Int. J.

Production Economics 131 (2011) 441–452

Contents lists available at ScienceDirect

Int. J. Production Economics

journal homepage: www.elsevier.com/locate/ijpe

Assessing performance factors for a 3PL in a value chain

Gulgun Kayakutlu, Gulcin Buyukozkan n
Galatasaray University, Istanbul 34357, Turkey

a r t i c l e in f o abstract

Article history: Business continuity of the logistics companies in the twenty first century highly depends on the value
Received 27 February 2009 chain performance. As the variety of services outsourced to third party logistics (3PL) companies increase,
Accepted 12 October 2010 success strategies for these companies are to be revised. This study explores and illustrates an analytical
Available online 31 December 2010
framework to assess the performance factors for 3PL companies through a managerial view. The factors
Keywords: integrating the strategical and operational targets are evaluated within a framework based on four levels;
Third party logistics (3PL) companies performance targets, planning activities, logistics operations, and performance attributes of logistics
Logistics performance factors operations. The analytic network process is used to determine the most effective performance attributes.
Analytic network process The framework is applied and studied in two major logistics companies active in the South East Europe.
Value chain performance
The proposed framework will contribute to the logistics sector by demonstrating the paradigm shift in
performance measurement.
& 2011 Published by Elsevier B.V.

1. Introduction
Increasing requests for logistics services imposed a strategic role
for the third party logistics (3PL) companies. It has been emphasised
by many researchers that supply chain will not be effective unless
logistics firms do not measure and monitor the company performance
in a flow of functions rather than individual activities (Robertson et al.,
2002). The biggest pace is taken by integrated evaluation of informa-
tion and material flow (Gunasekaran and Ngai, 2003). It is shown by a
recent literature survey on logistics and supply chains that there is
still a big gap on reconsidering inter-functional and inter-company
measures (Sachan and Datta, 2005). These gaps are advocated by
concentration of 3PL companies on outsource requests; which are
focused on evaluation of service provider on a single function such as
transportation and warehousing (Jharkharia and Shankar, 2007). The
need for differentiating proposed services caused managers to ask for
quantitative performance scores (Cook and Bala, 2007). Hence, there
is a necessity of considering variations arising across the domain of
‘‘effective factors’’ (Parhizgaria and Gilbert, 2004); as well as integrat-
ing supply chain management and logistics management (Kim, 2009).
In the production economy and business strategy literature,
considerable interest has been centred on identifying the domain of
effective factors. Approaches show a variety of dimensions in defining
the success, such as quality and organisational interactions (Cheng
et al., 2005), integrating network and operational strategies (Rudberg
and Olhaberg, 2003), relating marketing performance and human
capital (Knemeyer and Murphy, 2004), supply chain strategies and
n
Corresponding author. Fax: + 90 212 259 5557.
E-mail address: gulcin.buykozkan@gmail.com (G. Buyukozkan).
logistics operations (Lai et al., 2004; Liu and Ma, 2005; Jayaram and
Tan, 2010). First generic covering was realised by Yamin et al. (1999).
Since then, there has been some industry specific analysis as the one on
automotive logistics by Schmitz and Platts (2004), Krakovics et al.
(2008) and in food processing as in Hsiao et al. (2010).
Today the altitude of performance is defined by core compe-
tence in networks, process orientation, free margins, organisational
learning and technology utilisation as Gunasekaran and Ngai
(2007) specifies. To create competitive advantages based on these
new fields of focus, detailed factors vary by industry. De Sensi et al.
(2007) makes an introduction to the industry specified issues in
beverage supply chains. Singh et al. (2005) make the analysis in
automotive industry of Australia. The article of Lai et al. (2007) take
the issues in 3PL companies considering the clusters in China.
South East Europe has become an important hub for logistic
services between Asia and Europe. Hence, 3PL logistics companies
giving services through Europe are in the process of changing the
business paradigm. This is the first study that will discover the factors
that need to be considered in competitive strategy reengineering by
Turkish partnered companies that take role in this important route.
This study has two main objectives: (1) define a model to analyse
the effectiveness of a variety of factors that will link strategical and
operational targets using Analytic Network Process (ANP); (2) apply
the framework to compare effectiveness of the factors in two major
3PL companies of South East Europe with different strategies.
Managers of the companies surveyed are in the process of changing
the strategies and have not yet determined exact responses for the
business questions. It is an obligation to prepare and present a pool
of factors affecting the competitive strategies and then study the
interdependencies and effectiveness of those factors for the companies
studied.

0925-5273/$ - see front matter & 2011 Published by Elsevier B.V.

doi:10.1016/j.ijpe.2010.12.019
442 G. Kayakutlu, G. Buyukozkan / Int. J. Production Economics 131 (2011) 441–452

There is an unavoidable need to apply a multi criteria method to
convert the managerial opinions into figures and analyse the
dependency among the factors. Though there are several methods
that can represent the importance and rank of the factors in figures,
ANP is chosen for its unique features in analysing the interdepen-
dent criteria.
The paper is organised as follows. The second section is reserved
for preparing the pool of factors through literature survey. ANP
method will be explained in the third section. In the fourth section,
the application of the proposed framework will be presented. The
conclusion and further recommendations will be given in the fifth
and last section. The proposed framework will lead the managers of
3PL logistics sector by demonstrating the paradigm shift in perfor-
mance measurement.
2. Proposition of a conceptual framework
2.1. Background for the conceptual framework
Literature survey is run to depict the performance factors con-
sidered in logistics industry with the goal of global competition.
Almost a hundred articles printed in highly graded academic period-
icals are reviewed, which try to solve different issues in developing
competitive uniqueness, recommending analytical and/or heuristic
models for solutions. It is observed that strategic goals embracing
competitive advantage in a supply chain can be classified in three
groups: networking, capital balancing and customer focus. Effective
planning enables linking these strategies with different logistics
operations. There is a big variety of measure for operational perfor-
mance. Besides, control and coordination of planning will feed in the
right information for the related strategies (Liu and Ma, 2005). This
section is organised to handle performance factors at strategic,
planning and operational level and the summary of literature analysis
is given in Table 1a.
2.1.1. Performance targets
The evolution in information sciences lead majority of academic
studies to focus on business network issues. Boyson et al. (1999) is one
of the initiators of discussion on alliance relationship in distribution
networks being as influential as cost management. Business alliances
consider distribution channels as well as supplier and partner
relations. Stock et al. (2000) detail the issues of distributors in a
supply chain, emphasising that performance influencers are not only
configuration and organisation of the chain, as mentioned by
Jayaraman and Ross (2003), but real partnering in planning, pricing
and services. Dubois and Gadde (2000) reveal the innovation and
efficiency advances by partnering with suppliers. Ross and Droge
(2004) worked on strategies and operations effected by supply chain
efficiencies. It is analytically observed that effective business network
would grant strategic enhancements as well as operational efficiency
improvements. Most recently each operation is tested in detail to
realise the integration (Dong and Chen, 2005; Biehl et al., 2007). It is
observed that the supply chain is to be designed based on structural
and relational coordination criteria as stated by Truong and Azadivar
(2005). Kim (2009) gets into the details of supply chain management
influences on structured and unstructured integration of strategies
and logistics operations.
Since logistics is a value adding industry, capital balancing is an
important target specifically in developing countries (Clark et al.,
1993). One of the major operations of logistics, inventory manage-
ment needs special interest in strategic and operation planning
since it is a highly capital binding operation. Bonney (1994)
analysed how capital performance is interacted with the balance
of pull and push strategies of inventory management. De Sensi et al.

