1. Introduction
In today’s business world, it is very challenging for a company to be competitive without working in close collaboration with external partners. In light of this, logistics outsourcing is a crucial component of every firm as a result of the strain of rising enterprise expenses and the globalization of business activities [
1]. The idea of supply chain management developing in this direction aims to manage the physical and informational flow exchanged among all participants in a supply chain as optimally as possible, with the dual goals of simultaneously reducing costs along the entire supply chain and increasing the perceived value of goods or services. A globally based company must be competitive in a healthy market environment while collaborating closely with its associated stakeholders [
2]. To focus on their core competencies, businesses frequently outsource their logistics activities to a third-party logistics (3PL) provider.
In 2021, the worldwide 3PL market was estimated to be worth USD 962.1 billion. It is expected to reach USD 2018.22 billion by 2030, expanding at an 8.58% CAGR (compound annual growth rate) over the forecast period (2022–2030) [
3]. The market is dominated by North America. The large-scale application of 3PL services in the manufacturing, retail, automotive, hospitality, construction, telecommunication, online retail, and food and beverage (F and B) industries can be attributed to the rising demand for the outsourcing of crucial transportation and logistics functions to reduce shipping costs and manage delivery times. The market is currently growing in this setting. The introduction of supply chain management (SCM), the cloud, enterprise resource planning (ERP), transportation management systems (TMS), and international trade logistics systems (ITLS), among other significant technological advancements, contributes to this and is a further growth-inducing factor. These developments aid in reducing energy use and improving operational efficiency [
4]. Additionally, the widespread adoption of radio-frequency identification (RFID) chips to track product locations, orders, and freight shipments by manufacturers and consumers using a variety of electronic devices is fueling market expansion. In addition, the sudden global spread of the coronavirus disease (COVID-19) pandemic and the ensuing implementation of mandatory lockdowns facilitated an increase in the demand for third-party logistics services across a variety of e-commerce and online platforms for inventory management and the completion of product deliveries within specified time frames. Other elements, such as the growing trading activities brought on by globalization and the widespread use of installed mobile apps, also contribute to the market’s promising future.
The majority of multinational 3PL companies specialize by differentiating their services, with the scope of services encompassing a range of options from narrow services to broad supply chain activities. Transportation, outbound (distribution), warehousing, inventory control, packaging, and reverse logistics are all tasks related to contract logistics [
5]. For transportation, activities include freight transport (air, ocean, land, and railway), shipping, intermodality management, package express carrying, (de)consolidation, forwarding, customs brokering, perishable/hazardous goods management, and freight bill payment/auditing. For outbound (distribution), activities include order fulfillment/processing, merge in transit, picking, sorting, dispatching, postproduction configuration, and installation of products at the customer’s site. For warehousing, activities include storage, receiving, (de)consolidation, cross-docking, and perishable/hazardous goods. For inventory management, activities include slotting/layout design, forecasting, location analysis, and storage/retrieval management. Design, assembly/packaging, labeling, and palletizing are activities of the packaging sector. Finally, reverse logistics consists of pallet flow management, repair, reuse, recycling, remanufacturing disposal management, testing/product serving, and return shipment management.
The decision to choose a 3PL provider often presents particular difficulties due to the wide range of 3PL service options offered by the sector’s rapidly expanding 3PL market. High order volumes, a lack of inventory space, rising fuel prices, the need to find new talent, and environmental issues are just a few of the difficulties that may arise. Since the 3PL user is contractually obligated to rely on the 3PL to deliver prompt and reasonably priced logistics services to its end customers, failure to address these issues could seriously disrupt the supply chain operations of the 3PL user and have the opposite effect. Most importantly, environmental concerns have become worse in the logistics management industry for a number of reasons [
6]. For instance, after the electrical industry, logistics and transportation rank second in terms of greenhouse gas production. In addition, the need for transportation of products has increased greatly in recent years, and it is supposed to continue to increase in the next years [
7]. As a result, major 3PL companies are concentrating on growing their core businesses in order to maintain supply chain competition, satisfy their customers’ needs globally in a challenging economic environment, and uphold the objective of developing sustainable supply chains. In order to create a more environmentally friendly supply chain in the modern world, corporations must improve their performance indicators to reduce unfavorable external factors of their own logistics activities, such as carbon emissions [
8]. Therefore, knowledge and tactics are crucial for 3PL providers to survive and function effectively and sustainably. These businesses must measure efficiency in order to improve their chances of being efficient.
