This document provides a literature review and analysis of existing methods for evaluating and selecting third-party logistics (3PL) providers. It analyzes 50 academic articles on 3PL selection methods published between 1997-2008. The majority of methods considered a mixed qualitative and quantitative approach, using criteria like quality, cost, and services to evaluate candidates. The document categorizes the methods as qualitative, quantitative, or mixed. Most used a mixed method, with some initial quantitative screening followed by qualitative analysis from an expert team. The literature review aims to provide a reference on current 3PL selection research and the characteristics of different evaluation methods.

1. A brief literature review on decision methods analysis for 3PL selection
Fabio Favaretto
Guilherme Ernani Vieira
Luis Eugenio Carretero-Dias
Abstract - There has been an increasing interest in
third-party logistic (3PL) evaluation and selection
methods lately. Proposed methods in academic
literature have significant differences, approaches
and conditions to be used, yet comprehensive
reference of such methods was not found. This
problem is considered in this article, which main
goal is to make a descriptive analysis of existing
methods for evaluation and selection of 3PL
providers. A classification of methods is made
using characteristics commonly highlighted in
academic literature. This paper is an exploratory
study and main expected result is a reference of
current 3PL selection and evaluation researches.
Most of the analyzed methods for 3PL selection
and evaluation considered a mixed between
qualitative and quantitative approaches and are
not based in real cases. Descriptions of which
method to use in each particular situation was not
found.
Keywords: Third-party logistics; evaluation and
selection methods; logistic outsourcing; decision
methods.
I. INTRODUCTION
COMPETITIVE markets make enterprises more
concerned in getting good results. One way to hit
this goal is to focus on core competences or
processes. Activities that can be performed by
partners are outsourced in different ways, varying
from a simple and volatile commercial supply to a
long term partnership. Logistic is a process that has a
strong role in manufacturing enterprises and mainly to
those in dynamic competitive environments. The
growth of logistics process outsourcing has led
business to a new class of logistic service providers
called third-party logistics (3PL). To Qureshi et ale
(2007), the outsourcing of logistical functions to
third-party service providers has become an
increasingly powerful trend in modem multinational
companies. Bounfour (1999) proposes that the main
reasons of an enterprise to outsource some of its
functions are:
1. Concern in the core business or process;
2. Reduce technological complexity;
3. Reduce costs and
978-1-4244-3541-8/09/$25.00 ©2009 IEEE 735
4. Develop new competitive approaches,
through innovation.
The 3PLStudy (2007) presents a research with
more than 1,500 logistic and supply chain executives
and approximately 82% of their enterprises are 3PL
services user.
According to Gunasekaran and Ngai (2008),
nowadays 3PL has become very popular for disposing
products to market as soon as possible and also for
the timely delivery ofproducts to the customers.
Due to the importance of logistic services, enterprises
need to carefully evaluate and select their service
providers. Selection is a process where many
candidates are analyzed to choose the best provider
for a situation. To contract one or more 3PL provider
is also necessary to carefully evaluate candidates.
There is a great amount of academic work that deals
with this 3PL related issue. Selection methods have
different classifications, purposes and application
conditions. In addition there is a vast range of
required information in order to properly use these
methods. To enterprises and academics it is difficult
to know exactly what kind of methods are available
and what their main features are. This paper will work
with this problem and its main goal is to show a brief
analysis of existing methods for selection of 3PL
service provider.
II. LITERATURE REVIEW AND ANALYSIS
This review was based on some of the most
renewed international journals about operations
management, supply chain management and logistics,
such as: Production and Inventory Management
Journal, International Journal of Production
Economics and Journal of Business Logistics.
Preferred articles were the ones that brought large
literature reviews.
The initial review concentrated in operations
management, logistics and supply chain management
journals and annals. Other researched areas were:
service management, quantitative and qualitative
decision methods and strategy. Search engines of
academic bases were used. First selection was done
based on titles and keywords, followed by abstract.
Around 50 articles were then selected to be used.
The following articles analyses are chronologically
divided for easier comprehension.