Table 1a
Summary of literature review.

Performance Relevant focus Main references

factors

Strategic targets
Networking Distribution network
Logistics chain (network)
Supply chain (network)
Capital balance Structural capital
Human capital
Financial capital
Relational capital
Customer focus Quality-customer satisfaction
Mass customisation
Customer capital
Customer segmentation
Demand chain
Accredited customers
Stock et al. (2000), Jayaraman and Ross (2003), Liu and Ma (2005), Sachan and Datta (2005)
Boyson et al. (1999), Dong and Chen (2005)
Dubois and Gadde (2000), Ross and Droge (2004), Truong and Azadivar (2005), Biehl et al. (2007), Kim (2009),
Jayaram and Tan (2010).
Gunasekaran et al. (2005), De Sensi et al. (2007)
Clark et al. (1993), Rudberg and Olhaberg (2003), Knemeyer and Murphy (2004), Gunasekaran et al. (2005)
Clark et al. (1993), Bonney (1994), Ross (2000), Gunasekaran et al. (2005), Krakovics et al. (2008)
Zhao and Stank (2003), Gunasekaran et al. (2005)
Andersson et al. (1989), Fawcett and Cooper (1998), Korpela and Lehmusvaara (1999), Ross (2000),
Goetschalckx et al. (2002), Rudberg and Olhaberg (2003)
Rabinovich et al. (2003)
Barad and Sapir (2003), Lai and Lee (2003), Zhao and Stank (2003), Parhizgaria and Gilbert (2004), Kušar et al.
(2005), Krakovics et al. (2008)
Mentzer et al. (2004), Kušar et al. (2005)
Landeghem and Vanmaele (2002), Treville et al. (2004), Cheng et al.(2005), Hsiao et al., (2010).
Bottani and Rizzi (2006)

