Designing 3PL services using a market-utility approach

Purpose: To investigate customer preferences for various product and service offerings by third party logistics providers. Design/methodology/approach: A sample of 93 third-party logistics (3PL) customers from Australia participated in a controlled experiment. The research utilised a discrete choice experiement to assess the relative importance of various attributes on the selection of 3PL providers. Findings: This study highlights the dominance of service performance in determining 3PL buyer behaviour. In particular, the results show that reliable delivery (DIFOTEF) is almost twice as important as price, and three times more important than service recovery and relationship factors in determining 3PL choice. Research limitations/implications: Future research will examine the applicability of these finding across different markets, and examine the capabilities required to meet the customer expectations identified in this study. Practical implications: The results of these findings can be utilised within a decision support system to assist in strategy development by predicting the impact of changing managerial actions on customer behaviour. Originality/value: The main contribution of this study relates to its use of a market-utility approach to quantify the relative value of certain attributes impacting on 3PL provider choice. Keywords: Buyer prefereneces, logistics, supply-chain management, discrete choice analysis, performance management, service management. Paper type: Research paper