3PL Relationship Management Practices as a Cost Reduction Tool in the Supply Chain: A Case of Stellar Logistics

Abstract

Purpose: The purpose of the study was to examine the nature of the 3PL relationship as a tool for cost reduction at Stellar Logistics Limited. It also examined the challenges affecting the effectiveness of the 3PL relationship. Methodology: A quantitative research approach was utilised to measure and analyse the data descriptively. Structured questionnaires and interviews were conducted to elicit data from the supply chain exerts at Stellar Logistics Company Limited. Data analysis was done based on 30 cases and at the firm level in terms of a unit of analysis. 3PL relationship management is the key tool that links all members of the supply chain at Stellar Logistics. Findings: The study proves management members of Stellar Logistics are aware effective 3PL relationship management leads to mutual trust and confidence in the company and are also aware that commitment is a key factor in creating a stable third-party relationship. Selection and evaluation are crucial in achieving valuable partnerships in the 3PL relationship process as it has the highest response rate in the company. The relationship system at Stellar Logistics requires creating a win/win for 3PL contracting parties. Improper record management makes it difficult to keep track of all shipments at the company. There is a lack of collaboration between the shippers, carriers, and the end customers of the company which affects 3PL relationship management at the company. Finally, unforeseen delays affect the delivery of goods to customers at the company. Recommendations: Stellar Company can help resolve its 3PL relationship problems by setting clear expectations. Again, Stellar Logistics must establish single points of contact. The study also recommend that the company must measure performance in order to salvage its 3PL relationship challenges. Stellar logistics must also involve their 3PL provider in long-term planning.