Innovation consists of making collaborative efforts in term of relationship with other organization and institutions to attain competitive advantage by means of innovative services and products, as well as different relationships with their shareholders and stakeholders. Logistics services includes warehousing, freight, transportation, product return and repairs, inventory management, packaging, order entry/order processing. All these can be managed internally. But the challenges of coping with manufacturing and handling logistics which is not the core of the organization business model result to the outsourcing for logistics service providers, such as third-party logistics service providers. This paper aimed at investigating the moderating effect of innovation on logistics practices, particularly, warehousing, transport and packaging services, of 3PLs service provider in Malaysia manufacturing sector. Quantitative method of research was adopted, and questionnaire was distributed electronically. It was analysed using SPSS and the result indicated that innovation of green logistics moderates the relationship between inventory management and operational performance, packaging and service performance but does not moderate relationship between transportation and service performance.

In the contemporary business global sphere, it is so problematic, if not impossible, for an organization to be competitively deprived of working in alliance, closely with external associates. The idea of Supply Chain Management, (SCM), arose in this track and strives to optimally manage the physical goods and/or services. Logistics is the key competitive factor in the manufacturing sector because of the innovative models’ variants and options. For instance, in Malaysia, the manufacturing sector is a major contributor to the annual GDP, hence, there is a need for sustainable technology that can project significant business operations and supply chain management impacts. But this is far from being the case in the contemporary. Based on the increasing logistics benefits, the importance of the assessment of logistics efficiency and impact is attracting increased consideration. Green Logistics (GL) involves not only the delivery of green products or services to customers but also the inclusive logistics flow of items from cradle to grave in addition to reverse logistics. Numerous green events and operations have been instigated, such as manufacture scheduling and network construction. This article aimed at investigating the innovative logistics practices relationship with the operations of third-party logistics service providers in Malaysia. To achieve this, the study engages a structured questionnaire survey. 256 questionnaire was retrieved out of 333 questionnaires distributed electronically and 27 questionnaires were rejected based on some parallel errors and 229 questionnaires was eventually analyzed This is 69% of the questionnaire. In the analysis, SPSS version 20 was utilized. The outcome showed that selection of vehicle type and procurement on quality, cost, and environmental impacts as the main feature of innovation in sustainability. Innovative green logistics serve as a moderating factor in the relationship between 3PLs service provider’s key performance factors and green logistics in the Manufacturing industry of Malaysia. Hence, it fulfills one of the key economic growth activities or operations under strategic thrust 2 of SPV2030.