Planning activities
Strategies Technology/organisation Andersson et al. (1989), Hameri and Paatela (1995), Schmitz and Platts (2004), Kim (2009).
Alliances/customers Robertson et al. (2002), Hertz and Alfredsson (2003), Georgiadis et al. (2005), Sachan and Datta (2005)
New product/services Hertz and Alfredsson (2003), Rudberg and Olhaberg (2003)
Resources Distribution centres Toppen and Smits (1998), Gunasekaran and Ngai (2003), Zhao and Stank (2003), Bogataj and Bogataj (2004),
Ross and Droge (2004), Georgiadis et al. (2005), Krakovics et al. (2008), Hsiao et al., (2010)
Delivery vehicles Toppen and Smits (1998), Ross and Droge (2004), Georgiadis et al. (2005), Ioannou (2005)
Employees Gunasekaran and Ngai (2003), Cook and Bala (2007), Ioannou (2005)
Information Strategic planning Yamin et al. (1999), Gunasekaran and Ngai (2003, 2004), Yusuf et al. (2004), Bayraktar et al. (2009), Kim (2009).
Operational planning Toppen and Smits (1998), Au et al. (2002), Kim and Narasimhan (2002), Landeghem and Vanmaele (2002),
Rabinovich et al. (2003), Kim (2009).
Measurement Irani et al. (2006), Hamdan and Rogers (2008)
 G. Kayakutlu, G. Buyukozkan / Int. J. Production Economics 131 (2011) 441–452
(2007) worked on the importance of inventory issues in the supply
chain. Another capital balancing issue is the resource allocation
influencing the distribution centres and transportation facilities as
Ross (2000) has discussed. There are not many researches that
combine financial or even cost issues with the structural and the
relational capital. Gunasekaran et al. (2005) is a pioneer in search of
performance factors of the twenty first century, where new factors
are defined considering the integrated analysis of all capitals.
Customer focus is found to be the third major goal. Customer
satisfaction has been considered as a performance factor in all
industries in the last ten years of twentieth century (Anderson
et al., 1998). The need to redesign internal and external customer
processes have been a major concern in logistics (Fawcett and Cooper,
1998). Customer satisfaction concept was analytically expressed
only after the development of qualitative methods (Korpela and
Lehmusvaara, 1999). Measures used in relations enabled the asso-
ciating customer capital with cost and profit performances (Anderson
et al., 1998; Fawcett and Cooper, 1998; Korpela and Lehmusvaara,
1999; Goetschalckx et al., 2002). Development of supply chains led
the target of mass customisation which needs detailed demand
analysis to include both enterprise and relational data (Rabinovich
et al., 2003). Customer relations became an important asset only after
definition of customer related processes in operation (Barad and Sapir,
2003; Lai and Lee, 2003; Zhao and Stank, 2003). Customer segmenta-
tion helped in strengthening the focus (Mentzer et al., 2004). Hence,
contribution of this asset in cost reduction, lead time minimisation
and capacity optimisation are also measured (Kušar et al., 2005). It is
also emphasised that linking customers in a demand chain will con-
tribute more in both strategic and operational modelling (Landeghem
and Vanmaele, 2002; Treville et al., 2004). Positive interactions with
loyal customers are expected to influence total quality of the
organisation (Cheng et al., 2005). As outsourcing increased customer
oriented service performance has become the challenge. 3PL firms are
imposed to focus on accredited customers for sustainability (Bottani
and Rizzi, 2006). Even cost optimisation has to be revised based on
services (Ross et al., 2007).
2.1.2. Planning activities
The main objective of logistics is overall coordination of strategies
and operations. The coordination can be realised by the right planning;
there is a need of effective plans for resources and information in
parallel with the altering strategies (Andersson et al., 1989).
The increasing interest in 3PL operations by companies from
different industries changed the traditional way of planning from
operation integration to integrating multiple global strategies. With
the aid of technology it has been easier to simulate the different
strategic models for integration (Hameri and Paatela, 1995). These
models are expected to include managerial performances to incorpo-
rate the link of customers and alliances to provide more complex
services (Hertz and Alfredsson, 2003). Briefly, plans are expected to find
solutions for multi-level supply-chain issues (Georgiadis et al., 2005).
Resource based performance theories are focused on limits and
optimisation of capacities (Zhao and Stank, 2003). Resource plan-
ning is interrelated with operational strategies and gets into more
detail with improvements in enterprise planning software (Bogataj
and Bogataj, 2004). It is observed that distribution centres, distri-
bution vehicles and employees are the main issues in resource
planning. Optimisation of resources is effective in operational cost
performance (Ioannou, 2005) in terms of effective structure of
distribution network and efficient utilisation of information about
the resources (Toppen et al., 1998).
Yamin et al. (1999) have stressed the effect of information
planning on logistics performance that helps analysing organisa-
tional success. Studies on functional improvements by information
planning, such as cost reduction (Toppen et al., 1998), lead time
443
reduction (Rabinovich et al., 2003) and customer satisfaction
(Au et al., 2002; Kim and Narasimhan, 2002; Treville et al., 2004)
enlightened the paradigm change in logistics operations. Devel-
opment of supply chains and the need for agility are emphasised in
studies of Gunasekaran and Ngai (2003, 2004), who succeeded the
promotion of information and material flows in parallel. These two
researches have contributed to remove the restricted vision of
operational data. It can be extended to benefit information and
knowledge by effective planning of infrastructure, inter-operation
and relational information (Yusuf et al., 2004). Consequences of
information plans are to be measured with care since they are in
interaction with strategic and operational plans in both dimensions
(Irani et al., 2006). Recently the impact of information systems on
the supply chain of manufacturing companies is emphasised by
Bayraktar et al. (2009).
It is observed in the literature of planning activities, that, it is
indispensable to run and implement strategic, resource and
information plans together as a bond between the strategies and
the operations.
2.1.3. Logistics operations and their performance attributes
Success of several industries are attributed to the performance of
logistics operations (Knemeyer and Murphy, 2004); which would be
defined as individual or integrated services in transportation, ware-
housing, materials management, order management, customer ser-
vices and procurement (Robeson and Copacino, 1994; Skjoett-Larsen,
2000). Reduction of costs while providing the quality and schedule to
satisfy the customers are considered to be the major objectives of
operational performance (Lynch, 2000). Studies on supplier selection
analyse these criteria in general (Bevilacqua and Petroni, 2002; Chang
et al., 2006; Demirtas and Üstün, 2008) or detail as an inter-operation
mix classified by business (Lai et al., 2004), by processes (Robertson
et al., 2002; Tyan et al., 2003) or by decision variables (Liu and Ma,
2005; Jharkharia and Shankar, 2007).
Principal components of cost reduction in transportation are
ascribed by vehicle allocation and routing (Ross et al., 2007). The
three measures which are independent of the industry are the size
of fleet capacity (Tarantilis and Kiranoudis, 2001; Tarantilis et al.,
2004; Hsieh and Tien, 2004), distance (Di Benedetto, 1999; Chen
et al., 2005) and the driver force (Zhao and Stank, 2003; Di
Benedetto, 1999). The quality in transportation is helping to realise
the delivery commitments in quality and time by avoiding the loss
of goods (Bowersox et al., 1999; Panazzo et al., 1999) and relocation
(Leung et al., 2002; Powell and Topaloglu, 2003).
Warehouse performance involves physical infrastructure and
monitoring receipt, storage and movements of goods between the
distribution stations. Service quality for these activities relies on
forecast success (Van der Vorst et al., 1998) and layout flexibility
(Barad and Sapir, 2003); however, cost and timing is influenced by
regularity of receiving the goods (Hameri and Paatela, 1995;
Wegelius-Lehtonen, 2001; Lutz et al., 2003; Singh et al., 2005),
distribution rates (Mason et al., 2003; Chen et al., 2005) and return
rate of goods (Lu, 2000; Mahadeven et al., 2003).
Order rate and order cycle are indispensable measures in
logistics service sales (Boyson et al.,1999; Dong and Chen, 2005).
These two measures ensure the success of transportation and
warehouse management success as well as customer services
(Chen et al., 2005). Improvements in sales cost reduction is realised
by balancing the demand rates and order rates (Van Norden and
Van de Velde, 2005). Customer relations management also con-
tributed with new measures like changes in customer portfolio and
complaint rates (Collins et al., 2001; Wouters and Sportel, 2005).
Realisation of resource plans cannot be completed without close
monitoring of fulfilment and procurement (Gunasekaran and Ngai,
2003). Effective implementations of these activities result in
444 G. Kayakutlu, G. Buyukozkan / Int. J. Production Economics 131 (2011) 441–452

