SELECTION CRITERIA OF THIRD PARTY LOGISTICS SERVICES

A key decision in logistics management from the customer’s point of view is the selection of the transportation mode and carrier to move company’s inbound and outbound freight. When making this decision, managers must typically consider different attributes related to cost and transit time as the primary criteria. However, the importance of individual factors often depends on the industry and company size. Moreover, even these factors may differ within a company form one facility to the next (Meixel & Norbis, 2008). 3PL selection criteria, especially the mode choice and carrier selection are part of the logistics decision making process of the 3PL customers. These include identifying relevant logistics performance variables, selecting the most suitable mode of transport and carrier, negotiating rates and level of service, and evaluating the carrier performance (Monczka, Trent & Handfield, 2005). According to Russell and Taylor (2003), transportation costs within manufacturing firms in 2003 were average 20 percent of the total production costs. Thus, no doubt these decisions are important to logistics managers.