Fuzzy AHP signifies criteria influencing third party logistics selection in outsourcing decisions of freight forwarding company

Abstract

Outsourcing decisions for logistics activities are a multi-criteria problem, composed of qualitative and quantitative factors. Most decision support models in logistics outsourcing or known as third party logistics (3PL) are popularly adopting the multi-criteria decision making (MCDM) methods used in manufacturing or import/export business. However, most factors in outsourcing are identified as human judgments which are challenging in term of objectively measuring. Freight forwarding is one of major businesses that frequently utilizes 3PL. Yet, few studies of outsourcing logistics for freight forwarding business were investigated. Purpose of this study is to examine and propose critical criteria to be used in decisions to choose 3PL road transportation provider for freight forwarding companies in Thailand. Responses from experts in the industry was calculated using fuzzy analytic hierarchy process (Fuzzy AHP) procedure to obtain weight and rank of criteria. The result reveals that top 3 criteria for freight forwarding company to use in evaluating road transportation provider are quality of service, cost of service, and delivery performance respectively.