Performance Evaluation of Logistics Service Provider (LSP) in FMCG Companies Using Physical Distribution Service Quality (PDSQ) Dimension: Case Study
DOI:
https://doi.org/10.37385/jaets.v5i1.1997Keywords:
FMCG, Performance, LSP, PDSQAbstract
Increasingly fierce business competition requires companies to be able to meet customer desires on time, in the right amount and in the right quality. FMCG XXX Company is a skin care product manufacturing company that focuses on production activities. Therefore, the company transfers product distribution activities to customers (distributors) to Logistics Service Providers (LSP). FMCG XXX hold consumer’s satisfaction in the highest regard. Along with the increasing number of activities being diverted, FMCG XXX companies aim to evaluate LSP performance through appropriate indicators. The indicators evaluated in this study adopt dimensions in Physical Distribution Service Quality (PDSQ) which consist of three dimensions, namely timeliness, availability and condition. Based on the results of the study, 13 indicators were obtained that FMCG XXX Company used to evaluate LSP performance. In general, around 69% of LSP's actual performance has been able to meet the targets set by the company, where two indicators are able to exceed the target and seven indicators are in accordance with the target. However, the company still has to focus on four indicators that have negative deviations because the actual performance value is less than the target set by the company. Negative indicators come from the availability and condition dimensions. The company coordinates with LSP to design improvement projects in order to improve actual performance according to the company's targets.
Downloads
References
Aguezzoul, A., & Paché, G. (2018). A Decision Making Tool for Selection of LSPs. International Journal of Business and Management, 13(5). https://doi.org/10.5539/ijbm.v13n5p95
Aguezzoul, A., & Pires, S. (2016). 3PL performance evaluation and selection: a MCDM method. Supply Chain Forum: An International Journal, 17(2), 87–94. https://doi.org/10.1080/16258312.2016.1176302
Bai, C., & Sarkis, J. (2013). Flexibility in reverse logistics: A framework and evaluation approach. Journal of Cleaner Production, 47, 306–318. https://doi.org/10.1016/j.jclepro.2013.01.005
Barker, J. M., Gibson, A. R., Hofer, A. R., Hofer, C., Moussaoui, I., & Scott, M. A. (2021). A competitive dynamics perspective on the diversification of third-party logistics providers’ service portfolios. Transportation Research Part E: Logistics and Transportation Review, 146(December 2020), 102219. https://doi.org/10.1016/j.tre.2020.102219
Bazeley, P. (2018). INTEGRATING ANALYSES IN MIXED METHODS RESEARCH. SAGE. https://www.torrossa.com/gs/resourceProxy?an=5018133&publisher=FZ7200
Bienstock, C. C., Mentzer, J. T., & Bird, M. M. (1997). Measuring Physical Distribution Service Quality. Journal of The Academy of Marketing Scence, 25(1), 31–44.
Centobelli, P., Cerchione, R., Esposito, E., & Raffa, M. (2016). The revolution of crowdfunding in social knowledge economy: Literature review and identification of business models. Advanced Science Letters, 22(5–6), 1666–1669. https://doi.org/10.1166/ASL.2016.6721
Choi, T. M. (2021). Risk analysis in logistics systems: A research agenda during and after the COVID-19 pandemic. Transportation Research Part E: Logistics and Transportation Review, 145, 102190. https://doi.org/10.1016/J.TRE.2020.102190
Chopra, S., & Meindl, P. (2016). Supply Chain Management: Strategy, Planning, and Operation, Global Edition 7th Edition. Pearson.
Colicchia, C., Marchet, G., Melacini, M., & Perotti, S. (2013). Building environmental sustainability: Empirical evidence from Logistics Service Providers. Journal of Cleaner Production, 59, 197–209. https://doi.org/10.1016/j.jclepro.2013.06.057
Coyle, J. J. (John J., Bardi, E. J., & Langley, C. J. (1996). The management of business logistics. 631.