2. Articles ranging from 1997 to 2000:
• Sink and Langley Jr. (1997) justify
logistic outsourcing by core competence
focusing. A third-party case studies
literature review is presented and main
objective is to provide a managerial
framework for the selection of 3PL based
on these cases. Authors present a five
steps sequence to be performed by a
team. Third step is to perform an
evaluation of likely suppliers, obtain
required data, qualitative evaluate
candidates and then choose supplier.
Initial selection is based on traditional
criteria like: quality, cost, capacity and
delivery capability. More rigorous criteria
can be added as: references, depth of
management expertise, financial strength
and others. Proposals for a specific
scenario can be required and visits can be
done to analyze potential candidates.
Evaluation is used to select 3PL provider.
• In Menon et al. (1998) the main goal is to
make an exploratory study to examine the
criteria for selecting 3PL provider and to
know how the firm's competitiveness and
external environment affects these
criteria. In this research it is highlighted
that supplier perceived performance and
supplier perceived capability are more
important selection criteria than price.
Criteria items are defined based on a
literature review and on a survey with
logistic managers. Proposed selection
decision method is that a team evaluates
and ranks providers candidates. Logistic
managers analyze this rank and select a
provider according to defined criteria
composed by strategic and operational
items.
Articles ranging from 2001 to 2005:
• Van et al. (2003) consider the 3PL as a
supply chain special member hardly
affected by demand variations. They
develop a new decision method to more
effectively support the evaluation and
selection of 3PL in the supply chain
network environment. Authors use an
expert system based on a human
evaluation of some features of past
logistic cases. Systems utilization is one
process activity of knowledge gathering.
Classes of items for evaluation are
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defined but specific items should be set in
each case according to the expertise. It
composes a dynamic environment where
changes are incorporated and used in new
cases.
• Zhang et al. (2004) stated that the
evolution of supply chains leads to the
creation of a new integrator element
called fourth-party logistic (4PL) who is
responsible for managing a group of 3PL.
Managing activities includes selecting
3PL providers. The authors proposed a
process where a group of experts value
candidates using some defined items
criteria. These items are then used in an
Analytic Hierarchy Process (AHP) multi-
criteria decision method. Items range
from operational, strategic and external.
Proposed process is based on literature
review and previous academic findings.
• A framework for evaluating 3PL is also
presented by Vaidyanathan (2005). In this
case evaluation is a way of selection. This
framework explains functions that
providers must have to enhance
information and material flows. The
proposed method follows a process. In
the first activity, the necessary functions
are compared and some candidates are
discarded. After some other steps, an
evaluation is done using a provided list of
criteria divided in six factors: IT
(information technology), quality, cost,
services, performance metrics and
intangibles. Evaluation (and selection) is
conducted by a team that ranks
candidates.
Articles ofyear 2006:
• To Aguezzoul et al. (2006), additional
requirements are being placed on many
industries and chains and previous
selection decision methods do not support
some needed factors, such as: price,
services offered location, technology and
quality between others. Authors address
this problem in two steps. First they use
main and secondary criteria chosen
according to the situation in a flexible
selection method where user can
introduce desirable criteria and weights.
Second, they use an ELECTRE multi
criteria method. Authors present a
numerical example where criteria

3. definition is based on a literature review.
Specialists provide values for each
criterion of each candidate and the
proposed method is used to index them.
The first candidate in the final rank is
selected.
• Zhang et al. (2006) propose the use of a
quantitative multi criteria decision
method as a way to allow decision
makers specify their preference using a
single scale. The method is based on
previous works and literature reviews.
Method uses a DEA (Data Envelopment
Analysis) combined with AHP
techniques. Criteria are based on previous
research and use operational and strategic
matters. Method utilization is a single
activity that makes an evaluation of
candidates. Zhang et al. (2004) and
Zhang et al. (2006) have the same basis
for their proposals, but use different
methods, criteria and sub-criteria.
Articles ofyear 2007:
• Alard et al. (2007) proposed a reference
process for global sourcing based on an
action research with enterprises. This
process should be used in an interactive
way. Supplier selection is an activity
performed after deciding 'make-or-buy'.
