Abstract:
Many manufacturers and retailers often outsource their logistics functions to Logistics Service Providers (LSPs) to focus more on their core business process. Due to the competitiveness and the popularity of the sustainability concept, those organizations evaluate their prospective LSPs not only based on economic aspects like cost, service quality but also on social and environmental aspects as well when selecting LSPs. This paper proposes a methodology that can be used by organizations when evaluating and selecting LSPs based on their sustainability performance. Analytic Network Process (ANP) is used in evaluating the LSPs’ sustainable performance since multiple dimensions and indicators need to be incorporated when measuring the sustainability performance. A Linear Programming Problem (LPP) model was proposed which allows the organizations to decide both desired number of LSPs and the volume to be allocated for those selected LSPs. The proposed methodology is flexible as it depends on the sustainability requirements of the organization when selecting LSPs. Both the indicators and their relative importance are up to the organization to decide.