Delfmann, W., Albers, S., & Gehring, M. (2002). The impact of electronic commerce on logistics service providers. International Journal of Physical Distribution and Logistics Management, 32(3), 203–222. https://doi.org/10.1108/09600030210426539
Fetters, M. D. (2020). The Mixed Methods Research Workbook: Activities for Designing, Implementing, and Publishing Projects. In The Mixed Methods Research Workbook: Activities for Designing, Implementing, and Publishing Projects. SAGE Publications, Inc. https://doi.org/10.4135/9781071909713
Guarnieri, P., Sobreiro, V. A., Nagano, M. S., & Marques Serrano, A. L. (2015). The challenge of selecting and evaluating third-party reverse logistics providers in a multicriteria perspective: a Brazilian case. Journal of Cleaner Production, 96, 209–219. https://doi.org/10.1016/J.JCLEPRO.2014.05.040
Gultekin, B., Demir, S., Akif Gunduz, M., Cura, F., & Ozer, L. (2022). The logistics service providers during the COVID-19 pandemic: The prominence and the cause-effect structure of uncertainties and risks. https://doi.org/10.1016/j.cie.2022.107950
Gupta, A., Singh, R. K., Mathiyazhagan, K., Suri, P. K., & Dwivedi, Y. K. (2022). Exploring relationships between service quality dimensions and customers satisfaction: empirical study in context to Indian logistics service providers. International Journal of Logistics Management, ahead-of-print(ahead-of-print). https://doi.org/10.1108/IJLM-02-2022-0084/FULL/XML
Heiyantuduwa, M. (2015). A Strategic Analysis of the use of Third Party Logistics Providers (3PLs) in Fast Moving Consumer Goods (FMCG) Industry: A Systematic Review of Literature. http://ssrn.com/link/12th-ICBM-2015.html
Hwang, B. N., Chen, T. T., & Lin, J. T. (2016). 3PL selection criteria in integrated circuit manufacturing industry in Taiwan. Supply Chain Management, 21(1), 103–124. https://doi.org/10.1108/SCM-03-2014-0089/FULL/XML
Isaksson, K., & Huge-Brodin, M. (2013). Understanding efficiencies behind logistics service providers’ green offerings. Management Research Review, 36(3), 216–238. https://doi.org/10.1108/01409171311306382
Jepherson, E. M., Patrick, K. N., & Moronge, M. (2021). LOGISTICS MANAGEMENT SYSTEMS AND PERFORMANCE OF FAST-MOVING CONSUMER GOODS MANUFACTURERS IN NAIROBI, KENYA. International Journal of Supply Chain Management, 6(1), 29–63. https://doi.org/https://doi.org/10.47604/ijscm.1232
Lambert, D., Stock, J. R., Ellram, L. M., & Grant, D. (2006). Fundamentals of Logistics Management: First European Edition. In International Journal of Logistics Research and Applications (Vol. 10, Issue 4). McGraw-Hill. https://researchportal.hw.ac.uk/en/publications/fundamentals-of-logistics-management-first-european-edition
Langley Jr., C. J., & Capgemini. (2007). Third-party logistics: Results and findings of the 17th Annual Study. Capgemini Consulting.
Langley, C. J., & Infosys. (2018). The State of Logistics Outsourcing Results and Findings of the 22 nd Annual Study. 22nd Annual Third-Party Logistics Study. https://mymaritimeblog.files.wordpress.com/2017/10/3pl_2018_study.pdf
Lieb, R., & Bentz, B. A. (2005). The use of third-party logistics services by large American manufacturers: The 2004 survey. Transportation Journal, 44(2), 5–15. https://doi.org/10.5325/TRANSPORTATIONJ.44.2.0005
Liu, X., Grant, D. B., McKinnon, A. C., & Feng, Y. (2010). An empirical examination of the contribution of capabilities to the competitiveness of logistics service providers: A perspective from China. International Journal of Physical Distribution and Logistics Management, 40(10), 847–866. https://doi.org/10.1108/09600031011093232
Maloni, M. J., & Carter, C. R. (2006). Opportunities for Research in Third-Party Logistics. Transportation Journal, 45(2), 23–38. https://doi.org/10.2307/20713632
Mandrinos, S. (2014). Internationalisation processes of fast moving consumer good (FMCG) products. Journal of Entrepreneurship in Emerging Economies, 6(2). https://doi.org/https://doi.org/10.1108/JEEE-04-2014-0012
McKinnon, A. C. (2005). The economic and environmental benefits of increasing maximum truck weight: The British experience. Transportation Research Part D: Transport and Environment, 10(1), 77–95. https://doi.org/10.1016/j.trd.2004.09.006
McKinsey & Company. (2021, November 8). COVID-19: Implications for business. Https:// Www.Mckinsey.Com/Business-Functions/Risk-and-Resilience/Our-Insights/Covid-19-Implications-for-Business.
Mentzer, J. T., Gomes, R., & Krapfel, R. E. (1989). Physical Distribution Service: A Fundamental Marketing Concept? Journal of the Academy of Marketing Science, 17(1), 53–62. https://doi.org/10.1007/BF02726354
Min, H., & Ko, H. J. (2008). The dynamic design of a reverse logistics network from the perspective of third-party logistics service providers. International Journal of Production Economics, 113(1), 176–192. https://doi.org/10.1016/j.ijpe.2007.01.017
MLRP FEB. (2023, July 20). Kondisi Logistik Indonesia 2023: Tantangan yang Dihadapi dan Upaya Peningkatan. Https://Mlrp.Feb.Ugm.Ac.Id/2023/07/Kondisi-Logistik-Indonesia-2023-Tantangan-Yang-Dihadapi-Dan-Upaya-Peningkatan/.
