Environmental sustainability as criteria when choosing third party logistic providers

Abstract

The main purpose of this research is to investigate the importance and value of environmental sustainability as criteria when manufacturing companies are choosing their logistics provider. This research brings forward reasons why companies are outsourcing their logistics services to a third party logistics provider and what are the criteria for a long term relationship with the provider. The aim is also to reflect environmental sustainability in logistics perspective and see what kind of environmental initiatives and efforts companies, both manufacturing and logistics have.

A theoretical framework was set up to introduce the fundamentals of supply chain, logistics, outsourcing, three spheres of sustainability, environmental sustainability and green logistics. This qualitative research was done using case study method. Four case companies’ environmental representatives were interviewed; two of the cases were manufacturing companies, two cases were logistics companies. Each case were first analyzed separately and then finally cross-analyzed.

The main finding of the research is that manufacturing companies appreciates their logistics providers’ environmental sustainability initiatives but give only a moderate value as deal making criteria. Logistics providers in the other hand have a perception that their environmental initiative adds a high value and competitive advantage. The main criteria for manufacturing companies when choosing logistics provider are delivery reliability, service quality and price. Long term relationships are likely to lead towards renewal of supplier contracts. All case companies feel that promoting environmental sustainability is a “corporate need to do a right thing”.