A Hybrid MCDM Approach in Third-Party Logistics (3PL) Provider Selection

Abstract

Third-party logistics (3PL) is becoming more and more popular because of globalization, e-commerce development, and increasing customer demand. More and more companies are trying to move away from their own account transportation to third-party accounts. One reason for using 3PLs is that the company can focus more on its core activities, while the 3PL service provider can provide distribution activities in a more professional way, save costs and time, and increase the level of customer satisfaction. An emerging issue for companies in the logistics industry is how they can decide on the 3PL evaluation and selection process for outsourcing activities. For the first time, the entropy and the criteria importance through intercriteria correlation (CRITIC) methods were coupled in order to obtain hybrid criteria weights that are of huge importance to decide on the 3PL provider evaluation and selection process. The obtained criteria weights were further utilized within the additive ratio assessment (ARAS) method to rank the alternatives from the best to the worst. The introduced hybrid–ARAS approach can be highly beneficial, since combining two methods gives more robust solutions on one hand, while on the other hand eliminating subjectivity. Comparative and sensitivity analyses showed the high reliability of the proposed hybrid–ARAS method. A hypothetical case study is presented to illustrate the potentials and applicability of the hybrid–ARAS method. The results showed that 3PL-2 was the best possible solution for our case.

Keywords

• 3PL logistics
• decision making
• ARAS
• entropy
• CRITIC