What Drives The Choice Of A Third Party Logistics Provider?

What drives the choice of a third party logistics provider?
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Statement of author's purpose
In the article “What drives the choice of a third‐party logistics provider? Anderson, Coltman, Devinney & Keating (2011) sought to determine the factors that influenced the choice of logistics service providers. Delivery performance, capacity, relationships, innovation and professional knowledge determined the providers chosen (Anderson et al., 2011).Application of supply chain management theory
Anderson et al (2011) used the Discrete choice analysis (DCA) that is linked to the Random Utility Theory and DCA “has been used to model the choices of key decision makers in a variety of organizational areas spanning marketing, operations management, transportation and economics” (Anderson et al., 2011). There are different decision-making agents in an organization and when considering the third party logistics providers there should be minimization of conflicts to improve outcome (Young, 2017).
Managers have multiple stakeholders and satisfying all their needs is impossible and one of the main challenges for the managers is how to cater to different interests, including those that are contradictory to achieve the best outcomes. Some studies include theories from other fields such as economics such as agency theory and the Transaction-cost economics (TCE), which helps to understand the impact of costs and risks in choices made in third party logistics (Jao-Hong & Tang, 2017). Even when there are agency conflicts in an organization there should be focus managing complex issues and making the best decisions among the alternatives.
Background of the issue
There are different factors that are taken into account in the measurement of supply chain performance and this also influence the choice of third party logistics provider. Even for the third party logistics service providers the production, storage, transportation and distribution, storage, delivery and customer service are considered when choosing the most appropriate option. The performance of a supply chain is a function of efficiency in supply chain links and the managers choose the 3PL who can deliver what is required (Anderson et al., 2011). Sometimes when the supply chain links are trying to reduce unit costs, this may lead to many conflicts, but the flow of goods to customers and information should still be prioritized when getting third party logistics services. Optimization improves efficiency and performance and there is greater responsibility to integrate organizational changes and there are efforts to foster excellence to improve supply chain management.
Managerial Implications
When there is focus on improving supply chain performance there is imporved efficiency and third party logistics arrangem...