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Performance Metrics,
and Globalization Issues
in the Third-Party Logistics
(3PL) Industry:
A Survey of North
American Service
Providers
Subrata Mitra This paper reports on a survey of North American third-party logistics (3PL)
Indian Institute of Management Calcutta service providers. Although current research on 3PL provides valuable
subrata@iimcal.ac.in
insights into the 3PL industry, it is primarily descriptive in nature and does
Prabir K. Bagchi not explore the underlying relationships among several factors and key
School of Business, issues related to the industry. This paper presents an exploratory study of
The George Washington University
the North American 3PL industry in terms of the key success factors,
bagchi@gwu.edu
performance metrics, and globalization issues. Respondents to the survey
are categorized based on their ratings of key success factors, and the
differences in perceptions among categories are highlighted. Also, the
factors with respect to which respondents are significantly underperforming
are identified. Importance of the key success factors for various
performance metrics is established through dependency relationships,
which provide a guideline to managers for allocation of scarce resources.
Factors responsible for growing globalization, important issues in
connection with setting up 3PL operations in a foreign country, and growth
strategies adopted by 3PL firms are also analyzed from the point of view of
the respondents. Finally, the contribution to logistics research, implications
of the survey findings for logistics managers, and directions for future
research on 3PL are presented in the concluding section.
Figure 1
Representation of research questions on the key success factors, globalization,
and growth strategies in 3PL
2. How are the performance metrics service providers was prepared and Analysis of survey results
related to the key success factors? each of them was sent a
In other words, given a questionnaire along with a cover The survey data was analyzed under
performance metric, which key letter, addressed to the CEO, and a the following headings: profile of the
success factors affect it self-addressed envelope. Two to respondents, key success factors,
significantly? three weeks after sending out the performance metrics, globalization
questionnaire, e-mail reminders were issues, and growth strategies.
Figures 1 and 2 diagrammatically sent along with the cover letter and
represent the research questions the questionnaire as attachments.
Profile of the respondents
addressed in the paper. Some of the letters dispatched could
not be delivered and were returned
In this subsection, a brief
Research methodology to the source because of change of
demographic profile of the
address or unknown recipient,
respondents is provided. Among
There were two sources of data for leaving the effective number of
supposedly delivered mails to 300. the 40 respondents, 34 are
research: primary and secondary.
During a period of two months after headquartered in the United States, 2
The primary sources were the 3PL
sending out the first batch of mail, 40 in Canada, 3 in Europe, and 1 in Asia.
service providers and data collection
filled-out questionnaires were Hence 36, or 90%, of the respondents
was effected through a mail survey
received through postal mails, e- are headquartered in North America.
and telephone interviews. The
mails, and faxes, resulting in an Thirty-eight of 40 respondents
secondary sources were published
reports, journal articles, and the effective response rate of 13.33%. reported 3PL revenues in 2005. For
Internet. Keeping in mind the Given the high frequency at which the two firms that did not provide
difficulty in attaining an adequate managers receive such the same information, data was
response rate in mail surveys, the questionnaires from various supplemented from secondary
questionnaire was limited to 14 research organizations, this is an sources. Revenues of the respondent
questions and two pages, a copy of acceptable response rate. The firms in 2005 ranged from $2 million
which is enclosed in the appendix for possibility of existence of to $14 billion, representing very
reference. A 5-point Likert scale nonresponse bias in survey data was small to very large firms in the
where 1 represents very low and also tested by the method of sample. The average revenue of the
5 represents very high was used extrapolation (Armstrong and firms was $841.42 million and the
to measure all variables except the Overton, 1977) and was found median revenue was $50 million in
growth strategies, which the nonexistent. Finally, the survey data 2005. Revenues of 6 firms were in
respondents would rank against each was collated in Microsoft Excel and excess of $1 billion in 2005. These are
other from 1 to 4. analyzed using SAS1 and the global revenue figures and not
statistical functions available in earned in North America alone.
To identify potential respondents, Excel. Details of the analysis are Twenty-five, or 60%, of the
directories of 3PL service providers presented in the next section. A
available on the following websites selected number of respondents
were referred to: www.glscs.com, were contacted in the end to validate
www.inboundlogistics.com and some of the survey findings.
1. Statistical Analysis Software developed by SAS
www.leonardsguide.com. A list of 320 Institute, Inc.
Table 4
Significant dependency relationships among the performance metrics and the key success factors
Table 5
Significant dependent and independent variables in canonical correlation analysis