Selection of Third-party Logistics Provider for Agricultural Products Based on System Comprehensive Evaluation

Bowen SUI,Lijuan ZHUANG

1.College of Economics and Management,South China Agricultural University,Guangzhou 510642,China;2.College of Economics and Management,Qinzhou University,Qinzhou 535099,China

With the transformation of the traditional industry,emergence of advanced technology and integration of global economic integration,the agricultural sector has also realized the importance of agricultural product logistics in promoting the economic prosperity of"agriculture,countryside and farmers".However,the perishable and bulky properties of agricultural products make the agricultural product logistics have the characteristics of professional facility application,restricted logistical process and limited time competence.Therefore,it broadens the view of agricultural product industrialization strategy by breaking traditional scattered self-supporting logistics form but using the professional large-scale third-party logistics management mode,which also provides guarantee for the agricultural product operators to win core competence.In the various third-party logistics providers,every provider is restricted by its own resources and affected by the environment,and they all have their own defects,which brings difficulty to the selection of third-party logistics providers for the agricultural product operators.

Meaning and Features of the Third-party Logistics for Agricultural Products

The Research Center for Rural Economy of the Ministry of Agriculture defined agricultural product logistics in 2005 as follows:as a branch of logistics industry,agricultural product logistics is the sum of agricultural product logistics management activities in the circulation from producers to consumers,including production,purchase,transportation,storage,loading and unloading,handling,packaging,delivery,distribution processing,distribution and information processing of agricultural products.The objectives of agricultural product logistics are increasing added value of agricultural products,saving circulation cost,raising circulation efficiency,reducing un-necessary cost and evading market risks.

Third-party logistics refers to the logistics operation mode achieved logistics services through the third-party besides the supplier of logistics services and the demander.The thirdparty logistics for agricultural products is a new concept,so the definition of the third party logistics of agricultural products can expand its scope to promote its development.

The natural attributes of agricultural products determine the characteristics of the third-party logistics of agricultural products which is different from the general logistics:

First,as for fresh agricultural products,it has particularly high demand for the logistics facilities provided by the logistics providers,mainly including logistics equipmentforkeeping fresh,cold storage,and epidemic prevention.

Second,as for the processed agricultural products whose storage life has prolonged,it needs to conduct scientific technical process to keep their original properties and tastes,which not only needs to ensure food security,but also needs to pass the restricted trade technical barriers.

Third,the life cycle characteristics of agricultural products make the agricultural product logistics possess strong seasonal and regional properties,which is restricted by natural conditions.

Construction of the Evaluation Index System of the Third-party Logistics Providers for Agricultural Products

The earliest research on the evaluation and selection of providers was done by Dickson[1],who summarized 23 related provider selection criteria based on the 170 surveys on the procurement practices of purchasing agents and purchasing managers.In 2000,Ellram[2]proposed that in provider selection,in addition to the general quantified criteria like cost,quality and delivery period,consideration should also be given to the so-called soft standards such as management consistency,strategic directivity of consistent providers.In 1997,the results of the questionnaire survey of the University of Maryland[3]showed that financial stability was more important than the other characteristics of the third party logistics provider.The survey results of Stevenet al.[4]on thirdparty logistics showed that"thinking about the interests of the customers","reliability",that is,the service quality wasthe mostimportantfactorin choosing the third-party logistics providers.In China,MAet al.[5]proposed a comprehensive evaluation index system to the selection of cooperative partners undersupply chain management,and classified the main factors that affected cooperative partner selection into 4 categories:enterprise performance,business structure and production capacity, quality system and enterprise environment.MAet al.[6]conducted comprehensive evaluation on the selection of third-party logistics providers from 4 aspects,namely,development potential of enterprises,logistics technology,equipment status and service quality of the enterprise.ZHOUet al.[7]constructed the index system for the evaluation on the competence of third-party logistics providers based on the analysis on the third-party logistics provider,which mainly focused on the following 4 aspects ofmarketpower,technical strength,organization and coordination ability,and management level.

