Study of third party logistics selection and development in Singapore

• Main Author: Ji, Zhuoying
• Other Authors: School of Civil and Environmental Engineering
• Format: Final Year Project
• Language: English
• Published: 2014
• Subjects: DRNTU::Engineering::Maritime studies; DRNTU::Business::Operations management::Supply chain management
• Online Access: http://hdl.handle.net/10356/61033
• Institution: Nanyang Technological University

With the development of globalization, pursuit of customer satisfaction and intensive competition, supply chain management is become one of the key success factors of companies. In reaction, companies tend to outsource the supply chain function to third party service providers, known as Third Party Logistics (3PL). As the cooperation with 3PLs deepens, companies are delegating a wider range of functions to 3PLs. The possible impact of 3PL on companies’ profitability and the potential long-term strategic relationship urge companies to select 3PL with caution. Selection criteria have been developed and adopted. However, few studies have investigated into the 3PL selection in Singapore Fast Moving Consumer Goods industry. Hence, the objectives of this project are to (1) investigate the 3PL selection criteria adopted by Fast Moving Consumer Goods (FMCG) industry in Singapore local context, (2) compare the distinctive selection criteria across three selected industries, namely the Fast Moving Consumer Goods industry, Cold Chain Logistics, and Electronic and Electrical industry, (3) measure the evolution in 3PL selection with the development in Supply Chain Management. A multi-method approach combining both quantitative and qualitative methods was employed. A quantitative survey designed to adopt Analytical Hierarchy Process (AHP), was conducted among 51 Singapore registered FMCG companies. Subsequently, mathematical analysis of the four completed survey results was conducted. Meanwhile, for qualitative approach, an in-depth case study with a local 3PL selection practitioner and four brief interviews with 3PL users and providers are completed to complement the result from the quantitative survey. The findings from the research reveal the most important 3PL selection criteria in Singapore FMCG sector are: Cost Competitiveness, Service Quality, Expertise, Company Capability, Sustainability, Flexibility, Compatibility, and Innovation. The criteria are considered to a significant extent and no dominant criteria exist in Singapore FMCG industry. Through the cross-industry comparison, it was observed that distinctive needs of each industry were addressed by unique criteria. The findings also confirm the evolution of 3PL selection criteria with the development in supply chain management. Integration between 3PLs and principals has emerged. This paper has attempted to establish the list of 3PL selection criteria for Singapore FMCG industry and supplement the lack of study on 3PL selection criteria in Singapore context. In such way, the result can serve as a reference for FMCG companies during 3PL selection. Future studies can be extended by expanding the scope from Singapore to emerging markets and by switching to other industries. The correlation between valued 3PL selection criteria and the nature of the industry can be further analysed. The 3PL selection criteria in 3PL companies’ mind can be consolidated to serve as a contrast with this study.