KEY SERVICE QUALITY DIMENSIONS FOR LOGISTIC SERVICES

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1 KEY SERVICE QUALITY DIMENSIONS FOR LOGISTIC SERVICES Phusit Wonglorsaichon School of Business, University of the Thai Chamber of Commerce 126/1 Vibhavadee-Rangsit Road, Dindang, Bangkok 10400, Thailand ABSTRACT Recently, Thai logistics service providers have to face the challenges of both domestic and global competition. They attempt to decrease the cost and improve the quality of service. The key service quality dimensions have been investigated in many logistics service providers in order to serve for their customers in this decade. Therefore, this research explores to the concept of service quality in the logistics service and gains more insight into the most important dimensions for many services offering in order that the Thai logistic service provider can use the information to benefit for the company. This paper attempt to understand the interesting service quality dimensions of manufacturers based on a study of 167 respondents via a mail in Bangkok. The research found that the significant dimensions of all industries were expertise, trust, reliability, communication and serviceability, respectively. The least important dimensions were the aesthetics, extra characteristics, style, behavior, and adaptability, respectively. The logistics service providers should concern these dimension extraordinary and to improve only key dimension based on limited resources. The results can use be a direction for the Thai logistic services companies to add value and competency with service quality. KEYWORDS Quality, Logistics, Service 1. Introduction Thailand s advantageous location is one of the reasons for its continuing prosperity. The country is located on the center of Southeast Asia. Thailand is a connecting country from China and South Asia countries such as India through Indo-China and other Asian countries. This strategic geographical position supports the Government s efforts to develop Thailand as a transport and communications hub in this region. Today highly competitive global market climate sparks Thai industries demand for logistics management. Running the old style management and competing with competitors only lower labor cost and cheaper raw materials than other exporting countries are fading out. To stay competitiveness in the global market, Thai companies have to start cultivating and applying the supply chain management and logistics management for their operations. Logistics is part of the large integrated process, called supply chain, in which a number of various business entities, such as suppliers, manufacturers, distributors and retailers work together for acquiring raw materials, processing for finish goods and delivering to retailers and end-users later on (Beamon, 1996) [1]. Logistics companies play a more important role than in the past, which in turn they coordinate and accelerate physical and information flows along multiple levels of the supply chain. Indeed, in keeping pace with rapid market changes, the whole logistics system has become more efficient and flexible. This has forced third party logistics to look for accurate and real-time information of the status of the entire shipment process to increase their planning capacity and to improve customer service levels. Logistic have influenced the selection of suppliers, purchasing the raw materials, designing of products and processes, location of the factories, building the partnership and alliance, and many other core business processes (Caplice and Sheffi, 1995) [2] Consequently, the quality of logistic services is an important condition and element of both own logistic system and third-party logistic of outsource. Therefore quality and customer orientation increasingly becomes a key factor of the market success in the area of logistic services. For that reason the domestic logistic companies have to establish their quality strategy following the practice of the international logistic companies aiming at the establishment, maintenance and continuous improvement of the logistic services. The quality of the logistic services can be established in the service process, involving essentially the specification of products and services meeting customers expectations and market demand. Quality of service could be divided into transport, service and logistic criterions, which can be used with the varieties service quality concepts. The research has been developed in order to find out the difference in the logistic service quality dimensions when classified by position, type of industry, size of firms, nationality of decider. There are main two objectives for this study. The first purpose will be to identify the logistic services quality dimensions of the manufacturers from the

