Growing need of third party logistics (3pl) in Pakistan : Analysis on oil and gas Industry Islamabad

Abstract

The need of third party logistics is becoming prevalent in the industry of oil and gas in Pakistan. The study discusses the relationship that exists between third party logistics (independent variable) and supply chain performance (dependent variable). The study discusses various definitions of supply chain management, supply chain evolution, supply chain management in oil and gas industry, numerous definitions of logistics and third party logistics, several aspects of inventory management, transportation management, warehouse management and information management, effects of outsourcing specific business function to third party logistics provider in general and specifically in oil and gas industry. Survey for this study was carried out in 10 firms and organizations (Mol, Mari Petroleum Company Limited, Oil And Gas Development Company, Pakistan Petroleum, Pakistan Oil Fields, Shell Petroleum, Pakistan State Oil, Schlumberger, Attock Petroleum and Dewaan Petroleum) operating in oil and gas industry restricted to Islamabad and Rawalpindi. Data collected through 10 firms was later analyzed by using SPSS (Version 7.0). On the basis of theoretical framework, four hypothesis were developed which are H1: Outsourcing inventory management to third party logistics service providers has significant impact on increasing supply chain performance, H2: Outsourcing transportation management to third party logistics service providers has significant impact on increasing supply chain performance, H3: Outsourcing warehouse management to third party logistics service providers has significant impact on increasing supply chain performance and H4: Outsourcing information management to third party logistics service providers has significant impact on increasing supply chain performance. On the basis of several tools and tests applied, hypothesis H1, H2 were accepted and H3, H4 were rejected. Research concludes that outsourcing specific business function to third party logistics is not just a mean to be cost efficient, but also proves to be strategic instrument for gaining competitive advantage through increased supply chain performance, service and flexibility throughout the chain.