Logistics service providers evaluation and selection criteria from shippers' perspective

Abstract

Global supply chain networks are becoming complex due to many causes such as diverse customer requirements, new markets, specialization, technology, and innovations. Hence, companies are seeking expertise, better service, delivery, and competitive advantage in outsourcing their logistics activities to focus on core competencies. Logistics service providers have emerged to serve this need during past decades. Identifying business needs from shipper’s perspective and selecting the suitable LSP has become challenging today. For shippers, LSP selection is a strategic decision and selecting the most compatible, and capable LSP is unclear and unique in nature. There is a clear need to research from shipper’s perspective to understand the requirements of the shipper first and then improve LSPs accordingly. This study is designed based on the literature, followed by a survey questionnaire and semi-structured interviews to collect data based on both quantitative and qualitative approaches. Shippers who are involved in global scale logistics operations, with minimum spending of USD 1 million per LSP mode, are selected in the survey. A conceptual framework is designed to guide both survey questionnaire and semi-structured interviews. The analysis is carried out for both survey and interview responses and the results are substantiated by the qualitative responses. For the LSP selection process, service quality and delivery are identified as the most influential dimensions followed by value, cost and LSP capabilities in descending order. Thus, LSP selection criteria significantly vary with the LSP mode. In the second construct, there is no impact from LSP brand reputation for the shipper’ evaluation. But shipper satisfaction and recommendation levels are inter-related. Finally, shippers’ choice to get multiple services from a single LSP is analyzed. The result has no significant observation and both literature and interviews substantiate the same result. The conclusion from the interviewed expertise is that no LSP can provide the same service level for all their logistics requirements and the most suitable option can be selected by matching exact requirements.