Cluster Analysis Prioritization of Automobile Logistics Services

Purpose – The purpose of this paper is to provide a clustering approach to segment supply chain partners in the automobile industry and prioritize services offered by third party logistics service (3PL) providers.Design/methodology/approach – In total, 98 automobile and auto‐parts manufacturers are surveyed to identify service needs, preferences, and outsourcing commitments. By applying a two‐stage clustering approach combined with Ward's minimum‐variance method and the K‐means algorithm, the logistics companies prioritize their services to better satisfy groups of customers with specific preferences.Findings – Four distinctive groups of manufacturers are identified using the two‐stage clustering approach. The clusters separate logistic preferences and outsourcing patterns of after market parts suppliers, original equipment service parts suppliers, original equipment manufacturer parts suppliers, and tier one car makers. The paper finds that distribution and delivery services hold the highest percentage o...

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