Understanding the usage patterns, practices and decision process of third party logistics outsourcing in Bangladesh

Abstract

Purpose Bangladesh is becoming one of the emerging destinations for global outsourcing. However, little is known about the usage patterns of third party logistics (3PL) outsourced services. The purpose of this paper is to examine the extent of 3PL usage, the organisational factors affecting 3PL usage, impacts of 3PL and the future trend of 3PL usage in Bangladesh. Design/methodology/approach A survey questionnaire is used to collect data against a number of items pertaining to the extent of 3PL use and its impact on performance. A total of 1,000 organizations were randomly selected from the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) database. The survey resulted in 243 responses, out of which 150 organisations have adopted 3PL services. A chi-square test is conducted to assess statistical significance of the hypothesized relationships among the variables relating to 3PL decision-making process and a regression analysis is conducted to assess the strength of those variables to predict the impact of 3PL usage. Findings Overall, the results reveal that 3PL services are extensively adopted by businesses (63 per cent) in Bangladesh. Freight forwarding, order fulfilment and shipment consolidation are the top three most frequently outsourced 3PL services. However, the extent of 3PL use varies between manufacturing and service organisations. Results also suggest that logistics system performance is the key predictor of the overall satisfaction of 3PL users. Research limitations/implications The key limitation of this study is that both manufacturing and services firms are collectively analysed. Future research will separately investigate the outsourcing 3PL services requirements for two categories of firms. Characterisation of 3PL usage patterns and their drivers has practical significance and strategic implications for logistics practitioners and decision-makers who opt for global outsourcing. Originality/value The implementation in the context of Bangladesh to provide an evidence base to formulate business strategies for increasing the adoption of 3PL usage is novel.

Current and Future Trends of Information Technology and Sustainability in Logistics Outsourcing

“…It is observed that research on logistics outsourcing has received attention in literature over the years and is growing, given the number of past and recent publications. The interest in logistics outsourcing research indicates how important the sector is to shippers, especially from a sustainability perspective and as a way of organizing the movement of goods in an efficient manner across supply chains, as also claimed by [72]. However, limited studies have tried to identify the common elements of logistics outsourcing from a technology and sustainability perspective.…”

A comparative study of market potential for logistics outsourcing in Estonia and Finland

“…Also, the before mentioned logistics activities are less outsourced in Estonia, than in Finland. Interestingly, most of the existing studies consider cost reduction as a main motivator for logistics outsourcing (Brewer et al , 2013; Prajapati et al , 2020) and that logistics outsourcing has mainly had positive effects on cost performance (Akter et al , 2019).…”

“…Further, both came to the conclusion that cost-driven outsourcing is dominant when performance is considered. This research stream has continued to flourish, for example, Modaress et al (2016), Nyameboame and Haddud (2017); and Akter et al (2019) have since received similar results in different contexts. Akter et al (2019) study among other things the impact of 3PL logistics outsourcing on performance, reporting that over 75% have experienced positive and just 13% of firms negative impacts on logistics costs.…”

“…This research stream has continued to flourish, for example, Modaress et al (2016), Nyameboame and Haddud (2017); and Akter et al (2019) have since received similar results in different contexts. Akter et al (2019) study among other things the impact of 3PL logistics outsourcing on performance, reporting that over 75% have experienced positive and just 13% of firms negative impacts on logistics costs. Similar results have been obtained in different company context also by Modaress et al (2016), who surveyed petroleum companies in the Persian Gulf region, concluding that approximately 22% of respondents estimated hidden costs associated with logistics outsourcing.…”

Assessing Blockchain Technology application for freight booking business: a case study from Technology Acceptance Model perspective

“…Our proposed blockchain-based system is crucial for stakeholders’ ability to reap the benefits of this transformation without risking a loss of information. Particularly those at the centre of the supply chain, such as carriers and ECU Worldwide, will see vast gains through digitization, whereas smaller entities further up and downstream need additional incentives to join (Akter et al , 2019). Reallocation of benefits might thus be necessary to contemplate when introducing a blockchain-based system.…”