reduction of distribution costs and lead-time (Mahadeven et al.,
2003; Muffatto and Payaro, 2004). When procurement is consid-
ered, cost fluctuations and unusual demands are issues that cannot
be ignored in unstable economies (Aktas- and Ulengin, 2005).
Hamdan and Rogers (2008) gets into the details of operational
performance indicators under demand and finance constraints.
2.2. Suggested conceptual framework
The proposed conceptual framework is given in Fig. 1. Four
dimensions are defined in the framework: company performance
targets supporting the competitive success in a value chain are
planning activities, logistics operations and performance attributes
of logistics operations.
Achieve
Competitive Success
in a Value Chain
Logistics firm’s
performance targets
Planning Activities
Logistics operations
Performance attributes of logistics operations
Fig. 1. Graphical representation of proposed evaluation framework.
The first dimension will follow the literature grouping on
performance targets, consisting of networking, capital balancing
and customer focus. Specific to 3PL companies networking and
customer focus will be restricted. As networking with consumers is
not yet wide-spread among 3PL companies (Hertz and Alfredsson,
2003), alliance networking will be taken into account to indicate
business chains. On the other hand, long-term contracted custo-
mers are of strategical importance for 3PL logistics companies
(Bottani and Rizzi, 2006), while other customer related issues are
taken into account in operational performance.
The ‘‘planning activities’’ dimension includes strategic plans,
resource and information plans that are needed to be run in parallel
as an interface between the targets and the operations.
‘‘Logistics operations’’, the third dimension is summarised in
four groups based on accumulation of critical factors surveyed
previously. Transportation all alone includes several factors; but,
warehouse and inventory management are taken together; order
and customer management are combined into one, procurement
and fulfilment operations are represented by demand manage-
ment. Attributes of logistics operations are widely used by other
researchers as briefly summarised in Table 1b.
Transportation is expressed by the fleet capacity, distances
travelled, driver force, loss of goods and relocation rate. Ware-
house/Inventory measures are forecast reliability, receiving reg-
ularity; return rate; distribution rate and layout flexibility.
Attributes of order/customer management are interest on order
rate, order cycle consistency, complaint rates, request trends and
fluctuations in the customer portfolio (change). Demand coordina-
tion represents the procurement and fulfilment factors, which are,
fulfil rate, procurement efficiency, lead time effectiveness, demand
trends and cost fluctuation rate.
The detailed model used to evaluate the 3PL company perfor-
mance attributes is given in Fig. 2.

Table 1b
Performance attributes of logistics operations.

Logistics Performance attribute Brief definition

operation

Transportation Performance analysis of transportation activities.

Fleet Optimal fleet capacity representing the number of vehicles used in logistics (Wu, 2009).
Distance travelled Optimum distance travelled by transportation fleet (Levinson, 2003)
Driver force Efficiency of the vehicle drivers (Anderson et al., 1998)
Loss of goods Minimum loss of goods during the delivery of the goods (Anderson et al., 1998)
Relocation rate Rate of change in the given address of delivery (Skjoett-Larsen, 2000)

Warehouse/ Performance analysis of warehouse management and inventory control activities

inventory
management
Forecast reliability How well the inventory amounts and security stocks are forecasted (Korpela et al., 2002)
Receiving regularity Regularity in the periodicity of receiving purchased material (Korpela et al., 2002). These two will affect the
inventory turnover rate
Return rate Product return rate over the quantity sold that will increase the inventory (Brito and Dekker, 2003)
Distribution rate Optimal product flow in one warehouse (Chen et al., 2005)
Layout flexibility Tolerance limits in assigning multiple warehouses to multiple locations (Barad and Sapir, 2003)

Order/customer Order management activities and customer relations management related to orders
management
Interest/order rate Interest on order rate that will effect the prediction of order rates (Chen et al., 2005)
Order cycle consistency Consistency in repeating orders in a periodic cycle (Chen et al., 2005)
Customer complaint rate Number of customer complaint as a rate of received order amount (Marasco, 2008)
Request Trends The rate of match among the customer requests and the company future predictions (Marasco, 2008)
Change in customer portfolio Change in the customer portfolio profile that will force changes in requests (Collins et al., 2001)

Demand Demand forecasting, updating, modifications according to changes in activities

coordination
Fulfil rate Demand fulfilment rate which will satisfy the customer (Stadtler, 2005)
Procure efficiency Efficiency rate of procurement which influences demand fulfil rate (Muffatto and Payaro, 2004)
Lead time effective Weight of lead time in demand satisfaction which changes by industry (Bogataj and Bogataj, 2004)
Demand trends Prediction robustness for future changes in demand (Landeghem and Vanmaele, 2002)
Cost fluctuation rate The rate of changes in demand fulfilment costs (Ross et al., 2007)
 G. Kayakutlu, G. Buyukozkan / Int. J. Production Economics 131 (2011) 441–452
Performance Targets
Alliance Network Capital Balancing Accredited Customers
(ALNW) (CBAL)
(B) (C)
Strategies (STRA)
Logistics Operations
Transportation Mgmt WH/Inventory Mgmt
(TRANS) (WHINV)
Performance
Attributes
Fleet (FL) Forecast Reliability (FR)
Distance (DS) Receiving Regularity(RS)
Driver force (DF) Return Rate (RR)
Loss of goods (LG) Distribution Rate (DR)
Relocation rate (RL) Layout Flexibility(LF)
Fig. 2. Evaluation network for achieving global competition in the logistics market.
3. Research methodology: the analytic network process
Selection of a suitable methodology that can decode the high-level
relationship model presented in Fig. 1 in order to determine the
importance of each component is a critical issue. This methodology
should be able to use quantitative, qualitative, tangible and intangible
factors pertaining to the decision of which success attributes should
be evaluated. ANP is a unique method capable of taking the multiple
dimensions of information into the analysis.
ANP (Saaty, 1996) is a general form of the analytical hierarchy
process (AHP) first introduced by Saaty (1980). While the AHP employs
a unidirectional hierarchical relationship among decision levels, the
ANP enables interrelationships among the decision levels and attri-
butes in a more general form (Saaty and Takizawa, 1986; Saaty, 1996;
Saaty and Vargas, 1998). This provides a more accurate approach for
modelling complex decision/evaluation environment and then the
number of ANP related works has increased in the recent years (Meade
and Sarkis, 1998, 1999; Yurdakul, 2003; Sarkis, 2003; Chung et al.,
2005; Kengpol and Tuominen, 2006; Bayazit and Karpak, 2007;
Jharkharia and Shankar, 2007; Ravi et al., 2008; Wadhwa et al., 2009).
The detailed model used to evaluate the 3PL company perfor-
mance attributes is given in Fig. 2.
The ANP uses ratio scale measurements based on pair-wise
comparisons; however, it does not impose a strict hierarchical
structure as in AHP, and models a decision problem using a
systems-with-feedback approach. The ANP then refers to the
systems of which a level may both dominate and be dominated,
directly or indirectly, by other decision attributes and levels. The
ANP approach is capable of handling interdependence among
elements by obtaining the composite weights through the devel-
opment of a ‘‘supermatrix’’. Saaty (1996) explains the supermatrix
concept similar to the Markov chain process. The supermatrix
development is defined in the next section.
445
Achieving global
competition success
(ACCU) GOAL
in the logistics
market
(A)
Resources (RSCS) Information (INFO) Planning
Activities
(D)
(E)
Order-Customer Mgmt Demand Coordination
(ORD/CUST) (DEMM)
Interest/Order Rate (OR) Fulfil Rate (FlR)
Order Cycle Consist. (OC) Procure Efficiency (PE)
Complaint Rates (CR) Lead Time Effective(LE)
Request Trends (RT) Demand Trends (DT)
Change in Portfolio (CP) Cost Fluct. Rate (CS)
The supermatrix development for ANP process is defined into
six major steps which are stated below:
Step 1. Develop an evaluation network hierarchy showing the
relationships among the criteria analysed. The hierarchy has to
show the goal, the targets, the cluster of factors and the
attributes.
Step 2. Elicit pair-wise comparisons among the factors influencing the
evaluation. Eliciting preferences of various components and attri-
butes will require a series of pair-wise comparisons where the
assessor will compare two components at a time with respect to an
upper level ‘‘control’’ criterion. In ANP, pair-wise comparisons of
the elements in each level are conducted with respect to their
relative importance towards their control criterion. Saaty has
suggested a scale of 1–9 when comparing the two components,
with a score of 1 representing indifference between the two
components and 9 being overwhelming dominance of the com-
ponent under consideration over the comparison component.
When scoring is conducted for a pair, a reciprocal value is
automatically assigned to the reverse comparison within the
matrix. Since many of these values have strategic importance,
strategic group decision-making tool is used.
Step 3. Calculate relative-importance-weight vectors of the factors.
Once all the pair-wise comparisons are completed, the relative
importance weight for each component is determined. The
weights can be determined as the largest eigenvalue.
Step 4. Form a supermatrix (i.e. a two-dimensional matrix com-
posed from the relative-importance-weight vectors) and normalise
this supermatrix, so that the numbers in every column sum to one.
The priority vectors for each pair-wise comparison matrix will
be needed to complete the various supermatrix submatrices.
The priority vectors are needed to complete the supermatrix, a
446 G. Kayakutlu, G. Buyukozkan / Int. J. Production Economics 131 (2011) 441–452