Emulating best-practice 3PLs that can be found by setting a reliable performance standard is one way to increase the operational effectiveness and, as a result, the competitiveness of 3PLs. An industry norm, a benchmark, and a financial and a nonfinancial audit are a few examples of such standards. Benchmarking appears to be the most suitable method of setting a reliable performance standard and then comparing the operational efficiency of the 3PL with that of its competitors, because a 3PL needs to evaluate its operational performance in relation to those of its competitors and to previous years to continuously strengthen its market position. A strategic action plan for achieving superiority can be created by an organization using benchmarking, a continuous quality improvement process that allows it to assess its strengths and weaknesses, compare the competitive advantages of its top rivals, and find the best practices of functional leaders in the industry.
Therefore, this study proposes a holistic evaluation framework for the performance of 3PL service providers. In this benchmark setting, key performance indicators are identified in light of sustainability practices (economic, service level, social, and environmental aspects), and the most efficient leading providers are determined according to identified indicators. In doing so, a framework of an MCDM-based entropy objective weighting method and the MARCOS (measurement of alternatives and ranking according to compromise solution) method is proposed. The MARCOS method is a powerful and robust tool for optimizing multiple goals that uses the ratio method and the reference point method to generate a scheme of basic comprehensive decision information. Recognizing the limitations inherent in many multicriteria models such as degree of inconsistency and misjudgment of alternatives, there arises a necessity to explore new tools that facilitate rational and reliable decision making. In this context, the newly developed MARCOS method plays a pivotal role in bolstering the robustness of MCDM. Unlike models based on fuzzy logic systems, the MARCOS model demonstrates remarkable flexibility and proficiency in solving multicriteria models with more criteria. Notably, it maintains its simplicity even as the number of criteria or options increases. When compared to other methods, MARCOS distinguishes itself by its simplicity, effectiveness, and ease of application and enhancement. For example, when compared to the TOPSIS method, MARCOS shows greater stability and robustness of the results when changes are made in the measurement scales of the decision attributes [
9]. In comparison with some well-established MCDM methods such as the MABAC, SAW, ARAS, WASPAS, and EDAS methods, the MARCOS method shows an extremely high rank correlation [
9].
In this paper, in order to illustrate the proposed framework, fifteen leading 3PL companies of the world are ranked based on the collection of real data; then, a sensitivity analysis and a comparative analysis are conducted to validate the model. In terms of theoretical contributions, the applied methods are used to take the benefits of the MARCOS method to make a sustainable 3PL evaluation framework with objective weighting assessments with quantitative data; as well, the sensitivity and comparative analyses are conducted to allow decision makers to observe the stability of the results. The present study at the same time can be utilized without modifications in other industries. In terms of managerial implications, this paper provides valuable insights for practitioners and decision makers or policy holders to review their latest current performance in light of sustainability development, benchmark the performance of their rivals in order to help a 3PL key player to navigate, and focus on strengthening strategies as soon as possible to reinforce its competitiveness.
The structure of this study is organized as follows. The literature review is presented in
Section 2. In
Section 3, materials and methodologies are presented. In
Section 4, the result analysis is demonstrated.
Section 5 describes the results validation. In
Section 6, discussion of the implications in terms of research and practice are presented. Finally, in
Section 7, the conclusion and suggestions for future research are discussed.
6. Discussions
6.1. Implications for Research
This study has several important research implications. First, the present work proposes a sustainable evaluation framework with objective weighting assessments with quantitative data, which extends the existing literature related to the performance evaluation of 3PL service providers that mostly adopt single MCDM methods, such as DEA, and subjective weighting methods, such as AHP, TOPSIS, and ANP, to name a few. Deviating from the existing studies, this study aggregates multiple MCDM methods, thus leading to higher robustness and eliminating method-specific disadvantages. Additionally, the incorporation of the entropy-based and MARCOS methods with real collecting data instead of subjective, biased, and ambiguous judgments facilitates real-life implementation. The sensitivity and comparative analysis allow decision makers to observe the stability of the proposed evaluation framework.
Second, there is an absence of research on the determination of social and environmental aspects and its impact on the performance of 3PL service providers. This study contributes to the literature on the environmental aspects of 3PL service providers by determining the carbon dioxide emissions and their impact on performance. The relationships between environmental performances and differentiation advantage from the perspective of 3PLs was proven [
6], which demonstrates that incorporating environmental initiatives involves opportunities to identify and eliminate inefficiencies and reduce the carbon footprint in the supply chain, which can lead to increased competitiveness and profitability of major 3PL firms in the long term [
54]. Logistics improvements from an environmental standpoint, therefore, could gain a strategic role in enhancing a company’s eco-efficient performances and, as a result, its global competitiveness for the implementation of sustainable strategies in supply chain operations. Customers frequently query 3PLs about how well they function in terms of the environment.