2 logistic services companies by selecting specific variables. The second objective is to find out the most and the least important in the logistic services quality dimensions, which are desired from them of manufactures when classified by the respondent characteristics. The review of the existing literature on the concept of service quality in logistic service will be the basis for this research. 2. Literature Review The basic elements of the quality model of the logistic services of Rixer et.al.(1995) [3] stated that the quality of the services can be established in driving essentially the specification of products and services meeting customers expectations and market demand. The company has to create activities to serve customer beyond their expectation and desire in order to establish the satisfaction and loyalty. To improve the value and excellent level of service, core products and services should be defined as well as process chains and operation of service should be determined. The properly quality model of products and services should be selected or elaborated and quality characteristics should be determined. The original ten dimensions of service quality, through empirical research by Parasuraman et al., 1985 [4] that were identified as following: : the ability to provide the pledged service on time, accurately and dependably. Responsiveness: the ability to deal effectively with complaints and promptness of the service. Credibility: the extent to which the service is believed and trusted. The service provider s name and reputation, and the personal traits of front line staff all contribute to credibility. Competence: staff should possess the necessary skill, knowledge and information to perform the service effectively. Access: the ease of approachability and contact. : the politeness, respect, consideration and friendliness shown to the customers by the contact personnel. Security: the freedom from danger, risk and doubt. It involves physical safety, financial security and confidentiality. : keeping customers informed about the service in a language that they can understand and listening to the customers. Tangibles: these include: the state of facilitating goods; physical condition of the buildings and the environment; appearance of personnel; and condition of equipment services such as the Open University. Understanding/knowing the customer: this involves trying to understand the customer s needs and specific requirements; providing individualized attention; and recognizing the regular customer. Measuring perceived service quality requires a continuum similar to tangible product satisfaction (Berry, et. al., 1985). The customer s satisfaction of service results only when the service outcomes exceed initial expectations. Service satisfaction models were studied by many researchers for long time. Especially the measurements of service quality with a well known model know as SERVQUAL was the five key dimensions (Berry and Parasuraman, 1991) [5] that were identified are as follows as: (1) Tangibles: these include: the state of facilitating goods; physical condition of the buildings and the environment; appearance of personnel; and condition of equipment. Tangibles are more important in high-contact services. (2) : the ability to provide the pledged service on time, accurately and dependably. is a customer expectation and means that the service every time is accomplished on time at approximately the same time each day is important to the most people. extends into the back office, where accuracy in billing and record keeping is expected. (3) Responsiveness: the ability to deal effectively with complaints and promptness of the service. It is the willingness to help customers and keeping customer waiting particularly for no apparent reason, creates ability to recover quickly with professionalism can create very positive perceptions of the quality For example, in the case of a package tour operator, it could be dealing quickly and effectively with a patron s accommodation problems. (4) : the knowledge and courtesy of employees and their ability to convey truth and confidence. The assurance dimensions include the following features competence to perform the service, politeness and respect for the customer, effective communication with the customer, and the general attitude that the serve has the customer. (5) Empathy: the provision of caring, individualized attention to understand the customer s needs and specific requirements; providing individualized attention; and recognizing the regular customer an important determinant of quality in high-contact customized services. Through, keeping customers informed about the service in a language that they can understand and listening to the customers.

3 Moreover, Garvin (1987) studied additional service quality dimensions such as reliability, performance, specialties, conformity, durability, serviceability, aesthetics, perceive of quality. Tenner-DeToro described the various models of service quality such as value dimension, eight quality characteristics of service, service quality of delivery things and service quality of interaction. Three-value dimension is composed of speed, goodness, cheapness or price. The eight quality characteristics of services were behavior, politeness, co-operation, thoughtfulness, reputation, reliability and friendship. For Quality characteristics, delivered things key dimensions were composed of price, reliability, performance, extra characteristics, serviceability, perceived quality, approachability, comfort, and standardization. The nine characteristics for service quality of interaction were reliability, expertise, approachability, communication, authenticity, safety, empathy, flexibility, and style (Tenner-DeToro, 1997) [6]. is an important dimension in service quality. McKnight et al. (1990) [7] and Mooman et al. (1993) [8] offered definitions of trust which pivot around the same notions and describe as a state between two partied that are involved in a relationship. One of the parties is perceived by the other party values while remaining convinced that the process or controlling assets (e.g. know-how, resource). The manufacturers had considered to the serviceability which is a variable in the quality dimensions. In addition, Tenner Detoro (2001) [9] identified the most important elements of quality strategic planning and management systems are the following: Quality policy and strategy fitting to company s strategy; Principles and service elements of ISO 9000 series; Specific quality loop and magic triangle of service quality; Value, performance and quality model of services; Process schemes, objects and value chains of services; Quality characteristics of service; Quality condition, engagement, inspection brochures. The main trends of the improvement of the quality system after the implementation are improvement toward to total quality management, tracking, monitoring market trends and changes of customers needs, more detailed quality model, and specifications, continuous improvement of quality spiral regarding quality contracts, implementation and maintenance of customer communication management system. 3. Research Methodology To study the logistic service quality of manufacturers in Bangkok, a mail survey was conducted for this research. There were two parts of questionnaires composed with the respondents profile and thirty three logistic service quality dimensions, which were responses, were measured using different scaling techniques as Likert-type scale (five items). The research method chosen for the analysis of the obtained data can be clustered in to three types. Descriptive statistics will explain the characteristics of the respondents. Cross-tab method will be applied to find out the relationship between the respondent profile and logistic service quality dimensions. One-Way ANOVA will identify whether there are difference in service quality dimensions when classify by respondents profiles Target population included all Thai manufacturers in Bangkok with significant logistic service requirements. In non-probability sampling of any particular member of the population being chosen is unknown and the sample being drawn from people/items that are readily available and convenient. The sample size of this research is 400 respondents by the survey method, a questionnaire in particular, in order to obtain data needed for the analysis in this research. These manufacturers were gotten a mail and then they returned within sixty days, the researcher did not specific the position of answers. A total of 167 questionnaires were received in the following eight-week period. 4. Research Results Respondents Profile Of the 167 responses received, the respondents were officers about 49.7% and the second group was the managers about 21.6%. Percentage of 15% was the executives and 13.2% represented the respondents who were the owners. Accounted for 14.9% was the food and beverage industry and there were three types of industries; service, logistic and others which were the same percentage with 13.9%. Mostly, the sizes of firms were medium with 48.8%, the large firms were accounted for 36.6% and there were the small firms closely with 14.6%. The capitals of firms were more than 100 million (baht) with 40.9%. Accounted for 22%, the capitals of firms were between 11 million (baht) and 100 million (baht). Nationality of decider in logistic service management, 56.3% was Thai. Asian was equivalent to 26.3%. There

