Selection of Third-Party Logistics (3PL): A Hybrid Approach Using Interpretive Structural Modeling (ISM) and Analytic Network Process (ANP)

parties involved, directly or indirectly, in fulfilling a customer request. Suppliers, customers, and other third-party providers share information and plans in order to maximize the efficiency and competitiveness of the overall supply chain (Ellram and Cooper, 1990). Each organization has a distinctive role to play and seamless transactions and value addition by each partner decides the overall competitiveness of one supply chain over others. The relative position of different entities in the value chain helps them decide their own core and noncore functions. Even if a firm has the available resources to perform a particular task, another firm in the supply chain may sometimes be better suited to perform that task because of its relative strategic position in the supply chain. Best-in-class companies are proactively seeking to build responsive and resilient supply chains that can withstand the impact of major disruptions and catastrophes—without affecting the end customer and without incurring excessive recovery costs (Elkins et al., 2005). The use of third-party logistics (3PL) providers is becoming prevalent. The relationships associated with 3PL are typically more complex than any traditional logistics supplier relationships and they are truly strategic alliances. These relationships have become a popular way to enhance an organization’s flexibility in meeting rapidly changing market conditions, focus on core competencies, and develop long-term growth strategies. This study offers an understanding of the criticality of various 3PL selection issues and provides a list of 26 selection criteria. Using the reallife case of KVIC (Khadi and Village Industry Commission, India) organic food sector, it proposes a hybrid approach of interpretive structural model (ISM) and analytic network process (ANP) for a proper selection of 3PL service providers. This paper discusses the implications of the results in a real-life context. Further, managerial insights developed through the use of ISMand ANP-based complementary approaches uncover the scope for improvements in the quality of supply chain practices. This paper summarizes the developed understanding of supply chain practices and identifies a few inherent limitations of the used approach. Selection of Third-Party Logistics (3PL): A Hybrid Approach Using Interpretive Structural Modeling (ISM) and Analytic Network Process (ANP)