The results of the 12thSurvey Report on Chinese Logistics Market conducted by the China Storage Association in September 2014 showed that the selection standards for many enterprises to select logistics service providers tended to be the logistics satisfaction ability and working quality,and some enterprises tended to first consider the economical efficiency of costs.The above survey analysis showed that enterprises mainly gave consideration to 2 evaluation standards in selecting third-party logistics providers:service price and service quality.It is relatively easy to compare the service price in evaluating the candidate third-party logistics provider,but hard to compare the service quality.Based on the above analysis on the evaluation index of third-party logistics provider,we selected key evaluation indexes from the aspects of power index,service index,development potential,quality index and information technologyofthe enterpriseswith clear service prices to construct a representative index system for the selection of third-party logistics providers for agricultural products(Table.1).

Selection Steps forthe Third-party Logistics Providers for Agricultural Products

According to the aim determined by the system,system comprehensive evaluation is to evaluate the system design plans on the satisfactory degree,and location consumption and occupied all kinds of resources from the aspects of technique,economy,environment and society based on the study of system investigation and feasibility,and selects the optimal or most satisfactory plan which is technically advanced,economically rational and implement feasible.Since the selection of agricultural product third-party logistics provider is an evaluation of multi-objective and multi-criteria,different indicators should be evaluated by different standards and different scales,making it have certain systematic and comprehensive properties.Therefore,system comprehensive evaluation[8]of analytic hierarchy processand fuzzycomprehensive evaluation method was used for the selection of agricultural third-party logistics provider.

Analytic hierarchy process to determine the weight of each index

Analytical Hierarchy Process(AHP)is a structured technique for organizing and analyzing complex decisions based on mathematics and psychology.It was developed by T.L.Saaty,a famous operational research expert and professor of the University ofPittsburgh,in the 1970s.this method is easy to operate and can quantify the qualitative index.However,based on the judgment of human experience,it is inevitable to subject to subjectivity.Therefore,it needs to be combined with toher methods to eliminate the subjective effects.The specific calculation steps of the analytic hierarchy process(AHP)are as follows:

(1)Define the scope of the problem and set up the provider’s hierarchy index system.

(2)Establish a two-two comparison matrix,whose result is represented by a judgment matrix:

In the judgment matrix,aijis determined after repeated research based on data,expert opinions and experience of system analysis staff.

Fourth,sort the total hierarchical levels.The calculated results of single hierarchical arrangement is used to further synthesize a set of overall priorities for the hierarchy,which is the task of the total hierarchical level sorting.This process is carried out from the highest level to the lowest level by layers.

Comprehensive evaluation based on fuzzy mathematics

The influencing factors evaluation index system of this study was an index system with three-layer structure.According to the fuzzy theory,the evaluation on the factor set and criterion layer was the first level evaluation,and evaluation on the objective layer by the criterion layer was the second level evaluation.Thus,a fuzzy comprehensive evaluation model with two levels and three layers was formed,and the specific methods were as follows:

(1)Establish factor set

AssumeU=(U1,U2,U3,U4,U5),where,Uiis the factor needed to be considered,andi=1,2,3,4,5,which represent the power index,service index,development potential,alliance property and social and ecological benefits of the enterprises;Ui= (Ui1,Ui2,...,Uij),andUijrepresents the weight of thejthindex.

(2)Establish evaluation set and score set

AssumeV(V1,V2,V3,V4,V5),whereVjis the evaluation result,j=1,2,3,4,5,twhcih represent very good,good,fair,poor,very poor;the corresponding score set isF=(1,0.8,0.6,0.4,0.2).

(3)Establish fuzzy matrix

Assume the fuzzy setA(a1,a2,…,a5),where,ai is the weight distribution ofUi.A fuzzy mappedRvectorR(Ui)=(ri1,ri2,…,rij)fromUtoVis called the single factor assessment,and it is the fuzzy subset inV,when 0≤rij≤1,it means the membership ofUiinVj.The single factor evaluation matrixR=R(rij),which parallel all vectors of the fuzzy mapping,is called the transformation matrix of comprehensive evaluation.In this way,the following one-level fuzzy comprehensive assessment model can be obtained from the compound operation of the fuzzy matrix:

Where,bjis the function ofri1,ri2,…,rij,and by using additive multiplicative operation,the model is more precise than other operations.

