Selection of Third-Party Logistics (3PL): A Hybrid Approach Using Interpretive Structural Modeling (ISM) and Analytic Network Process (ANP)

The use of third-party logistics (3PL) providers is becoming prevalent. The relationships associated with 3PL are typically more complex than any traditional logistics supplier relationships and they are truly strategic alliances. These relationships have become a popular way to enhance an organization’s flexibility in meeting rapidly changing market conditions, focus on core competencies, and develop long-term growth strategies. This study offers an understanding of the criticality of various 3PL selection issues and provides a list of 26 selection criteria. Using the real- life case of KVIC (Khadi and Village Industry Commission, India) organic food sector, it proposes a hybrid approach of interpretive structural model (ISM) and analytic network process (ANP) for a proper selection of 3PL service providers. This paper discusses the implications of the results in a real-life context. Further, managerial insights developed through the use of ISM- and ANP-based complementary approaches uncover the scope for improvements in the quality of supply chain practices. This paper summarizes the developed understanding of supply chain practices and identifies a few inherent limitations of the used approach.