Title: Selecting a Third Party Logistics partner for operating a Materials Service Centre: a Data Envelopment Analysis approach

Authors: Canan Bilen, Fong-Yuen Ding, Anthony P. Stoner

Addresses: Department of Industrial and Manufacturing Engineering, North Dakota State University, Fargo, ND 58105-5285, USA. ' Columbia International University, 7435 Monticello Rd., SC 29203, USA. ' Integrity Windows and Doors, Fargo, ND 58103, USA

Abstract: Outsourcing materials management functions to a Third Party Logistics (3PL) firm is a widely accepted and increasingly common method that companies use to enhance logistics efficiency. Because logistics processes are generally considered critical to the success of the business venture, selecting a compatible outsourcing partner is very important. A Data Envelopment Analysis (DEA) based model is presented in this paper to address the supplier selection evaluation for a 3PL outsourcing arrangement. A case study is provided to demonstrate the application of the DEA model for evaluating alternatives in a Materials Service Centre (MSC) outsourcing analysis. Data from a heavy equipment manufacturer are used to represent the critical decision factors used in the illustrative DEA model. The analysis results demonstrate the effectiveness of DEA as a decision analysis tool when considering a MSC outsourcing arrangement.

Keywords: 3PL partners; third party logistics; materials service centres; DEA; data envelopment analysis; materials management outsourcing; partner selection; heavy equipment manufacturing.

DOI: 10.1504/IJLSM.2011.041689

International Journal of Logistics Systems and Management, 2011 Vol.9 No.3, pp.280 - 295

Published online: 06 May 2015 *

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