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

AuthorBayu Khresna Sangka, Shams Rahman, Aswini Yadlapalli, Ferry Jie
Publication Date11 Nov 2019
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
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
importantcompetency category. In the moderately importantcompetency 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, 20192024 (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
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:
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 firms 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 firms 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
firmsfocusing 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 companys 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 Indonesias 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 Governments 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
managersskills 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
of 3PL

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