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Evaluating the efficiency of 3PL logistics operations

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  • Hamdan, Amer
  • (Jamie) Rogers, K.J.

Abstract

This paper introduces data envelopment analysis (DEA) as a tool to evaluate the efficiency of a group of third-party logistics (3PL) warehouse logistics operations. DEA is a linear programming technique used to evaluate the efficiency of decision-making units (DMUs) where multiple inputs and outputs are involved. The paper starts with a general review of the DEA models and basic definitions, and then provides a review of warehousing functions and performance measures. First, a basic (unrestricted) DEA model is applied to a group of homogeneous warehouses that have similar inputs and outputs. Then, a revised (restricted) DEA model with additional constraints is presented; the revised model incorporates weight restrictions and value judgment. The relative efficiency scores for the warehouses used in the study were analyzed before and after the use of weight restrictions. As a result, we were able to determine the impact of each input and output on the efficiency of each warehouse, and also, we were able to examine specific warehouse characteristics and develop a set of recommendations for assisting managers and engineers in the improvement and design of more efficient operations.

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  • Hamdan, Amer & (Jamie) Rogers, K.J., 2008. "Evaluating the efficiency of 3PL logistics operations," International Journal of Production Economics, Elsevier, vol. 113(1), pages 235-244, May.
    • Handle: RePEc:eee:proeco:v:113:y:2008:i:1:p:235-244
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    References listed on IDEAS

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    Cited by:

