Evaluation of third-party logistics (3PL) providers by using a two-phase AHP and TOPSIS methodology

Purpose - Third-party logistics (3PL) provider selection has gained great attention in logistics management literature. The purpose of this paper is to provide a good insight into the use of a-two-phase analytical hierarchy process (AHP) and technique for order preference by similarity to ideal solution (TOPSIS) approach that is a multi-criteria decision-making methodology in the evaluation of 3PL providers. Design/methodology/approach - In this paper, after the selection criteria of 3PL providers are determined by modified Delphi method, the weights of criteria have been calculated by applying the AHP method. The TOPSIS method is then employed to achieve the final ranking results. And an actual case example is presented to clarify the methodology. Sensitivity analysis is also given to demonstrate how sensitive the proposed model is to changes in the weights of different main criteria. Findings - This model provides decision makers with a simple, flexible, and easy-to-use approach to evaluate potential 3PL providers efficiently. Findings demonstrate that the proposed benchmarking framework, with minor modifications, can be useful to all firms in their 3PL provider selection decisions. Research limitations/implications - A two-phase AHP and TOPSIS methodology is very flexible and suitable for various decision situations. However, selection of the appropriate 3PL provider requires consideration of multiple alternative solutions and evaluation criteria because of complex methodology, and hence it increases the effort. Originality/value - This is probably the first time that an attempt has been made to apply the modified Delphi method, AHP and TOPSIS methodology in the decision of 3PL provider selection in a Turkish automotive supplier company. This is the most powerful motivation to consider this problem. In addition, the paper is especially of interest to managers as they make decisions on which criteria should be considered in the evaluation process and how a decision model should be structured by using a two-phase AHP and TOPSIS methodology.