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 a foreign 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, 7 criteria are determined for effective evaluation of the performance of the 5 logistics service providers the company is working for and the determination of the most suitable 3PL service provider according to the property of the orders (quantity, mode of conveyance, transportation channel, etc.). The priority levels of service providers are calculated by using these criteria in the combination of Analytic Hierarchy Process (AHP), and Technique for Order Preference by Similarity to Ideal Solution (TOPSIS). Then, a goal programming (GP) model that answers the question of which service provider to choose for which order, considering these priority values and the 12 system constraints and 5 objectives that the company encountered in real life is proposed. This model is the first one proposed in the literature for the selection of 3PL service providers for multimodal international transport with consistent results. The model is solved for the current 10 orders using the last 1-year data of the company and the most appropriate 3PL service provider combination is obtained. As a result of the solution of the problem with this methodology, 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.