Key selection criteria for third party logistics in the IC manufacturing industry

Globalization and the shift towards outsourcing have strengthened the need for strong relationship between Third Party Logistics (TPL) and the supply chain. The continuing trend of the IC industry disintegration has resulted in specialized companies that are independent yet co-dependent upon one another. To gain the competitive advantage through a seamless integration with TPL, the IC manufacturing industry sets a very high standard of TPL provider selection. The goal of this paper is to identify the key selection criteria of TPL providers from the empirical study of the IC manufacturing industry in Taiwan, one of the largest IC producers worldwide. The research result indicates that Performance, Cost, and Service are the top three criteria dimensions, in which the Document Accuracy, Problem Solving Capability, Continuous Cost Reduction, Cost Control of Value-added Services, and Value-added Services provision are the top five individual selection criteria. The research result can serve as a valuable reference for other companies with similar industrial characteristics as IC manufacturers.