Selection of Third Party Logistics Service Provider Using a Multi-Criteria Decision Making Approach for Indian Cement Manufacturing Industries

Today, third party logistics service providers (3PLSP) are into nearly all the businesses right from providing raw material to finish goods. 3PLSP’s are also getting convoluted in customer oriented operations. At the right cost and consideration of all affecting criteria anything can be outsourced. Every organization needs to find a smart balance of what to produce in-house and what to procure/hire from outside service providers. Over the past few decades, academicians/researchers and practitioners around the world have been motivated and guided by work related to the factors that have led to the success of 3PLSP. The purpose of this paper is to prepare a model for the selection of 3PL vendor for the Indian cement manufacturing industry using an analytical hierarchy process (AHP) which is a tool of multi-criteria decision making (MCDM) methodology. This approach enables the managers of the organization to understand the contextual relationships of the selection criteria which improves the reliability of the decision. The proper selection of the 3PLSP makes the organization competitive and increases the profitability. Through an exhaustive literature review and opinion of experts (5 from the industry and 4 from the academics), twenty major selection criteria were identified and the top five parameters in the descending order of ranking are compatibility with the users, cost of service, quality of service, reputation of vendor, and performance measurement.