Proposed supplier evaluation and
selection are performed bottom-up in a
strategic process of procurement and use
a qualitative method. Possible suppliers
are pre-selected and evaluated in detail.
Criteria are not defined and can be added
according to situation.
• To Cao et al. (2007), outsourcing
logistics activities is a way for an
enterprise to attempt maximizing supply
chain profit. Considering the limitations
of simple previous methods, authors
proposed an integrated method using
multi-criteria (Borda Function) and Gray
Rational Analysis to select a 3PL
provider based on a literature review.
Selection is part of a process that begins
with an objective definition and then
makes a candidates filtering, establishes
weights for defined criteria and ranks
providers. This process is conducted by a
group of specialists and used criteria are
composed from operational, strategic and
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external items. Items values are defined
by specialists.
• Isiklar et al. (2007) consider logistics
outsourcing a strategy that can lead
enterprises to greater competitiveness.
Their claims to enhance searching speed
and accuracy of 3PL selection method by
using a combinatory approach of a
particular multi- criteria technique with
learning methodologies. The proposal is
based in a literature review and is applied
in a case where best solution is chosen for
a specific situation. Choice is made by an
intelligent system that uses a case base. A
team analyzes previous cases using given
criteria to enrich this base. Criteria
consider operational and strategic issues.
• To Jharkharia and Shankar (2007), 3PL
providers are offering a great range of
services in face of an ascending need to
outsource. In this scenario, the
complexity of selection activity increases
due to the growth of needed selection
criteria. To deal with this complexity, the
authors suggest a selection method based
in an ANP (Analytic Network Process)
multi criteria decision method. This
proposal is based on literature review and
is applied in a case. This article main
objective is to provide a reference for
managers or decision makers that need to
select a 3PL for their organizations. The
proposed method is a process with two
steps: initial screening of providers and
final selection. Criteria items are defined
and cover operational and strategic
measures. A team performs an initial
qualitative evaluation and use ANP for
final selection.
• Qureshi et al. (2007) point that to
earmark the potential 3PL provider it is
necessary to make a systematic
evaluation in face of a changing demand.
Authors propose to use a framework with
the Technique for Order Preference by
Similarity to Ideal Solution (TOPSIS).
Their methodology deals with qualitative
and quantitative criteria and uses AHP to
weigh criteria. Evaluation and
subsequently selection is performed as a
single activity. The proposal is based on
literature review and is intended to be
used for an experienced decision maker's

4. team. Used criteria have both operational
and strategic items.
• Zhang et al. (2007) point that 3PL has
become a potentially valuable way of
securing competitive advantage (in
supply chains) and improving
organization performance. They proposed
a system to evaluate and select 3PL
providers based on criteria found in
literature. The method uses a technique
for pattern identification called Principal
Component Analysis. Item criteria are
both operational and strategic and have a
detailed description. A case is presented
to illustrate the method. Value for each
criterion is measured using given
definitions.
• Facing the rapid increasing number of
3PL providers, Xu and Wang (2007)
proposed a method based on fuzzy
considerations to help enterprises to
choose supplier reasonably. Defined
criteria are based on previous works and
cover operational and strategic items. A
team specifies values and weights for
these items and results are indexed using
a proposed quantitative method. Selection
is performed as an activity. Method
application evaluates and ranks 3PL
candidates.
Articles ofyear 2008:
• Efendigil et al. (2008) proposed a holistic
approach to select 3PL for reverse
logistic that can be used for more general
logistic regarding some specificity.
Authors proposed an integrated
conceptual framework combining
artificial intelligence and fuzzy logic to
assist managers in determining the most
appropriate 3PL. Method application is
divided in process phases and is
performed by a team from the contracting
enterprise. The AHP method is used
initially for weighing defined items
criteria that use operational, strategic and
external measures. Proposed tool
evaluates and selects 3PL providers.
Contract duration is not specified.
• Liu and Wang (2008) affirm that 3PL
utilization is derived from a global
markets trend. Authors proposed an
integrated fuzzy decision method for 3PL
selection based on the contracting
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company different logistic needs. It is
proposed to deal with imprecise and
uncertain situations. Application is a
process that consists in evaluating some
defined criteria and applies the proposed
method. The proposed method is based
on literature review and a real case is
presented to illustrate it. Criteria items
are both strategic and operational.
