Logistics Service Provider Selection through an Integrated Fuzzy Multicriteria Decision Making Approach

Nowadays, the demand of third-party logistics provider becomes an increasingly important issue for companies to improve their customer service and to decrease logistics costs. This paper presents an integrated fuzzy approach for the evaluation and selection of 3rd party logistics service providers. This method consists of two techniques: (1) use fuzzy analytic hierarchy process to identify weights of evaluation criteria; (2) apply fuzzy technique for order preference by similarity to ideal solution (TOPSIS) method to evaluate and sequence alternatives and to make the final selection. Finally, an actual industrial application is performed in logistics department of a tire manufacturing company. For this, first, eight logistics supplier selection criteria were determined, and then the best alternative among seven logistics service provider companies was selected by the proposed method.

[1]  S. Kendrick,et al.  The Use of Third-Party Logistics Services by Large American Manufacturers, the 2002 Survey , 2002, Transportation Journal.

[2]  P. K. Bagchi,et al.  LOGISTICAL ALLIANCES -- TRENDS AND PROSPECTS IN INTEGRATED EUROPE. , 1998 .

[3]  Li Hua Chen,et al.  Research on the Choice of the Third-Party Reverse Logistics Enterprise Based on the Method of AHP and Goal Programming , 2012 .

[4]  Anu Bask,et al.  Relationships among TPL providers and members of supply chains – a strategic perspective , 2001 .

[5]  V. Ravi.  Selection of third-party reverse logistics providers for End-of-Life computers using TOPSIS-AHP based approach , 2012 .

[6]  S. G. Deshmukh,et al.  Development of a balanced scorecard , 2006 .

[7]  Jamal Shahrabi,et al.  PROJECT SELECTION BY USING FUZZY AHP AND TOPSIS TECHNIQUE , 2007 .

[8]  Seyda Serdar.  A COMPARISON OF QUALITY PERFORMANCE CRITERIA OF LOGISTICS SERVICE PROVIDERS AND THOSE OF THEIR CUSTOMERS , 2003 .

[9]  Ozalp Vayvay,et al.  A METHOD FOR SELECTING THIRD PARTY LOGISTIC SERVICE PROVIDER USING FUZZY AHP , 2009 .

[10]  Lotfi A. Zadeh,et al.  The concept of a linguistic variable and its application to approximate reasoning - II , 1975, Inf. Sci..

[11]  Chen-Tung Chen,et al.  Extensions of the TOPSIS for group decision-making under fuzzy environment , 2000, Fuzzy Sets Syst..

[12]  Sohail S. Chaudhry,et al.  A model of a decision support system based on case‐based reasoning for third‐party logistics evaluation , 2003, Expert Syst. J. Knowl. Eng..

[13]  Selçuk Perçin,et al.  Evaluation of third‐party logistics (3PL) providers by using a two‐phase AHP and TOPSIS methodology , 2009 .

[14]  T. Chu,et al.  Improved extensions of the TOPSIS for group decisionmaking under fuzzy environment , 2002 .

[15]  S. G. Deshmukh,et al.  Selection of Third-Party Logistics (3PL): A Hybrid Approach Using Interpretive Structural Modeling (ISM) and Analytic Network Process (ANP) , 2005 .

[16]  Lotfi A. Zadeh,et al.  Fuzzy Sets , 1996, Inf. Control..

[17]  Wei-Kai Wang,et al.  An integrated fuzzy approach for provider evaluation and selection in third-party logistics , 2009, Expert Syst. Appl..

[18]  Lotfi A. Zadeh,et al.  The concept of a linguistic variable and its application to approximate reasoning-III , 1975, Inf. Sci..

[19]  Frederic H. Murphy,et al.  MANAGING REVERSE LOGISTICS CHANNELS WITH DATA ENVELOPMENT ANALYSIS , 2003 .

[20]  Sascha Albers,et al.  The impact of electronic commerce on logistics service providers , 2002 .

[21]  Hong Wang,et al.  A 3PL supplier selection model based on fuzzy sets , 2012, Comput. Oper. Res..

[22]  Chunquan Li,et al.  Refractured Well Selection for Multicriteria Group Decision Making by Integrating Fuzzy AHP with Fuzzy TOPSIS Based on Interval-Typed Fuzzy Numbers , 2012, J. Appl. Math..

[23]  Guo Cao,et al.  A hybrid MCMD integrated borda function and gray rational analysis for 3PLs selection , 2007, 2007 IEEE International Conference on Grey Systems and Intelligent Services.

[24]  Jui-Tsung Wong,et al.  DSS for 3PL provider selection in global supply chain: combining the multi-objective optimization model with experts’ opinions , 2012, J. Intell. Manuf..

[25]  Ying Zhang,et al.  A Selection Approach of Reverse Logistics Provider Based on Fuzzy AHP , 2007, Fourth International Conference on Fuzzy Systems and Knowledge Discovery (FSKD 2007).

[26]  Guiyun Liu,et al.  An Integrated SVM and Fuzzy AHP Approach for Selecting Third Party Logistics Providers , 2012 .

[27]  P. Panayides,et al.  Logistics service provider–client relationships , 2005 .

[28]  Chia-Chi Sun,et al.  A performance evaluation model by integrating fuzzy AHP and fuzzy TOPSIS methods , 2010, Expert Syst. Appl..