partitioned matrix allowing the resolution of the effects of the in industry for at least ten years. Analysis is performed on average
interdependence that exists between the clusters within the results of managers and consultants of each company.
evaluation network hierarchy. Each submatrix is composed of a
set of relationships between two clusters. 4.1. The evaluation network hierarchy
Step 5. Calculate converged (‘‘stable’’) weights from the normalised
supermatrix. Supermatrix evaluation is to determine the final According to Fig. 2 the proposed logistics system is evaluated on
relative importance weights of each of the attribute levels to four different dimensions (levels or clusters); Planning Activities,
help guarantee convergence. The columns of the supermatrix Performance Targets, Logistics Operations and Performance attri-
must be ‘‘column stochastic’’, i.e. the sum of weights of each butes of logistics operations. In this study, the interdependence or
column for the supermatrix must be equal to 1. To complete this feedback type relationship occurs between planning activities and
task, each column is to be normalised by dividing weight in the performance targets as represented by two reverse arrows among
column by the sum of that column. For convergence to a final set those levels. The other arrows in the model indicate a one-way
of weights, the normalised (column stochastic) supermatrix is relationship. In addition, the interdependency relationships of
raised to the power 2k+ 1 where k is an arbitrarily large number logistics operations are shown by a looped arc in Fig. 2. The capital
until stabilisation (values in the supermatrix do not change letters from A to E in parenthesis in Fig. 2 represent the weight
when it is multiplied by itself, converged). matrices used in the supermatrix construction which is described
Step 6. Determine overall weightings of evaluation attributes. The in details in Section 4.4.
last step in the ANP process is to take the final results of
the converged supermatrix and the eigenvector values from the 4.2. Pair-wise comparisons
earlier pair-wise comparisons and calculate the relative impor-
tance weight for success attribute of each level. Once all the
Eliciting preferences of various components and attributes will
relative weights have been calculated, a composite (global)
require a series of pair-wise comparisons where the assessor will
weight for each success attribute is determined. This is accom-
compare two components at a time with respect to an upper level
plished by aggregating the weights. The result is a single weight
‘‘control’’ criterion. In ANP, like AHP, pair-wise comparisons of the
value for success attributes of each level.
elements in each level are conducted with respect to their relative
These six steps will be discussed in conjunction with the case importance towards their control criterion (Saaty, 1996).
study in the following section. Saaty has suggested a scale of 1–9 when comparing the two
components, with a score of 1 representing indifference between the
two components and 9 being overwhelming dominance of the
component under consideration (row component) over the compar-
4. Application of the proposed framework
ison component (column component). If a component has a weaker
impact on the control criterion, the range of scores will be from 1 to 1/9,
The proposed analytic framework is applied in two major 3PL
where 1 represents indifference and 1/9 an overwhelming dominance
companies of South East Europe of Turkish origin. Company A and
by a column element over the row element. When scoring is conducted
company E are chosen since they have similar volume of logistics
for a pair, a reciprocal value is automatically assigned to the reverse
business with different background and strategies. Though, they
comparison within the matrix. That is, if aij is a matrix value assigned to
both take an important role in the value chain through Europe.
the relationship of component i to component j, then aji is equal to 1/aij
Company A has been in inbound transportation business for the
(or aijnaji ¼1). Since many of these values have strategic importance,
last twenty years, whilst giving customs execution and insurance
strategic group decision-making tool, Delphi approach (Delbecq et al.,
services. It has been international for the last ten years and started
1975; Melnyk et al., 2008) is used to assign meaningful values to the
the warehouse management services with three warehouses in
pair-wise comparisons. Expertise of the assessors chosen has avoided
different regions of Turkey only a few years ago. Current portfolio of
the issues caused by difficulty of evaluation.
five hundred customers is served by three hundred and fifty
Experts were asked questions such as: ‘‘In terms of the goal of
personnel. Integrated services of distribution, warehousing and
global competitiveness what is the relative importance of informa-
sales channel management are given for beverage and brewery
tion planning compared to the strategies planning?’’ In this
companies. Distribution of fuel oil is one of the major services that
example, the decision maker viewed collection as ‘‘slightly more
should be accounted. The company has invested in information
important’’ by the score of 3.000 (as shown in the cell at the
technology since the day of establishment but the implementation
intersection of the strategies row and the information column in
of integrated information system solutions is in process currently.
Table 2a). Reciprocally, the intersection of the information row and
Company E is only established in 1990 as a transportation
strategies column shows a score of 1/3. This pair-wise comparison
company but quickly switched into an integrated logistics solu-
approach is used to populate the matrix.
tions company in 1994. This company owns several warehouses in
different regions of South East Europe including the biggest
4.3. Calculation of relative importance weights
technology rich textile logistics centre of the region. Integrated
services are only given to the accredited customers; hence, there
are only ten international conglomerates like 3M, Marks & Spencer Once all the pair-wise comparisons are completed, the relative
and Metro Group in the customer base. Since the starting day importance weight for each component is determined. The priority
integrated information systems, networking and automatic data
collection and processing is given special interest and the ware- Table 2a
Pair-wise comparison matrix of Company A importance of planning elements
houses are technically equipped.
relative to the goal (A).
The proposed framework is applied in both companies to observe
the similarities and differences in business performance measures. GOAL Strategies Resources Information Weights
Assessors from both companies are high level managers and one
business consultant of each. General Managers of both companies Strategies 1 5 3 0.64
Resources 1/5 1 1/3 0.10
have graduate degrees of education and have experiences in global
Information 1/3 3 1 0.26
manufacturing companies. Interviewed consultants are experienced
 G. Kayakutlu, G. Buyukozkan / Int. J. Production Economics 131 (2011) 441–452 447