III. SELECTION METHOD ANALYSIS
Most articles use mixed method type for
evaluating and selecting 3PL provider. This class was
attributed to methods that use some kind of
quantitative analysis mixed with qualitative
inferences. Mixed methods can benefit from both
qualitative and quantitative methods in a broad
criteria range. Mixed methods utilization usually
begins with variables measurement or scale that are
used as criteria. Value attribution can be based in well
established basis or can be subjective. Differences in
initial value attribution can lead to distinct evaluation
or selection and some methods consider analyzing
this phenomenon using fuzzy tools. Other articles
consider a quantitative approach as an initial selection
for a candidate set creation. This set is then analyzed
in a qualitative way for experts and managers team.
Quantitative methods (as a part of a mixed model) are
mainly of two types: multi criteria decision methods
(AHP, ANP and ELECTRE) and artificial
intelligence. Some articles also included fuzzy logic
to avoid biased evaluations.
Four articles considered strictly qualitative
methods: Menon et al. (1998), Sink and Langley Jr.
(1997), Vaidyanathan (2005) and Alard et al. (2007).
In these works there are a set of subjective or
objective criteria used to rank 3PL providers. This
type of method is more flexible and susceptible to
opinions and preferences and is usually conducted by
a team.
Two articles considered strictly quantitative
methods: Zhang et al. (2007) and Efendigil et al.
(2008). In this type of method just objective criteria
(those that can be measured) are used in quantitative
methods with no subjective interpretation. There is no
experts need and calculation can be automated. Table
1 sums up the analyzed articles classified according to
the selection method.

5. REFERENCES
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and findings of 12th
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ACKNOWLEDGEMENTS
The authors would like to thank the Brazilian Federal
Research Funding Agency (CAPES - Coordenacao
de Aperfeicoamento de Pessoal de Nivel Superior) for
the financial support.
Table I. Articles classification according to the proposed method
IV. CONCLUSIONS
From the review papers analyzed, only Zhang et
at. (2007) made a detailed definition of used criteria
items for the evaluation and selection of 3PL
providers. Misunderstanding of proposed items can
lead to erroneous method utilization and poor results.
More than one item definition could be important to
have a clear way of measuring criteria variables. This
consideration is especially important and should be
with subjective criteria items. It can be added that a
contracting enterprise may need to invest a great
amount of the time and to gather all necessary
information, which is not usually available. In any
case, differences in initial value attribution can lead to
very distinct results.
3PL selection is an important task to enterprises
willing to be efficient and competitive. It is necessary
to use a decision support method to perform this task
but research in this field is still in its early stage and
therefore needs to be expanded. There are a great
range of selection decision methods that can be used
in particular situations but it was not found
comparisons about in which situation one method is
better than another. A great range of operational and
strategic criteria items can be used to cover large
outsourcing and competitive questions but it does not
guarantee good results during the 3PL evaluation and
selection process.
Analyzed methods have limitations due to a gap
of empirical research and a great number of
su.bje~tive criteria items that must be used. Yet many
criteria are not defined in details and can have
different interpretations and evaluations.
Selecting and evaluating are tasks usually
performed together and it can be useful in situations
with many initial3PL candidates to realize these tasks
in two phases: pre-selection and detail evaluation.
There is a need to extend the limits of current works
in more pragmatic and enterprise oriented views. And
type for 3PL evaluation and selection.
Main method
Strictly Strictly qualitative Mixed
quantitative
Zhang et al. Sink and Langley Jr. Yan et al, (2003)
(2007) (1997) Zhang et al. (2004)
Efendigil et al. Menon et al. (1998) Aguezzoul et al. (2006)
(2008) Vaidyanathan (2005) Zhang et al. (2006)
Alard et al. (2007) Cao et al. (2007)
Isiklar et al. (2007)
Jharkharia and Shankar
(2007)
Qureshi et al. (2007)
Xu and Wang (2007)
Liu and Wang (2008)
739

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