1.3 Problem Statement
Recently, Fruitvale’s management has decided to expand its business target market
beyond local to the other ASEAN countries. Business expansion (Surugiu and
Surugiu 2015) requires a higher level of inventory, larger warehouse capacity and
advanced information technology system to conduct effective supply chain
management.
Fruitvale’s management foresees its existing resources and capacity is inadequate
to the incoming overseas order. Insufficient funds with high investment risk have
pushed them to consider outsourcing. They are planning to outsource the non-
expertise area, which is foreign distribution, cargo consolidation, customs clearance,
and inventory management to third-party.
Besides that, Fruitvale is considering to outsource order fulfilment management so
that they could expand the geographical coverage and speed up the delivery lead
time (ILO 2016). In the present market condition, the consumer has magnified their
expectations for shorter lead time, a lower-price cost with a better quality product.
Based on (Mohamed Syazwan and Abu Bakar 2014) in short supply of
professionals in the logistic industry and lack of collaboration efforts between logistic
parties has mostly affected the development of the third-party logistics industry in
Malaysia. Additionally, the fresh food supply chain is getting complicated by the
recent consumer concerns on food hygiene, safety, and food quality (Balaji et al.
2016).
Nevertheless, an improvement in the method of fruits preservation, the reduction of
trade barriers and investment in specialised port terminals have led to spectacular
3

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Evaluation of Third-Party Logistics Readiness for Fruitvale in Malaysia

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