vector shows that for this study, the strategic planning activities summing the elements in each row of the resultant matrix and dividing
were given the highest rating (0.64 and 0.65) (the weighted by the n elements in the row. This is referred as the process of averaging
priorities are shown as the last column in Table 2). Given that A over normalised columns. The procedure may be algebraically repre-
is the pair-wise comparison matrix; the weights can be determined sented as
by expression: PJ PI
j ¼ 1 ðaij = k ¼ 1 akj Þ
A w ¼ lmax w ð1Þ wi ¼ for i ¼ 1,2,::,I ð2Þ
J
where lmax is the largest eigenvalue of A. Saaty provides several where wi is the weighted priority for component I, J is number of
algorithms for approximating w. In this paper a two-stage algorithm columns (components), and I is number of rows (components).
was used to involve forming a new n  n matrix by dividing each In the assessment process there may occur a problem in the
element in a column by the sum of the column elements and then transitivity or consistency of the pair-wise comparisons. For an
explanation on inconsistencies in relationships and their calcula-
Table 2b tions see Saaty (1980). The priority vectors for each pair-wise
Pair-wise comparison matrix of Company E importance of planning elements comparison matrix will be needed to complete the various super-
relative to the goal (A).
matrix submatrices. We will need a total of 19 priority vectors to
GOAL Strategies Resources Information Weights
complete our supermatrix. This requirement means that 19 pair-
wise comparison matrices must be completed. The pair-wise
Strategies 1 5 3 0.65 comparison matrix’ results were used below after tests and
Resources 1/5 1 3 0.22 validation of the consistency.
Information 1/3 1/3 1 0.13

4.4. Supermatrix formation

Goal Perform. Planning Operations
Targets
0 ANP uses supermatrix to allow the resolution of interdepen-
Goal 0 0
dence that exists between the levels and elements of the evaluation
Performance Targets 0 0 C 0 network hierarchy. The supermatrix is a partitioned matrix, where
each submatrix is composed of a set of relationships between two
Planning A B 0 0 clusters in the graphical model. A generic supermatrix is shown in
Fig. 3, with the notation representing the various relationships
Operations 0 0 D E from Fig. 2; for instance, ‘‘A’’ is the submatrix representing the
influence relationship between the Planning Activities and control
Fig. 3. General submatrix notation for supermatrix. factor of achieving global competition success by determining the

Table 3a
Initial supermatrix M for determining the weights of logistics operations’ performance attributes for Company A.

GOAL Perform. Targets Planning Operations

ALNW CBAL ACCU STRA RSCS INFO TRANS WHINV ORD/CUST DEMM

GOAL 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Performance targets ALNW 0.00 0.00 0.00 0.00 0.10 0.65 0.10 0.00 0.00 0.00 0.00
CBAL 0.00 0.00 0.00 0.00 0.26 0.22 0.64 0.00 0.00 0.00 0.00
ACCU 0.00 0.00 0.00 0.00 0.64 0.13 0.26 0.00 0.00 0.00 0.00
Planning STRA 0.64 0.64 0.10 0.10 0.00 0.00 0.00 0.00 0.00 0.00 0.00
RSCS 0.10 0.26 0.64 0.26 0.00 0.00 0.00 0.00 0.00 0.00 0.00
INFO 0.26 0.10 0.26 0.64 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Operations TRANS 0.00 0.00 0.00 0.00 0.08 0.55 0.08 0.60 0.21 0.26 0.26
WH/INV 0.00 0.00 0.00 0.00 0.52 0.23 0.52 0.22 0.06 0.52 0.52
ORD/CUST 0.00 0.00 0.00 0.00 0.20 0.11 0.20 0.10 0.60 0.10 0.12
DEMM 0.00 0.00 0.00 0.00 0.20 0.11 0.20 0.08 0.13 0.12 0.10

Table 3b
Initial supermatrix M for determining the weights of logistics operations’ performance attributes for Company E.

GOAL Perform. targets Planning Operations

ALNW CBAL ACCU STRA RSCS INFO TRANS WHINV ORD/CUST DEMM

GOAL 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Performance targets ALNW 0.00 0.00 0.00 0.00 0.10 0.64 0.26 0.00 0.00 0.00 0.00
CBAL 0.00 0.00 0.00 0.00 0.64 0.26 0.10 0.00 0.00 0.00 0.00
ACCU 0.00 0.00 0.00 0.00 0.26 0.10 0.64 0.00 0.00 0.00 0.00
Planning STRA 0.65 0.26 0.65 0.10 0.00 0.00 0.00 0.00 0.00 0.00 0.00
RSCS 0.22 0.64 0.22 0.64 0.00 0.00 0.00 0.00 0.00 0.00 0.00
INFO 0.13 0.10 0.13 0.26 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Operations TRANS 0.00 0.00 0.00 0.00 0.06 0.07 0.07 0.06 0.14 0.58 0.58
WH/INV 0.00 0.00 0.00 0.00 0.12 0.09 0.15 0.08 0.06 0.23 0.23
ORD/CUST 0.00 0.00 0.00 0.00 0.56 0.57 0.39 0.55 0.51 0.07 0.07
DEMM 0.00 0.00 0.00 0.00 0.26 0.27 0.39 0.31 0.29 0.12 0.12
448 G. Kayakutlu, G. Buyukozkan / Int. J. Production Economics 131 (2011) 441–452

