Managerial competencies of 3PL providers. A comparative analysis of Indonesian firms and multinational companies

• Published date: 11 November 2019
• DOI: https://doi.org/10.1108/IJLM-04-2019-0098
• Pages: 1054-1077
• Date: 11 November 2019
• Author: Bayu Khresna Sangka,Shams Rahman,Aswini Yadlapalli,Ferry Jie
• Subject Matter: Management science & operations

Managerial competencies

of 3PL providers

A comparative analysis of Indonesian firms

and multinational companies

Bayu Khresna Sangka

Faculty of Teacher Training and Education,

Universitas Sebelas Maret, Surakarta, Indonesia

Shams Rahman and Aswini Yadlapalli

School of Business IT and Logistics, RMIT University, Melbourne, Australia, and

Ferry Jie

School of Business and Law, Edith Cowan University, Joondalup, Australia

Abstract

Purpose –The purpose of this paper is to identify and prioritise competencies of Indonesian third-party

logistics (3PL) managers from the perspective of multinational corporations (MNCs) and local firms.

Design/methodology/approach –Underlined by the theory of action and job performance (competency

model), the study proposes a framework that consists of management, logistics,business and information and

communication technology competency categories, with 15 competencies. Data are collected from five MNCs

and five local 3PL firms operating in Indonesia. The analytic hierarchy process method is used to calculate the

priority weights and to prioritise the competencies.

Findings –Results indicate that both the local and MNC 3PL providers emphasise logistics as the “most

important”competency category. In the “moderately important”competency group, MNCs prioritise

competencies in the management competency category while local firms prioritise competencies in the

business competency category.

Research limitations/implications –Results obtained in this study focus on 3PL firms in Indonesian

businesses, which may not be applicable to other nations and other industries.

Practical implications –3PL firms, industry peak bodies (e.g. Indonesian Logistics Association) and

education providers can benefit from incorporating the findings of this study in developing curricula for

higher education and training programmes for certification designed to improve managerial competencies.

Originality/value –By including the perceptions of the MNCs and local 3PL providers, this study advances

the literature on 3PL managerial competencies by extending such knowledge to the global environment.

Keywords Indonesia, Analytic hierarchy process, Competency, Logistics industry, Logistics competences,

Third-party logistics providers

Paper type Research paper

1. Introduction

Third-party logistics (3PL) refers to an arrangement in which companies outsource their

business operations to a specialised service provider that offers customised on-demand

transportation, warehousing, distribution and freight-forwarding services. In addition, 3PL

providers facilitate the movement of goods through processing documents, monitoring

activities and financing transactions. The comprehensive range of services offered by 3PL

providers has led to an increase in the number of firms outsourcing their logistics services to

3PL providers (Perçin, 2009). For example, 90 per cent of the Fortune 500 companies in the

USA reported having at least one 3PL contract, and the market for logistics providers

continues to grow (Berman, 2017). It has been suggested that the global 3PL market will

grow to $1.3 trillion by 2024 (from $0.452 trillion in 2018), registering a strong CAGR over

the forecast period, 2019–2024 (Mordor Intelligence, 2019). The growth in logistics

outsourcing to 3PL providers is principally attributed to the benefits it creates through

The International Journal of

Logistics Management

Vol. 30 No. 4, 2019

pp. 1054-1077

© Emerald PublishingLimited

0957-4093

DOI 10.1108/IJLM-04-2019-0098

Received 4 April 2019

Revised 1 August 2019

Accepted 7 August 2019

The current issue and full text archive of this journal is available on Emerald Insight at:

www.emeraldinsight.com/0957-4093.htm

1054

IJLM

30,4

reducing costs, improving performance and increasing the ability of organisations to focus

on their core business (Zacharia et al., 2011; Langley, 2017).

The increasing role of 3PL providers in a firm’s business requires managers that can link

processes, manage crucial relationship s and engage in decision making ( Langley, 2017).

Specifically, skilledemployees in the logisticsindustry can redesign theprocess and contribute

greatly toa firm’s success and growth (Ellinger and Ellinger, 2014). However, rapid c hanges in

the business environment have resulted in a shortage of skilled logistics professionals

(Langley, 2013; Rahman and Qing, 2014; Sinha et al., 2016). This shortage has arisen from

firms’focusing on cost reduction and improving relationships with customers and suppliers

rather than on developing employees to achieve supply-chain objectives (Sweeney, 2013;

Flöthmann, Hoberg and Gammelgaard, 2018). Therefore, talent management will be the

principal driver of a company’s success in the future (Hohenstein et al., 2014; Langley, 2017).

The Indonesian logistics industry is facing challenges related to a shortage of skilled

labour. The efficiency of Indonesia’s logistics industry, as measured through the Logistics

Performance Index (LPI), indicates that Indonesia (which has an aggregated rank of 51) can

improve the quality of its logistics services (World Bank, 2018). Research finds that

governments play an important role in ensuring the quality of logistics services through

developing policies (McKinnon et al., 2017). For example, the Indonesian Government’s 2012

Blueprint for the Development of a National Logistics System (Cetak Biru Pengembangan

Sistem Logistik Nasional) highlights establishing national competency standards for the

logistics industry. Regardless of its efficiency issues, the Indonesian logistics industry has

been growing by 11.8 per cent on an average for the past 10 years (McKinnon et al., 2017).

Given the growth potential, if challenges related to the availability of skilled and competent

managers in the logistics industry are addressed promptly, Indonesia could become the

largest market for the logistics industry in Asia.

Despite the importance given by practitioners and policymakers globally to talent

management in the logistics industry, research has rarely focused on the crucial process of

developing talented managers (Ellinger and Ellinger, 2014). Most prior studies on logistics

managers’skills and competencies are limited to the context of developed countries such as the

USA (e.g. Keolanui and Wood, 1975; Murphy and Poist, 1991a, b, 2006; Gammelgaard

and Larson, 2001) and Europe (Larson and Gammelgaard, 2001; Flöthmann, Hoberg and

Gammelgaard, 2018). More recently, researchers have begun to investigate the skills and

competencies of logistics managers in the context of developing countries such as China

(e.g. Rahman and Yang, 2012; Thai and Yeo, 2015). Despite the shift in research focus to

developing countries, the research output remains very limited to the largest world economies.

The limited research on the skills and competencies of logistics managers in the context of

developing countries has highlighted the need for research to identify critical skills for 3PL

managers in the context of developing economies (Hohenstein et al., 2014). Therefore, the

objective of the study is to identify and prioritise the competencies required by 3PL managers in

the context of Indonesia.

This research contributes to the literature in two ways. First, this is the first study to

investigate 3PL managerial skills and competencies in the Indonesian context. The

identified skills and competencies will assist government and policymakers in Indonesia to

develop policies for the future development of human resources in the Indonesian logistics

industry. Second, the study provides a comparison of the perspectives of multinational

corporations (MNCs) and local 3PL providers operating in the Indonesian business context

on the skills and competencies important for 3PL managers. It is crucial to understand the

differences between the perspectives of MNCs and local 3PL providers because both the

categories of logistics providers have access to different resources.

The remainder of this paper is organised as follows. Section 2 presents a brief discussion

of the importance of Indonesian 3PL service providers. Section 3 presents the competency

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Managerial

competencies

of 3PL

providers