Studying the sustainability of third party logistics growth using system dynamics

Abstract

Purpose In this Industry 4.0 era, third-party logistics (3PL) industries face huge cost pressure to deliver their service. With increase in competition among the players, constant mergers and acquisitions (M&A) have been taking place to sustain competitive advantage. Therefore, this study aims to investigate the growth dynamics among the 3PL service providers. Design/methodology/approach In this research, the system dynamics methodology was applied to the study of the growth of 3PL industry in Singapore. A population growth model incorporating the predator–prey interaction is developed to account for growth through M&As among 3PLs and their interaction phenomenon are modeled through modified Lotka–Volterra method. The two-species system model consisting of small and medium logistics service providers (SMLSPs as the prey) and the lead logistics providers (LLPs as the predator) are gauged according to the firm size. Findings Results from the baseline model indicates that Singapore’s logistics industry looks very optimistic for SMLSPs for another 6 years from 2018, while the LLP population will achieve a peak at about 12 years from 2018. Further sensitivity analysis through macroeconomic and microeconomic changes reveals increase in trend of M&As. By varying competitive pressures between firms, results indicate that the LLP population experiences a decreasing rate of increasing SMLSP population falls. Research limitations/implications The research provides guidance for logistics and supply chain managers to better understand the critical factors that impact and determine competitive dynamics. The paper further recommends managers to build sustainable logistics strategies to retain competitive advantages. Originality/value The research contributes to both economic and social dimensions of logistics sustainability of how resilient the industries are during uncertain conditions. Some of the limitations of this research include the geographic coverage of the study region and other methodological aspects. The research value thus helps policymakers for developing strategic policies for sustainable industrial growth.

Sustainable performance in tourism SMEs: a soft modeling approach

“…However, they recognize that lean philosophy is challenging for tourism companies. JM2 18,6 SUP has been studied from perspectives such as management (Sundarakani et al, 2019), organizational science (Mouhib et al, 2020), ecology (Holling, 1973) and economics (Mikhail et al, 2019). Some studies focus on its composition and conceptual analysis (Sarango-Lalangui et al, 2018) or theoretical principles (Asemokha et al, 2019).…”

“…Likewise, system dynamics can generate more substantial results regarding SUP because it can trigger reactions to seek equilibrium between the socio-ecological domain (Hillmann, 2021). Under the systemic perspective, Nunkoo and So (2016) and Sundarakani et al (2019) addressed sustainability through PLS-PM, incorporating tourist residents' feedback as a regulatory factor to move toward sustainability. Besides, they report that SMEs' sustainable culture should address interactions with stakeholders and constantly assess their results in terms of business performance, customer retention and market share.…”

Editorial

“…Sundarakani et al (2019) applied SD to the study of the growth of 3PL industry in Singapore. They developed a population growth model incorporating the predator–prey interaction to account for growth through M&A among 3PLs, and their interaction are modelled through modified Lotka–Volterra method.…”

Benchmarking of Singapore maritime cluster: the role of cluster facilitators

“…The authors introduce symbiosis theory in biological science to the study of maritime cluster from the economic development perspective (Zhang and Lam, 2013a, b). Another form of the Lotka–Volterra model has been applied in Singapore logistics study by Sundarakani et al (2019) where a two-species system behaviour of small and medium logistics service providers (SMLSPs as the prey) and the lead logistics providers (LLPs as the predator) are gauged according to the firm size in Singapore context in which a significant portion of the maritime industry has been considered. Table 2 provides a summary of the ranking of world cities using different research methods, in which the maritime cities were then categorised into international maritime service centres.…”