance Metrics for Evaluation and Selection of 4PL

Supervisor : Dr . Charles Lau Prepared by : V .Rajiv Kumar Menon

Student Number : S3157160

1 . Abstract

As firms were increasingly focusing on core competencies , there had been a growing interest among organizations to outsource a broader gamut of logistics services . The logistics fraternity was evolving innovative models tailored to meet end customer solutions and adhere to channel wide requirements in the supply chain network . Conceptualizing such

a paradigm , 4PL operators had built on a foundation of providing supply chain infomediary services that act as a barometer of channel collaboration . Such an inter-mediator required competency to manage multi tiered echelons through an efficient and effective intelligent network , apart from providing real time information sharing , optimizing channel resources and enhancing decision synchronization . Choosing the right lead logistics partner was thus a major strategic decision . A few organizations consider qualitative criteria for supplier decision making and majority treated it as an optimization problem . For optimum decision making both quantitative and qualitative measures needed to be integrated . This study provided taxonomy of comprehensive metrics arranged hierarchically in a process based systematic perspective to build a framework for selection and evaluation of a lead logistics partner . The metrics were aligned based on the organizations business strategy . The chosen set of metrics were then used to evaluate the performance of the 4PL operator . This evaluation mechanism was to assist in common understanding and reciprocation of organizational goals at RFP (Request for Proposal ) stage avoiding law of unintended consequences The objective of this study was to introduce a comprehensive decision making methodology for the selection of a 4PL logistics service provider . The relevant metrics based on SCOR model was selected and categorized using factor analysis . Then using fuzzy set theory technique the relevance of contending 4PL alternatives was analyzed for final selection . The proposed methodology was to serve as a guideline for effective decision making in selection and evaluation of 4PL

2 . Introduction

The wisdom of supply chain collaboration was well known and defined . The supply chain was an integrated entity and all the members were functionally coordinated as an extended enterprise (Holmberg , 2000 Lambert et al , 1998 . The Supply Chain was an inter-related network of multiple members and complex relationship (Lambert and Cooper , 2000

This required management of business activities from original suppliers till end consumers . To focus on core competencies , firms were increasing looking at outsourcing or externalization of logistics services . In to meet the growing requirements of its users , logistics service providers were also offering customized expertise and experience which would otherwise be difficult to acquire or costly to develop in-house by its users (Razzaque and Sheng , 1998 . Depending upon user requirements logistics service providers were offering various forms of solutions The most common of these are warehousing , outbound transportation customs brokerage and inbound transportation (Langley et al , 1999

This study was to endeavor to differentiate the core offerings of two leading forms...