MODELING OF SELECT ISSUES IN THIRD PARTY SERVICE PROVIDERS UNDER L.L.P. SCENARIOS

Abstract

In today's constrained economy companies are increasingly turning towards Lead Logistics Providers (L.L.P.) to manage their supply chain operations. Although the L.L.P. can add an extra operational layer to the organization's business model, it more than pays for itself in cost savings and efficiency. L.L.P.'s basically act as integrators and help streamline the organizations supply chain activities thereby making them more efficient. In general a single L.L.P. may aid more than one parent organization. Hence selecting a wrong 3PL in turn, might harm more than one organization. Therefore the selection issue's involved in selecting a right Third party service provider (3PL) by a L.L.P. has to be more carefully dealt with. The research presented in this work examines the issue of selection of third party service providers under L.L.P. scenario. The objective of this research work has been to 1) identify the criteria considered important for selection of Third party service providers under L.L.P. scenario and 2) to create a model for selection of the providers based on the criteria selected. To fulfill the above objectives a three stage model is developed. The first stage involves criteria identification using interpretive structural model (ISM). Once the criteria are identified the second stage uses data envelopment analysis (DEA) to shortlist a suitable set of providers to be evaluated. This second stage is basically a pre qualification round. The third stage involves the final selection. The criteria identified in first stage and the providers shortlisted in second stage are inputs to this stage. This stage uses Taguchi loss function (TLF) to provide a final loss score for each of the providers identified in second stage, based on the criteria identified in first. The lower the loss score the more suitable the provider is. This model takes into account the relative advantage's of all three methods and provides a more accurate, effective, and systematic decision support tool for 3PL provider selection under L.L.P. scenario.