[29]  Wenhuang Liu,et al.  An application of the AHP in 3PL vendor selection of a 4PL system , 2004, 2004 IEEE International Conference on Systems, Man and Cybernetics (IEEE Cat. No.04CH37583).

[30]  Adnan Aktepe,et al.  A FUZZY ANALYTIC HIERARCHY PROCESS MODEL FOR SUPPLIER SELECTION AND A CASE STUDY , 2011 .

[31]  Robert C Lieb,et al.  A COMPARISON OF THE USE OF THIRD-PARTY LOGISTICS SERVICES BY LARGE AMERICAN MANUFACTURERS, 1991, 1994, 1995 AND 1996. , 1996 .

[32]  D. Lambert,et al.  Fundamentals of Logistics Management , 1998 .

[33]  Lotfi A. Zadeh,et al.  The Concepts of a Linguistic Variable and its Application to Approximate Reasoning , 1975 .

[34]  B. Çatay,et al.  Third‐party logistics provider selection: insights from a Turkish automotive company , 2007 .

[35]  David Smith,et al.  Managing the IS outsourcing relationship , 2008 .

[36]  Golam Kabir.  THIRD PARTY LOGISTIC SERVICE PROVIDER SELECTION USING FUZZY AHP AND TOPSIS METHOD , 2012 .

[37]  Ravi Shankar,et al.  Selection of logistics service provider: An analytic network process (ANP) approach , 2007 .

[38]  Chee-Chuong Sum,et al.  Linking financial performance to strategic orientation and operational priorities , 2006 .

[39]  Tugba Efendigil,et al.  A holistic approach for selecting a third-party reverse logistics provider in the presence of vagueness , 2008, Comput. Ind. Eng..

[40]  E. Zavadskas,et al.  Multi-criteria Optimization System for Decision Making in Construction Design and Management , 2009 .

[41]  Laura Meade,et al.  A conceptual model for selecting and evaluating third‐party reverse logistics providers , 2002 .

[42]  Hokey Min,et al.  Benchmarking the operational efficiency of third party logistics providers using data envelopment analysis , 2006 .

[43]  Noel P. Greis,et al.  Logistics, strategy and structure: A conceptual framework , 1999 .

[44]  Gülçin Büyüközkan,et al.  Application of a hybrid intelligent decision support model in logistics outsourcing , 2007, Comput. Oper. Res..

[45]  Noel P. Greis,et al.  Logistics, strategy and structure , 2013 .

[46]  Shaligram Pokharel,et al.  A hybrid approach using ISM and fuzzy TOPSIS for the selection of reverse logistics provider , 2009 .

[47]  Reza Farzipoor Saen,et al.  A mathematical model for selecting third-party reverse logistics providers , 2009 .

[48]  C. K. Kwong,et al.  A fuzzy AHP approach to the determination of importance weights of customer requirements in quality function deployment , 2002, J. Intell. Manuf..

[49]  A. Rizzi,et al.  A fuzzy TOPSIS methodology to support outsourcing of logistics services , 2006 .

[50]  Kenneth B. Ackerman,et al.  SELECTION CRITERIA FOR PROVIDERS OF THIRD-PARTY LOGISTICS SERVICES: AN EXPLORATORY STUDY , 1998 .

[51]  Hsuan-Shih Lee,et al.  Generalizing TOPSIS for fuzzy multiple-criteria group decision-making , 2007, Comput. Math. Appl..

[52]  Frank W. Davis,et al.  The Evolution to Service Response Logistics , 1992 .

[53]  K. J. Rogers,et al.  Evaluating the efficiency of 3PL logistics operations , 2008 .

[54]  Jao-Hong Cheng,et al.  An application of fuzzy Delphi and fuzzy AHP for multi-criteria evaluation model of fourth party logistics , 2008 .

[55]  K. Lai.  Service capability and performance of logistics service providers , 2004 .

[56]  Rajesh Gupta,et al.  Selection of 3pl Service Provider using Integrated Fuzzy Delphi and Fuzzy TOPSIS , 2010 .

[57]  Seyed-Mahmoud Aghazadeh.  How to choose an effective third party logistics provider , 2003 .

[58]  S. Soh,et al.  A decision model for evaluating third-party logistics providers using fuzzy analytic hierarchy process , 2010 .

[59]  Elliot Rabinovich,et al.  Outsourcing of integrated logistics functions: An examination of industry practices , 1999 .

[60]  BüyüközkanGülçin,et al.  Application of a hybrid intelligent decision support model in logistics outsourcing , 2007 .

[61]  Kai-Ying Chen,et al.  Applying Analytic Network Process in Logistics Service Provider Selection - A Case Study of the Industry Investing in Southeast Asia , 2011, Int. J. Electron. Bus. Manag..

[62]  A. Petroni,et al.  From Traditional Purchasing to Supplier Management: A Fuzzy Logic-based Approach to Supplier Selection , 2002 .

[63]  R. K. Shukla,et al.  Modelling Supply Chain Coordination: An Application of Analytic Hierarchy Process under Fuzzy Environment , 2013 .

[64]  Pravin Kumar.  An Integrated Model of AHP and TOPSIS for 3PL Evaluation , 2008 .

[65]  C. Kahraman,et al.  Multi‐criteria supplier selection using fuzzy AHP , 2003 .

[66]  Elliot Rabinovich,et al.  Studies of Trends in Third-Party Logistics Usage: What Can We Conclude? , 2005, Transportation Journal.