    1. Hao Zhang & Jianxin You & Xuekelaiti Haiyirete & Tianyu Zhang, 2020. "Measuring Logistics Efficiency in China Considering Technology Heterogeneity and Carbon Emission through a Meta-Frontier Model," Sustainability, MDPI, vol. 12(19), pages 1-18, October.
    2. Aleksandar Kemiveš & Lidija Barjaktarović & Milan Ranđelović & Milan Čabarkapa & Dragan Ranđelović, 2024. "Assessing the Efficiency of Foreign Investment in a Certification Procedure Using an Ensemble Machine Learning Model," Mathematics, MDPI, vol. 12(7), pages 1-26, March.
    3. Patricija Bajec & Danijela Tuljak-Suban, 2019. "An Integrated Analytic Hierarchy Process—Slack Based Measure-Data Envelopment Analysis Model for Evaluating the Efficiency of Logistics Service Providers Considering Undesirable Performance Criteria," Sustainability, MDPI, vol. 11(8), pages 1-18, April.
    4. Anna Corinna Cagliano & Alberto Marco & Giulio Mangano & Giovanni Zenezini, 2017. "Levers of logistics service providers’ efficiency in urban distribution," Operations Management Research, Springer, vol. 10(3), pages 104-117, December.
    5. Kim, T.Y. & Dekker, R. & Heij, C., 2016. "The impact of forecasting errors on warehouse labor efficiency," Econometric Institute Research Papers EI2016-10, Erasmus University Rotterdam, Erasmus School of Economics (ESE), Econometric Institute.
    6. Piran, Fabio Antonio Sartori & Lacerda, Daniel Pacheco & Camargo, Luis Felipe Riehs & Viero, Carlos Frederico & Dresch, Aline & Cauchick-Miguel, Paulo Augusto, 2016. "Product modularization and effects on efficiency: An analysis of a bus manufacturer using data envelopment analysis (DEA)," International Journal of Production Economics, Elsevier, vol. 182(C), pages 1-13.
    7. Ming-Miin Yu & Bo Hsiao, 2016. "Measuring the technology gap and logistics performance of individual countries by using a meta-DEA--AR model," Maritime Policy & Management, Taylor & Francis Journals, vol. 43(1), pages 98-120, January.
    8. Ameknassi, Lhoussaine & Aït-Kadi, Daoud & Rezg, Nidhal, 2016. "Integration of logistics outsourcing decisions in a green supply chain design: A stochastic multi-objective multi-period multi-product programming model," International Journal of Production Economics, Elsevier, vol. 182(C), pages 165-184.
    9. Yongrong Xin & Kengcheng Zheng & Yujiao Zhou & Yangyang Han & P. R. Tadikamalla & Qin Fan, 2022. "Logistics Efficiency under Carbon Constraints Based on a Super SBM Model with Undesirable Output: Empirical Evidence from China’s Logistics Industry," Sustainability, MDPI, vol. 14(9), pages 1-24, April.
    10. Gafner, Andreas & Loske, Dominic & Klumpp, Matthias, 2021. "Efficiency measurement of grocery retail warehouses with DEA," Chapters from the Proceedings of the Hamburg International Conference of Logistics (HICL), in: Jahn, Carlos & Kersten, Wolfgang & Ringle, Christian M. (ed.), Adapting to the Future: Maritime and City Logistics in the Context of Digitalization and Sustainability. Proceedings of the Hamburg International Conf, volume 32, pages 317-348, Hamburg University of Technology (TUHH), Institute of Business Logistics and General Management.
    11. Anchal Gupta & Rajesh K. Singh & P. K. Suri, 2018. "Sustainable Service Quality Management by Logistics Service Providers: An Indian Perspective," Global Business Review, International Management Institute, vol. 19(3_suppl), pages 130-150, June.
    12. Kayakutlu, Gulgun & Buyukozkan, Gulcin, 2011. "Assessing performance factors for a 3PL in a value chain," International Journal of Production Economics, Elsevier, vol. 131(2), pages 441-452, June.
    13. Samet Güner, 2018. "Incorporating value judgments into port efficiency measurement models: insights from Turkish ports," Maritime Economics & Logistics, Palgrave Macmillan;International Association of Maritime Economists (IAME), vol. 20(4), pages 569-586, December.
    14. Chia-Nan Wang & Hong-Xuyen Thi Ho & Shih-Hsiung Luo & Tsung-Fu Lin, 2017. "An Integrated Approach to Evaluating and Selecting Green Logistics Providers for Sustainable Development," Sustainability, MDPI, vol. 9(2), pages 1-21, February.
    15. Guanglan Zhou & Yiru Xu & Fangping Zhang, 2024. "Measurement of innovation efficiency in logistic enterprises: Evidence from China based on the three‐stage DEA‐Malmquist index model approach," American Journal of Economics and Sociology, Wiley Blackwell, vol. 83(2), pages 331-381, March.
    16. Anchal Gupta & Rajesh Kumar Singh & Pradeep Kumar Suri, 2018. "Prioritizing Critical Success Factors for Sustainable Service Quality Management by Logistics Service Providers," Vision, , vol. 22(3), pages 295-305, September.
    17. Tongtong Jiang & Xiuguo Wu & Yunxiao Yin, 2023. "Logistics Efficiency Evaluation and Empirical Research under the New Retailing Model: The Way toward Sustainable Development," Sustainability, MDPI, vol. 15(20), pages 1-22, October.
    18. Rodrigues, Antonio Carlos & Martins, Ricardo Silveira & Wanke, Peter Fernandes & Siegler, Janaina, 2018. "Efficiency of specialized 3PL providers in an emerging economy," International Journal of Production Economics, Elsevier, vol. 205(C), pages 163-178.
    19. Nitin Kumar Sahu & Atul Kumar Sahu & Anoop Kumar Sahu, 2015. "Appraisement and benchmarking of third-party logistic service provider by exploration of risk-based approach," Cogent Business & Management, Taylor & Francis Journals, vol. 2(1), pages 1121637-112, December.
    20. Congcong Yang & Alfred Taudes & Guozhi Dong, 2017. "Efficiency analysis of European Freight Villages: three peers for benchmarking," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 25(1), pages 91-122, March.
    21. Aguezzoul, Aicha, 2014. "Third-party logistics selection problem: A literature review on criteria and methods," Omega, Elsevier, vol. 49(C), pages 69-78.
    22. Krakovics, Fabio & Eugenio Leal, José & Mendes Jr., Paulo & Lorenzo Santos, Rafael, 2008. "Defining and calibrating performance indicators of a 4PL in the chemical industry in Brazil," International Journal of Production Economics, Elsevier, vol. 115(2), pages 502-514, October.
    23. Stefan Jovčić & Petr Průša, 2021. "A Hybrid MCDM Approach in Third-Party Logistics (3PL) Provider Selection," Mathematics, MDPI, vol. 9(21), pages 1-19, October.
    24. Kim, T.Y. & Dekker, R. & Heij, C., 2013. "The impact of forecasting errors on warehouse labor efficiency: A case study in consumer electronics," Econometric Institute Research Papers EI2013-15, Erasmus University Rotterdam, Erasmus School of Economics (ESE), Econometric Institute.
    25. Pal Singh, Satender & Adhikari, Arnab & Majumdar, Adrija & Bisi, Arnab, 2022. "Does service quality influence operational and financial performance of third party logistics service providers? A mixed multi criteria decision making -text mining-based investigation," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 157(C).

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