Identifying interrelationships of key success factors of third-party logistics service providers

Abstract

To be more cost-effective as well as to maintain a sustainable competitive advantage, many enterprises tend to improve their business practices by having a strong relationship with third-party (3PL) logistics service providers. The main objectives of this paper are to determine the key success factors associated with the Sri Lankan 3PL industry and identify the interrelationships of these key success factors. A systematic literature review and expert opinions were used to identify the key success factors of the 3PL industry in Sri Lanka. In total 21 key success factors were obtained, and those key success factors were grouped into four categories as organization strategy, management, and process, human resources, and customer orientation. Q-sort technique was used to group key success factors into four categories. Decision-making trial and evaluation laboratory (DEMATEL) method was used to capture the interactive relationships among the key success factors of 3PL service providers, and the casual effect map analyzed. Data were collected through questionnaires from middle and senior-level managers of 3PL firms. A total of eleven experts in the 3PL industry participated in the data collection process. The result shows that organization strategy is a core success factor since it has both high prominence and high interrelationship. Management and process were classified as driving factors since they had a low prominence but a high interrelationship. However, human resources and customer orientation had high prominence but low relationship, which are influenced by other factors and cannot be directly improved. The findings may assist managers to formulate long-term flexible decision strategies in their 3PL firms.