Finally, to the best of the authors’ knowledge, no other study has so far applied integrated indicators of economic, service level, social, and environmental aspects in an objective weighting MCDM approach in the area of 3PL performance evaluation. Therefore, the integration of entropy-based and MARCOS methods was proposed for the first time in the logistics literature and the relative priority of environmental aspects was presented in the outcome of this study.
6.2. Implications for Practice
This study’s accurate and practical results, based on the integration presented, will benefit practitioners and researchers in the logistics area in determining which metrics to pay closer attention to in order to increase their level of competitiveness in the market. Therefore, logistics managers can compare the priorities of their own companies with the ideal advised ranking using the suggested priority of the indicators.
The findings show that carbon dioxide emissions rank first among all indicators, followed by employee count, operating costs, and total warehouse area. Remarkably, these 4 indicators represent more than half of the total percentage of the 12 indicators; as a result, the logistics industry should place the majority of its attention on these indicators in order to remain competitive. Employee satisfaction and accidents are the two indicators in the developed model that are ranked at the bottom of the scale. However, since the rankings only show the relative priorities of the 12 indicators chosen for the decision model, their final priority from the results of this study should not be interpreted as meaning that these indicators are not at all important.
This result reinforced that the lower the carbon footprint is and the higher the number of employees is, the higher the competitiveness will be for the 3PL providers in the industry. This outcome is also consistent with the argument of Raut et al. [
6], who noted that the global 3PL market highlights carbon emissions reduction, which positively affects the reputation, customers’ concerns, and sustainable performance of a logistics service organization. Additionally, the outcome may be also explained by the fact that the logistics industry has an emissions-intensive and labor-intensive nature in [
10,
37].
Finally, the results of this study assist practitioners and decision makers in comprehending the influence of the pertinent indicators and the environmental concept on their logistics businesses. The results are therefore useful for different stakeholders in their selection of logistics service providers because they can be used as a reference to understand the norms of the logistics industry as the world faces climate change and global warming. In other words, the results of this study are useful not only for logistics companies but also for various stakeholders in the industry.
7. Conclusions
Effective and efficient outsourcing decisions are essential to an organization’s success in today’s competitive market. I the supply chain management and logistics industries, environmental sustainability is an increasing research topic of interest and is the focus of the current study. This paper proposes an integrated MCDM framework for benchmarking the sustainable performance of global 3PL companies, which studies and develops practical guidelines for improving the performance of these key players to achieve better environmental as well as economic performance, ultimately leading to truly sustainable outcomes, taking into account a highly competitive business environment in the logistics industry and supply chain management. In order to equip logistics companies with key indicators to measure their performances, this study focuses on identifying and then prioritizing those measures that are the most appropriate for their strategic, tactical, and operational needs toward sustainable development. To satisfy these objectives and ensure the impact of each of these indicators, a two-stage framework with a comprehensive evaluation model for logistics performance indicators was suggested in this study. In the first phase, the weight coefficients for each criterion are computed by entropy objective weighting method. Then, the MARCOS method is applied to rank the 3PL companies in accordance with the defined criteria. Sensitivity analysis of criteria weights and comparative analysis of MCDM methods are conducted to test the effectiveness and the applicability of the proposed model.
As a result, carbon dioxide emissions and number of employees are found to be the most significant factors. For the final ranking, DHL is the most efficient 3PL provider, follow by UPS, NFI, and Expeditors. The contributions of this study are threefold. First, the key indicators for 3PL performance evaluation are determined by means of a literature review, aiming for sustainable development of 3PL businesses. Methodologically, the entropy-based MARCOS integrated MCDM framework is proposed for the first time for logistics industry assessment. Finally, both academic researchers and practitioners can benefit from the developed model and its results. The list of indicators and the model presented serve as a frame of reference that will help logistics managers to better understand important logistics indicators, because choosing significant performance indicators is a difficult and time-consuming task for decision makers. According to the findings, this study assists logistics decision makers in identifying their operational prioritization in order to increase their competitiveness in the market. In other words, both the model and the method give managers insights into assessing operations in light of sustainable performance and the relative positions of companies within their industry.
This study offers several interesting research directions. Incorporating weighting methods besides the entropy method and MARCOS can provide more information. Scholars may also be drawn in by the use and integration of various approaches and cutting-edge elements. The size of the data set is a minor limitation. This work is limited to only 15 3PL service providers, the majority of whom are from developed countries, and 12 indicators due to a lack of data. Rich context-specific insights can be obtained by applying the suggested methodology to 3PL service providers in emerging market nations.