3PL Service Provider Selection with a Goal Programming Model Supported with Multicriteria Decision Making Approaches

Abstract

In this study, third-party logistics (3PL) service provider selection problem is handled for aforeign trade company that exports the products with high quality level obtained by outsourcing,and who has problems regarding both cost, delivery quality and delivery time. In this direction, 7criteria are determined for effective evaluation of the performance of the 5 logistics serviceproviders the company is working for and the determination of the most suitable 3PL serviceprovider according to the property of the orders (quantity, mode of conveyance, transportationchannel, etc.). The priority levels of service providers are calculated by using these criteria in thecombination of Analytic Hierarchy Process (AHP), and Technique for Order Preference bySimilarity to Ideal Solution (TOPSIS). Then, a goal programming (GP) model that answers thequestion of which service provider to choose for which order, considering these priority valuesand the 12 system constraints and 5 objectives that the company encountered in real life isproposed. This model is the first one proposed in the literature for the selection of 3PL serviceproviders for multimodal international transport with consistent results. The model is solved forthe current 10 orders using the last 1-year data of the company and the most appropriate 3PLservice provider combination is obtained. As a result of the solution of the problem with thismethodology, an improvement is achieved about 7% for the rate of delivery on time, 33% for bid- bill consistency rate, and 29% for the problematic delivery rate.