Neboh, N. D., & Mbhele, T. P. (2021). Supply chain design dimensions for supply chain resilience in the South African fast-moving consumer goods retail industry. Africa Journal of Management, 7(S1), 58–81. https://doi.org/10.1080/23322373.2021.1930742
Nguyen, T. D. A. (2019). The effect of physical distribution service quality on customer perceived value in Omni-channel. International Journal of Research Studies in Management, 8(1), 101–115. https://doi.org/10.5861/ijrsm.2019.4011
Njambi, E., & Katuse, P. (2013). Third party logistics in distribution efficiency delivery for competitive advantage in fast moving consumer goods companies in Kenya. International Journal of Social Sciences and Entrepreneurship, 1(8), 15–27.
Nygrén, N. A. (2019). Scenario workshops as a tool for participatory planning in a case of lake management. Futures, 107, 29–44. https://doi.org/10.1016/J.FUTURES.2018.10.004
Perotti, S., Zorzini, M., Cagno, E., & Micheli, G. J. L. (2012). Green supply chain practices and company performance: The case of 3PLs in Italy. International Journal of Physical Distribution and Logistics Management, 42(7), 640–672. https://doi.org/10.1108/09600031211258138
Premkumar, P., Gopinath, S., & Mateen, A. (2021). Trends in third party logistics – the past, the present & the future. International Journal of Logistics Research and Applications, 24(6), 551–580. https://doi.org/10.1080/13675567.2020.1782863
Rabinovich, E., & Bailey, J. P. (2004). Physical distribution service quality in Internet retailing: service pricing, transaction attributes, and firm attributes. Journal of Operations Management, 21(6), 651–672. https://doi.org/10.1016/J.JOM.2003.11.004
Razzaque, M. A., & Sheng, C. C. (1998). Outsourcing of logistics functions: A literature survey. International Journal of Physical Distribution & Logistics Management, 28(2), 89–107. https://doi.org/10.1108/09600039810221667
Sarabi, E. P., & Darestani, S. A. (2021). Developing a decision support system for logistics service provider selection employing fuzzy MULTIMOORA & BWM in mining equipment manufacturing. Applied Soft Computing, 98, 106849. https://doi.org/10.1016/j.asoc.2020.106849
Selviaridis, K., & Spring, M. (2007). Third party logistics: A literature review and research agenda. The International Journal of Logistics Management, 18(1), 125–150. https://doi.org/10.1108/09574090710748207
Sherman, R. J. (2013). Supply Chain Transformation?: Practical Roadmap to Best Practice Results. John Wiley and Sons.
Solakivi, T., & Ojala, L. (2017). Determinants of carrier selection: updating the survey methodology into the 21st century. Transportation Research Procedia, 25, 511–530. https://doi.org/10.1016/J.TRPRO.2017.05.433
Sumantri, Y., & Lau, S. K. (2011). The Current Status of Logistics Performance Drivers in Indonesia: An Emphasis on Potential Contributions of Logistics Service Providers (LSPs). Business Innovation & Technology Management, 001, 34–050. http://apbitm.org
Tu, L., Lv, Y., Zhang, Y., & Cao, X. (2021). Logistics service provider selection decision making for healthcare industry based on a novel weighted density-based hierarchical clustering. Advanced Engineering Informatics, 48(December 2020), 101301. https://doi.org/10.1016/j.aei.2021.101301
Vieira, J. G. V., & Mergulhao, R. C. (2015). Sustainable supplier selection: the effect of logistical collaboration on logistical performance. International Journal of Engineering Research and Applications, 5, 118–127.
Williamson, K. C., Spitzer, D. M. Jr., & Bloomberg, D. J. (1990). Modern Logistics Systems: Theory and Practice. Journal of Business Logistics, 11(2).
Xing, Y., Grant, D. B., McKinnon, A. C., & Fernie, J. (2010). Physical distribution service quality in online retailing. International Journal of Physical Distribution and Logistics Management, 40(5), 415–432. https://doi.org/10.1108/09600031011052859/FULL/XML
Yew Wong, C., & Karia, N. (2010). Explaining the competitive advantage of logistics service providers: A resource-based view approach. International Journal of Production Economics, 128(1), 51–67. https://doi.org/10.1016/j.ijpe.2009.08.026