A Compromised Decision-Making Approach to Third-Party Logistics Selection in Sustainable Supply Chain Using Fuzzy AHP and Fuzzy VIKOR Methods

Abstract

With the effects of the COVID-19 pandemic, the e-commerce trend is driving faster, significantly impacting supply chains around the world. Thus, the importance of logistics and supply chain functions has been amplified in almost every business that ships physical goods. In Vietnam, the logistics service sector has seen rapid expansion. Since more and more businesses are seeking third-party logistics (3PL) providers to outsource the logistics functions, this article aims to offer decision-makers an integrated and consistent model for evaluating and selecting the most efficient 3PLs. To this end, the authors exploit a hybrid multi-criteria method which is fuzzy analytic hierarchy process (FAHP) and fuzzy vlsekriterijumska optimizacija i kompromisno resenje (FVIKOR) while examining the most influential and conflicting criteria regarding economic, service level, environmental, social, and risk aspects. Fuzzy information in the natural decision-making process is considered, linguistic variables are used to mitigate the uncertain levels in the criteria weights. First, FAHP (the weighting method) is adopted to evaluate and calculate each criterion’s relative significant fuzzy weight. FVIKOR (the compromised ranking method) is then used to rank the alternatives. The combination of FAHP and FVIKOR methods provides more accurate ranking results. As a result, reliability and delivery time, voice of customer, logistics cost, network management, and quality of service are the most impactful factors to the logistics outsourcing problem. Eventually, the optimized 3PLs were determined that fully meet the criteria of sustainable development. The developed integrated model offers the complete and robust 3PLs evaluation and selection process and can also be a powerful decision support tool for other industries.