The development of measures to assess the operational performance of third-party logistics providers

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Abstract

The recognition of third-party logistics (3PL) as a separate industrial services industry is only two decades old. With a strong sense of the growing strategic importance of logistics, manufacturers have shifted their focus to their core business and sought competent 3PL providers to handle their logistics activities. Along with the industry’s growth, some research has begun to identify customer concerns about performance issues with their 3PL providers. Measuring performance is one way to increase effectiveness and efficiency, both for processes and for people handling those processes. Performance measurement is done by monitoring performance indicators for the various processes. As a management function, performance measurement is more meaningful if a few key representative measures that can best capture the performance levels of the processes can be identified. Using literature review and interviews with nine logistics managers in the electronics manufacturing industry in Thailand, a set of thirty-eight operational performance measures covering the two major 3PL services, warehousing and transportation, was identified. Drawing on survey responses from 207 logistics managers in the same industry, these measures were categorized into three tiers: moderate importance, moderate-to-high importance, and high importance. Exploratory and confirmatory factor analyses were used to derive and test a twentytwo- item, five-dimension 3PL operational performance scale. The five dimensions are: delivery, order quality, in-storage handling, personnel quality and flexibility. Although structural equation modeling coefficients indicate that delivery and order quality are slightly stronger reflections of 3PL operational performance, (followed by flexibility, in-storage handling and personnel quality), the moderately high correlations between the five dimensions suggest that 3PL operational performance requires a fairly tightly packaged bundle of competencies.
Original languageEnglish
QualificationDoctorate
StateUnpublished - 2009


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