weights of performance attributes of logistics operations. Tables 3a
and 3b are the detailed initial supermatrix of the proposed model.
4.5. Calculation of stable weights from the normalised supermatrix
The next step with the supermatrix evaluation is to determine
the final relative importance weights for each operation. To
complete this step and to help guarantee convergence, the columns
of the supermatrix must be ‘‘column stochastic’’and thus minimise
the possibility for divergence to infinity or convergence to zero.
That is, the sum of weights of each column for the supermatrix
must be equal to 1. In order to achieve this sum, each column is
normalised by dividing weight in the column by the sum of that
column.
Let wij be any weight in the jth column then normalised weight
can be expressed as (3)
wij XJ
wNij ¼ PJ or 0 where j¼1
wN
ij ¼ 1 ð3Þ
j¼1
wij
For convergence to a final set of weights, we raise the normal-
ised (column stochastic) supermatrix to the power 2k+ 1 where k is
an arbitrarily large number, increased until stabilisation of the
weights occurs (i.e. the point where values in the supermatrix do
not change as a result of multiplication by itself, is also defined as
convergence). For our example, convergence occurred when the
supermatrix was raised to the 39th power. The long-term stable
weighted values to be used in the analysis are shown in the
converged supermatrix given in Tables 4a and 4b. The results show
the most important operation is transportation for both of the
companies (0.37; 0.34). For Company A the following operation is
warehouse/inventory management, whereas for Company E it is
the order/customer management.
4.6. Final relative importance weight calculation
The sixth and last step in the ANP process is to take the final
results of the converged supermatrix and the eigenvector values
from the earlier pair-wise comparisons and calculate the relative
importance weight for each operational performance attribute. To
analyse operational performance attributes, pair-wise comparison
similar to the one that is done in Step 2 is realised to achieve
importance weights (or eigenvectors). There are three separate
pair-wise comparison matrices that have to be developed for this
step in the analysis. Table 5(a–c) gives the evaluation results for
Company A and Table 6(a–c) gives results for Company E.
Once all the relative weights have been calculated, a composite
(global) weight for each performance attribute is determined. This
is accomplished by aggregating the weights. The result is a single
weight value for performance attributes of logistics operations. The
combination of all the weights is given in Tables 7 and 8. Company
A appears to have Fleet (0.1850), Forecast Reliability (0.1428),
Interest/Order Rate (0.1224) and the Driver Force (0.1036) as
performance attributes that have the most impact on the success
of global competitiveness. Whereas Company E has Fleet (0.1734),
Complaint rates (0.1320), Lead Time Effectiveness (0.0945), the
Driver Force (0.0884) and Change in Customer Portfolio (0.0810) as
performance attributes that have the most impact on the success of
global competitiveness.
The Fleet being the most important performance attribute was
not a surprise for any assessor. The reasons behind that may be the
cultural issue of insisting to own the trucks as explained by Aktas-
and Ulengin (2005). Forecast reliability seems to be solved by
technology in Company E but not yet in company A. The driver force
is an attribute, most possibly depending on the low education level
of drivers.

Table 4a
Converged supermatrix at M39 for Company A.

GOAL Perform. targets Planning Operations

ALNW CBAL ACCU STRA RSCS INFO TRANS WHINV ORD/CUST DEMM

GOAL 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Performance targets ALNW 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
CBAL 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
ACCU 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Planning STRA 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
RSCS 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
INFO 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Operations TRANS 0.37 0.37 0.37 0.37 0.37 0.37 0.37 0.37 0.37 0.37 0.37
WH/INV 0.28 0.28 0.28 0.28 0.28 0.28 0.28 0.28 0.28 0.28 0.28
ORD/CUST 0.24 0.24 0.24 0.24 0.24 0.24 0.24 0.24 0.24 0.24 0.24
DEMM 0.11 0.11 0.11 0.11 0.11 0.11 0.11 0.11 0.11 0.11 0.11

Table 4b
Converged supermatrix at M39 for Company E.

GOAL Perform. targets Planning Operations

ALNW CBAL ACCU STRA RSCS INFO TRANS WHINV ORD/CUST DEMM

GOAL 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Performance targets ALNW 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
CBAL 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
ACCU 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Planning STRA 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
RSCS 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
INFO 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Operations TRANS 0.34 0.34 0.34 0.34 0.34 0.34 0.34 0.34 0.34 0.34 0.34
WH/INV 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15
ORD/CUST 0.30 0.30 0.30 0.30 0.30 0.30 0.30 0.30 0.30 0.30 0.30
DEMM 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21
 G. Kayakutlu, G. Buyukozkan / Int. J. Production Economics 131 (2011) 441–452 449

Table 5
Relative importance of the logistics operations’ performance attributes for Company A.

(a) The relative importance of the transportation management performance attributes

FL DS DF LG RL

Fleet 1 5 7 3 3
Distance 1/5 1 1/9 1/3 1/5
Driver force 1/7 9 1 5 7
Loss in goods 1/3 3 1/5 1 1/5
Relocation rate 1/3 5 1/7 5 1
(b) The relative importance of the warehouse/inventory management performance attributes
FR RS RR DR LF

Forecast reliability 1 3 7 9 5
Receiving regularity 1/3 1 5 7 3
Return rate 1/7 1/5 1 1/5 1/3
Distribution rate 1/9 1/7 5 1 3
Layout flexibility 1/5 1/3 3 1/3 1
(c) The relative importance of the order/customer management performance attributes
OR OC CR RT CP

Interest/order rate 1 3 7 9 5
Order cycle consist. 1/3 1 5 7 3
Complaint rates 1/7 1/5 1 3 1/3
Request trends 1/9 1/7 1/3 1 1/5
Change in portfolio 1/5 1/3 3 5 1
(d) The relative importance of the demand coordination performance attributes
FlR PE LE DT CS

Fullfil rate 1 7 5 1/3 3

Procure efficiency 1/7 1 1/3 1/9 1/5
Lead time effectiveness 1/5 3 1 1/7 1/3
Demand trends 3 9 7 1 5
Cost fluctuation rate 1/3 5 3 1/3 1

Table 6
Relative importance of the logistics operations’ performance attributes for Company E.

