The growing healthy relations among shippers and 3PL service providers encourage the logistics services
expansion. About 20% growth has been witnessed in logistics outsourcing globally. Realizing the market
potential, many 3PL service providers are in with their massive expansion plans to widen their services.
Expansion of services into the new domain requires huge investment—thus postulate the market
assessment and performance evaluation of 3PL service providers. It is also an indispensable issue for the
managements to take strategic decisions from time to time. The paper presents a case study of
LOGIWORLD, a 3PL service provider, illustrating various performance facets. It also provides the
performance evaluation using Taguchi’s loss function
Logistics outsourcing is becoming indispensable for shippers (customers opting for Third
Party Logistics (3PL) service providers) as it helps them in achieving their strategic
objectives. The study by Sahay and Mohan (2006), has cited substantial growth in various
financial indicators using services of 3PL, for instance, various improvements in sales
revenue by 13.5%, working capital by 12.3%, returns on assets by 10%, capital assets
reduction by 10%, production cost reduction by 10.5%, labor cost reduction
by 10.0%, and logistics cost reduction by 15%. The 3PL service providers play an
important role by providing their logistics services during inbound and outbound logistics
for effective supply chain management. As per Hannon (2005), shippers depend on 3PL
service providers to secure capacity and gain agility. Many shippers, nowadays prefer the
3PL service providers to enhance their market share through enhanced service level and
customer satisfaction through value-added services. Apart from the core service of
supplying the right quality product, in right quantity, at right cost, at right place, and at
the right time, 3PL service providers are adding value-added services, such as tracking and
tracing, sending information prior to the arrival of the products, flexibility in delivery,
which are becoming attractive features in their selection too. The 3PL service providers
play a vital role in enhancing the service levels and thereby in satisfying customers. Many
shippers are interested to involve 3PL service providers in their multi-echelon supply
chain, which is depicted in Figure 1. Various flows are shown in the figure which are very
important to manage the efficacy of the supply chain. The 3PL service providers plays an
important role in maintaining smooth flows across various echelons involved in supply
chain thereby cutting time to market and enhance responsiveness.
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