International Journal of Physical Distribution & Logistics Management

B.S. Sahay; Ramneesh Mohan

2006 International Journal of Physical Distribution & Logistics Management

doi: 10.1108/09600030610710845

Purpose – To carry out a comprehensive survey on 3PL practices in India and to establish the impact of usage of third party logistics services on business results. Design/methodology/approach – Begins by analysing the studies carried out on 3PL practices and establishing a research framework. The input variables to the research framework depict the organization‐specific characteristics, such as the extent of usage of 3PL services, the reasons for outsourcing and the impact of the usage of 3PL services. The output function of future usage of 3PL services is influenced by the three input variables. Data collected through survey questionnaire on the input and output variables are used to establish impact of usage of 3PL services on business performance through statistical analysis. Findings – The usage of 3PL services reveals positive and significant impact on business performance though 3PL practices are still at a nascent stage in India. Additionally, results clearly indicate that significant increase in outsourcing has been planned across all activities of the logistics function in the next 2‐5 years. Research limitations/implications – Further research work should focus on managing 3PL relationships; selection and contract management of 3PL service providers for building collaborative supply chain partnerships; and identifying critical success factors for 3PL implementation and establishing performance measures for long‐term 3PL relationships. Practical implications – Detailed study to motivate supply chain managers to outsource and use 3PL services to focus on the core business, drive logistics cost reduction, and improve supply chain efficiency. These indicators should also help the 3PL service providers plan the depth and scope of their service offerings to user organizations in India. Originality/value – The paper contributes to the current 3PL and supply chain practices and the emerging trends in 3PL services for achieving improved business results and supply chain efficiencies.

M. Sadiq Sohail; Rohit Bhatnagar; Amrik S. Sohal

2006 International Journal of Physical Distribution & Logistics Management

doi: 10.1108/09600030610710854

Purpose – The aim of this research is to undertake a comparative analysis on the use of third party logistics (3PL) services by manufacturing firms in Singapore and Malaysia. Design/methodology/approach – This study is based on a questionnaire survey conducted in Singapore and Malaysia in 1998 and 2000, respectively. The paper addresses key issues relating to the extent of usage of 3PL services, specific contract logistics services used, benefits for the user firms, obstacles encountered in implementing contract logistics relationships, impact of the use of contract logistics services on logistics costs, customer satisfaction, and employees of the user firms and the future plans of current users of contract logistics services. Findings – Analysis shows that there are similarities on the use of contract logistics services in Singapore and Malaysia. These include the proportion of firms utilising contract logistics, the extent of involvement of functional managers, budget allocation and activities outsourced. Notable differences between the two countries include the decision‐making process, and the benefits to the firms from the use of contract logistics. Research limitations/implications – Limited sample size and the generalisation of results to all manufacturing firms in Singapore and Malaysia manufacturers ignoring possible regional differences in each context are the two limitations in this study. Originality/value – This study identifies the scope for 3PL services in Singapore and Malaysia. With the enhanced usage of contracting logistics, the study provides 3PL services providers who are considering Asia Pacific as a potential market, a comprehensive analysis of the current situation in Singapore and Malaysia.

Manoj Kumar; Prem Vrat; Ravi Shankar

2006 International Journal of Physical Distribution & Logistics Management

doi: 10.1108/09600030610710863

Purpose – The primary objective of this paper is to show how mathematical modeling can be used for solving a third party logistics (3PL) allocation problem. Design/methodology/approach – The solution approach consists of finding a compromise solution for the six different strategies, defined in the paper by using lexicographic goal programming involving three objectives under some realistic constraints related to capacities of the markets. Findings – This study investigates the usefulness and efficacy of the proposed method for a 3PL allocation problem for a case example of a typical fish supply network. The decision‐makers can evaluate the alternative solutions with respect to a set of decision criteria. The result indicates substantial improvement by reducing the number of 3PL service providers and reallocating them to the case fish markets. Practical implications – The work provides a useful decision model for practicing managers, policy makers and researchers of this area. Originality/value – This model would help a decision maker to resolve the issues related to selection of 3PL under a set of conflicting multi‐objective criteria.

Samar K. Mukhopadhyay; Robert Setaputra

2006 International Journal of Physical Distribution & Logistics Management

doi: 10.1108/09600030610710872

Purpose – An effective return policy is used as an important competitive weapon in the marketplace to substantially influence product sales. However, return policy is also seen as a problem for all parties in the supply chain due to the headache in processing returned merchandise. While retailers are efficient in selling, they do not usually have the expertise in handling the reverse flow. The purpose of this paper is to propose the use of a fourth party logistics (4PL) as a return service provider, and develops optimal decision policies for both the seller and the 4PL. Design/methodology/approach – A profit‐maximization model is presented to jointly obtain optimal policies for the seller and the 4PL through the use of Stackelberg like game theory, where the seller acts as the leader and the 4PL acts as the follower. Findings – Optimal values for the seller's and the 4PL's decisions are presented. Conditions under which profits for the seller and 4PL both increase are shown. Practical implications – This paper offers a number of managerial guidelines for using marketing and operational strategy variables to influence the market reaction parameters so as to obtain the maximum benefit from the market. Originality/value – This paper offers insights to seller and 4PL on how return policy may affect their strategic alliance. Treating return policy as a continuous variable is an original contribution of this paper as is the joint optimization of the seller and the 4PL.