The factor set is divided according to hierarchy,and then the above model can be extended to a multi level fuzzy comprehensive evaluation model,which applies the initial model to multi-level factors.The evaluation result of the first layer is of the upper layer,until reaching the top layer.The factor layerU= (U1,U2,U3,U4,U5)Τcan be divided into the two-level fuzzy synthsis evaluation model:

(4)calculate the comprehensive scoreSof third party logistics service providers

Calculation Examples

An agricultural product management company decides to use the third-party logistics provider to provide the logistics service,and there are 4 third-party logistics providers,P1,P2,P3,P4,for the company to choose.The evaluation index system is as shown in Table 1.

First,according to the data,expert opinion,the weight of the factor set is determined by hierarchical analysisU=(0.118 2,0.127 6,0.121 1,0.117 6,0.115 5);second is to determine the weight of secondary indexU1=(0.121 3,0.114 2,0.122 5,0.117 8,0.124 2),U2=(0.123 5,0.115 4,0.118 8,0.120 2,0.122 1),U3=(0.141 2,0.130 2,0.128 6),U4=(0.121 4,0.124 3,0.132 2,0.122 1),U5=(0.129 3,0.140 5,0.130 2);finally is to conduct fuzzy evaluation.Taking the 3PL provider P1 for example,if the opinions of 5 experts on the power index of a company is fair,poor,poor,good,fair,then the vectors of the factor set isR(U11)=(0.16,0.14,0.14,0.18,0.16).Thus,the first level comprehensive evaluation of the 3PL service provider is obtained as follows:

Where,A1is the secondary index weightU1of the 3PL service providerP1.

Based on the above steps,the first level evaluation re-sults of other service providersB2,B3,B4,B5can be obtained.Using the above evaluation result vectors as the upper layer index to evaluate the matrix can obtain the second level comprehensive evaluation results:

Table 1 The evaluation index system of agricultural products 3PL providers

Then the comprehensive score of the 3PL service providerP1 is:

Similarly, the comprehensive score of the other 3 3PL service providers are 0152 3,0164 9,0156 8,respectively.Therefore,P1 is the best cooperation partner for 3PL service.

Conclusion

Up to now,the research related with provider evaluation has achieved certain results.Bsed on the principle of system comprehensive evaluation,this study used AHP and fuzzy comprehensive evaluation method to conduct the selection of agricultural products third-party logistics provider,and the method was proved to be scientific and reasonable through calculation examples.

[1]DICKSON GW.An analysis of vendor selection systems and decisions[J].Journal of Purchasing,1996(9):18-23.

[2]LISA ME.The provider selection decision in strategic partnership[J].Journal of Purchasing and Materials Management,2010(5):35-38.

[3]DONALD JB,DAVID JC.LIN GL(林国龙)(Translated).Logistics Management(物流管理)[M].China Machine Press,2002:102-106.

[4]LUO WP(骆温平).Theory,Operation and Cases of Third-Part Logistics(第三方物流—理论、操作与案例)[M].Shanghai Academy of Social Sciences Press,2007:136-138.

[5]MA SH(马士华),LIN Y(林勇),CHEN ZX(陈志祥).Supply Chain Management(供应链管理)[M].China Machine Press,2000:151-156.

[6]MA XF(马雪芬),LIU YY(刘易勇),SUN SL(孙树栋),et al.Appraisal and selection of second party logistics provider of supply chain management(供应链管理环境下第二方物流供应商的评价选择)[J].Computer Engineering and Applications,2010(8):56-58.

[7]ZHOU T(周涛),CHENG JM(程钧漠),QIAO Z(乔忠).The competition ability index system and vague evaluation of third-party logistics corporation(第三方物流竞争力评价体系及模糊综合评判)[J].Logistics Management,2012(9):22-26.

[8]Teaching Materials Writing Group for Operational Research(运筹学教材编写组).Operational Research(运筹学)[M].Beijing:Tsinghua University Press,1990:89-92.