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15th Panhellenic Logistics Conference

Outsourcing service logistics providers for the transportation of hazardous materials with the use of multicriteria analysis Aidonis D., Achillas Ch., Voulgarakis N., Triantafillou D., Moussiopoulos N.


15th Panhellenic Logistics Conference

Agenda  Introduction  Scope  Problem definition  Criteria to be considered in the decision-making process  Multi-criteria Analysis  Methodological approach  Case study  Conclusions


15th Panhellenic Logistics Conference

Introduction

New trends in business management

Effects of the economic crisis

Revision of logistics services

Requirement of creating new ones


15th Panhellenic Logistics Conference

Introduction  Logistics services include; 

design,

implementation and

control

of the production, storage and distribution processes of materials

 Logistics services consist a holistic approach of; 

planning and coordinating the material

flows from source to user

in order to manage these materials

in the appropriate quantity, quality, time and place

and at the lowest possible cost


15th Panhellenic Logistics Conference

Introduction

Logistics can help firms to become leaders of the markets by achieving the twin peaks of excellence; gain both cost leadership and service leadership


15th Panhellenic Logistics Conference

Introduction

ď Ž In order to achieve their targets and improve their

competitiveness, firms have focused developing their core businesses

mainly

on

ď Ž On the other hand, outsourcing of non-core businesses

has become lately a very common practice


15th Panhellenic Logistics Conference

Scope

Present a

multicriteria analysis approach for the selection of the

optimal outsourcing strategy involving a number of service logistics providers


15th Panhellenic Logistics Conference

Problem definition  Logistics outsourcing functions to 3PL providers, involves

the use of external companies to perform some or all of the firm’s logistics activities  The use of qualified 3PL providers generates a large

number of advantages for manufactures dealing with hazardous materials: 

High level of expertise

Specialization on logistics services

Experience and know-how to ensure compliance with safety and environmental standards

Reduction of risks

Building up a reassuring layer of supply chain accountability

Help client companies to focus more on their main objectives


15th Panhellenic Logistics Conference

Problem definition  Outsourcing reduces capital investment in 

facilities,

equipment,

information technology systems and

human resources,

helping the clients to remain competitive

 3PL

companies provide high level of logistics services to its clients by 

reducing transportation lead times and

supporting the provision of higher customer service level.


15th Panhellenic Logistics Conference

Problem definition Critical questions:

Should a firm outsource or should it not? What

part of the logistics should be outsourced and what should be better executed “in-house”? What is the optimal balance?


15th Panhellenic Logistics Conference

Criteria to be considered in the decision-making process ď Ž The

decision hierarchy process regarding the selection of the appropriate 3PL provider is composed of multiple levels: 1.

General company’s considerations

(price, financial considerations,

industry experience, location, asset ownership, international scope, growth forecasts, yearly efficiency) 2.

Capabilities

(optimization capabilities, information technologies systems,

customer service, responsiveness) 3.

Quality

supply

chain

vision,

creative

management

and

(service quality and performance, continuous improvement, key

performance indicators, measurement and reporting) 4.

Client relationship

(service quality and performance, continuous

improvement, key performance indicators, measurement and reporting) 5.

Labor relations (human resources policies and availability)


15th Panhellenic Logistics Conference

Criteria to be considered in the decision-making process Indicative criteria: 

Cost

Asset ownership

Service quality

Growth forecasts

Technical expertise

IT infrastructure

Reputation

Customer service

Reliability

Creative management

Flexibility

Responsiveness

Geographical coverage

Continuous improvement

Capacity

KPIs

Financial stability

Cultural fit

Industry experience

Location

Availability of adequate human resources


15th Panhellenic Logistics Conference

Multi-criteria Analysis  Need to take into account mutually conflicting criteria

in the decision-making process

 Method: ELECTRE III

 Use of: 

Weighting factors for selected criteria

Indifference threshold

Preference threshold

Veto threshold


15th Panhellenic Logistics Conference

Methodological approach


15th Panhellenic Logistics Conference

Case study Alternatives: 

A1: Selection of service logistics provider A

A2: Selection of service logistics provider B

A3: Selection of service logistics provider C

A4: Selection of service logistics provider A for carrying out 50% of the volume and service logistics provider B for carrying out the remaining 50% of the volume

A5: Selection of service logistics provider A for carrying out 75% of the volume and service logistics provider B for carrying out the remaining 25% of the volume

A6: Selection of service logistics provider A for carrying out 25% of the volume and service logistics provider B for carrying out the remaining 75% of the volume

A7: Selection of service logistics provider A for carrying out 50% of the volume, service logistics provider B for carrying out 25% of the volume and service logistics provider C for carrying out the remaining 25% of the volume

A8: Selection of service logistics provider A for carrying out 50% of the volume and “in-house” execution of the remaining 50% of the volume

A9: Selection of service logistics provider A for carrying out 25% of the volume, service logistics provider B for carrying out 25% of the volume, service logistics provider C for carrying out 25% of the volume and “in-house” execution of the remaining 25% of the volume

A10: Selection of “in-house” execution of the company’s logistics


15th Panhellenic Logistics Conference

Case study Selected criteria: 

C1: Cost (in €/km×m3)

C2: Geographical coverage (in thousand km2)

C3: Reputation - Reliability (in 0-10 scale)

C4: Capacity (in m3/day)

C5: Technical expertise - Know how (in 0-10 scale)

C6: Environmental performance (in 0-10 scale)


15th Panhellenic Logistics Conference

Case study Performances of the available alternatives for the selected criteria

Weighting factors and thresholds

Normalized performances of the available alternatives for the selected criteria

Sensitivity Analysis


15th Panhellenic Logistics Conference

Case study

Ascending and descending distillations

A3: Selection of service logistics provider C

Hierarchy of available alternatives


15th Panhellenic Logistics Conference

Conclusions  Outsourcing

logistics services competitive advantages to firms

provides

significant

 Logistics outsourcing can help in reducing cost elements

and lead times  The presented methodological framework provides firms

with an easy-to-use tool that enables them to simultaneously assess several -often mutually conflictingcriteria  The

approach can be easily adopted -with slight modifications and adjustments to the special requirements of the problem under consideration- in order to similar logistics decision-making problems


15th Panhellenic Logistics Conference

Thank you for your attention!

Contact details: daidonis@logistics.teithe.gr

ACHILLAS  

Aidonis D., Achillas Ch., Voulgarakis N., Triantafillou D., Moussiopoulos N. 1 515 thth P a n h e ll e n icP a n h e ll e n ic L o g is ti c...

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