(a) The relative importance of the transportation management performance attributes

FL DS DF LG RL

Fleet 1 9 3 5 7
Distance 1/9 1 1/7 1/5 1/3
Driver force 1/3 7 1 3 5
Loss in goods 1/5 5 1/3 1 3
Relocation rate 1/7 3 1/5 1/3 1
(b) The relative importance of the warehouse/inventory management performance attributes
FR RS RR DR LF

Forecast reliability 1 3 5 3 7
Receiving regularity 1/3 1 7 3 5
Return rate 1/5 1/7 1 1/3 5
Distribution rate 1/3 1/3 3 1 5
Layout flexibility 1/7 1/5 1/5 1/5 1

(c) The relative importance of the order/customer management performance attributes

OR OC CR RT CP

Interest/order rate 1 1/3 1/5 1/3 1/5

Order cycle consist. 3 1 1/3 1/5 1/5
Complaint rates 5 3 1 5 3
Request trends 3 5 1/5 1 1/3
Change in portfolio 5 5 1/3 3 1

(d) The relative importance of the demand coordination performance attributes

FlR PE LE DT CS

Fullfill rate 1 1/3 1/5 1/5 1/3

Procure efficiency 3 1 1/3 1/5 1/3
Lead time effectiveness 5 3 1 5 3
Demand trends 5 5 1/5 1 1/3
Cost fluctuation rate 3 3 1/3 3 1
450 G. Kayakutlu, G. Buyukozkan / Int. J. Production Economics 131 (2011) 441–452

Table 7 chain. The study addresses the need for defining new performance
Composite priority weights for logistics operations’ performance attributes of factors to develop competitive success. A framework is developed in
Company A.
order to identify and rank the possible factors. The pool of criteria to be
Logistics Local Performance Local Global considered by a 3PL company is constructed on a literature survey and
operations weights attributes weights weights refined with industrial experts. The model considers tangible, intan-
gible, quantitative, qualitative factors in the analytic evaluation.
Transportation 0.37 Fleet 0.50 0.1850 As shown in Table 1, the previous studies were focused on
management Distance 0.03 0.0111
Driver force 0.28 0.1036
integrating either strategic performance factors or bringing
Loss in goods 0.06 0.0222 together the attributes in one or more operations. This study will
Relocation rate 0.13 0.0481 contribute to the logistics research literature with the unique effort
Warehousing/ 0.28 Forecast 0.51 0.1428 to amalgamate strategic factors and operational factors through
inventory reliability planning activities.
management Receiving 0.28 0.0784 The fact that performance issues are interdependent is clearly
regularity observed in the background section. Research on strategic deci-
Return rate 0.04 0.0112
Distribution rate 0.10 0.0280
sions to develop competitive success uses alternate decision-
Layout flexibility 0.07 0.0196 making tools. The fact that factors influencing the strategies cannot
be mutually excluded, ANP has become a unique method. The ANP
Order/customer 0.24 Interest/order 0.51 0.1224
management rate method is used in this study to offer a more precise and accurate
Order cycle 0.26 0.0624 analysis by integrating interdependent relationships, though it
consist. requires more time and effort (additional interdependency rela-
Complaint rates 0.07 0.0168 tionships increase geometrically the number of pair-wise compar-
Request trends 0.03 0.0072
Change in 0.13 0.0312
ison matrices).
portfolio The case is run on two 3PL companies providing integrated services
in international competition with each other. The aim of choosing these
Demand 0.11 Fullfill rate 0.26 0.0286
management Procure efficiency 0.03 0.0033 two companies was to observe the differences in importance of
Lead time 0.06 0.0066 performance targets, planning and operational performance factors
effectiveness in conjunction with (i) the level of information technology utilisation
Demand trends 0.51 0.0561
and (ii) the richness of logistics services provided.
Cost fluctuation 0.14 0.0154
rate
The results show that both give the biggest importance to
strategic planning and transportation operation; but the differ-
ences are observed in the followers. This is possible mainly because
Table 8 both companies started in transportation business and evolved in
Composite priority weights for logistics operations’ performance attributes of additional logistics operations. The Fleet and the Driver Force both
Company E. taking place among the important operational performance attri-
Logistics Local Performance Local Global
butes fortifies the possibility. Issues in the chosen factors cannot be
operations weights attributes weights weights removed by information technologies but control and monitor
operations and by learning organisation.
Transportation 0.34 Fleet 0.51 0.1734 The second choices are quite different. Company A shows the
management Distance 0.04 0.0136
need for technology by the choice of planning and operational
Driver force 0.26 0.0884
Loss in goods 0.13 0.0442 factors like forecast reliability and interest/order rate, which are
Relocation rate 0.06 0.0204 known to be handled by integrated information systems. Company
Warehousing/ 0.15 Forecast 0.44 0.0660
E on the other hand, shows interest in customer relations manage-
inventory reliability ment willing to measure complaint rates, change in portfolio and
management Receiving 0.29 0.0435 lead time effectiveness.
regularity The proposed framework has a few limitations as well. The
Return rate 0.08 0.0120
results depend on the initial responses. Even if the effort is made by
Distribution rate 0.15 0.0225
Layout flexibility 0.04 0.0060 choosing the assessors as managers and the business consultants,
the possibility of bias cannot be totally removed. Hence, this study
Order/customer 0.30 Interest/order 0.05 0.0150
management rate
will be extended to take the evaluation of customers into account to
Order cycle 0.08 0.0240 reduce the bias by opposition.
consist. Development of the model can also be continued by applying
Complaint rates 0.44 0.1320 sensitivity analysis. Comparing the results of this study and the
Request trends 0.16 0.0480
application of another analytical method will provide more defi-
Change in 0.27 0.0810
portfolio nitive conclusions, which can lead for the development of an expert
system in performance evaluation.
Demand 0.21 Fullfill rate 0.05 0.0105
management Procure efficiency 0.09 0.0189
Lead time 0.45 0.0945
effectiveness
Demand trends 0.18 0.0378 Acknowledgements
Cost fluctuation 0.23 0.0483
rate
The authors acknowledge the managers and consultants of
Adahan Logistics and Ekol Logistics for their unlimited support
5. Concluding remarks and future directions in evaluation of the framework. The authors thank the Editor,
Professor T.C. Edwin Cheng, and anonymous reviewers for their
This research aims to contribute both academic studies and the valuable comments and suggestions to improve the early version
3PL logistics management in reengineering the strategies in a value of the paper.
 G. Kayakutlu, G. Buyukozkan / Int. J. Production Economics 131 (2011) 441–452
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