4 were many logistic services kinds to be used for business as shown on table 1. The first was the transportation accounted for 33.6% of the using logistic services kinds to serve for businesses. The second and the third were storage and distribution, which were a little different with 15.4% and 15.1%, respectively. The purchasing or procurement and inventory management are the forth and fifth of kinds of logistic service in this survey. All supporting function such as customer supporting, personnel supporting, and financial supporting were included in this study. Table 1: Types of Logistic Services Types of logistic services Percentage Transportation 33.6 Storage 15.4 Distribution 15.1 Purchasing or Procurement 10.2 Inventory Management 9.9 Customer Supporting 7.6 Personnel Supporting 5.5 Financial Supporting 2.6 Hypotheses Result From the hypotheses research, there was no difference in all logistic service quality dimensions when classified by position that contained with owners, executives, managers and staff or officers. Size of firms by capital of firms was an independent variable, which was no difference in logistic service quality dimensions There was difference in logistic service quality dimensions when classified by industry, which was serviceability dimension. When classified by nationality of decider, flexibility was a dimension, which was difference and considered to be a criteria factor of logistic company; domestic, international and jointed venture between the both, the result was there was difference in goodness dimension. Moreover, there was difference in the logistic service quality dimensions when classified by kinds of logistic services in flexibility, accessibility, reputation, and adaptability dimensions. Research Results Base on the study of all respondents and the logistics service quality dimensions, top five priorities dimensions were set to study the importance ranking of the logistics service dimensions. The first important dimension of them was the expertise. The second important dimension was trust, the third important dimension was reliability, the forth and the fifth was communication and serviceability, respectively. In the contrast, the last five of least important dimensions were described on table 2, together. The aesthetics was the least mean score which was considered by all respondents to be the least important dimension in the logistic service quality. The second least important dimension was the extra characteristics. The others dimensions were ranked as the last five of least important which were style, behavior, and adaptability. Table 2: The Ranking of Important Service Quality Dimensions Overall of Respondents Besides the forgoing, the research had studied the difference in the logistics service dimensions when classified by each industry and nationality of decider in the logistic service management. Regarding to the type of industries, the dominant factors of logistics service quality in electronic and computers industry were trust, communication, serviceability, co-operation and standardization, respectively. For food and beverage industry; the first of important dimension was the trust, reliability was the second, speed was the third, cooperation was the forth and the conformity was the fifth, Top five priorities important dimensions for vehicle and spare part industry were trust, reliability, speed, communication and assurance, respectively. Regarding the most important dimension for electronic and computer industry, the food and beverage industry, and vehicle and spare part industry are trust. Logistic industry interested in the expertise which was the highest mean score. The other of top five of highest important were reliability, performance, trust, and communication, respectively. The top five of highest means score for service industry were expertise, trust, communication, safety and serviceability, respectively. Nevertheless, the table 3 illustrated the least important of each industry. The price was the least important dimension for electronic and computers, the style was the least important in food and beverage, the extra characteristics was the least important dimension for vehicle and spare parts industry. The aesthetics was the least important determinant in logistic, service and others

5 industry. Two of the least important dimensions were aesthetics and extra characteristics; the factors were considered to be the top five of least important factors Goodness Table 3: Relationship between Types of Industries and Logistic Service Quality Dimensions Electronic and Computers Standardization Accessibility Food and Beverage Speed Conformity Vehicle and Spare parts Speed For nationality of decider in logistic service management and logistic service dimensions which stated on table 4. The study focused on Thai, Asian, American, European, other nationality of deciders. Thai nationality of decider concerned the expertise which was the highest mean score. Other top five of highest means score were assurance, trust reliability and communication. The least mean score was aesthetics, extra characteristics, style, behavior, and reputation respectively. The most important service quality dimension of Asian decider was the expertise dimension. The second highest was the standardization, the third was the trust. The forth and the fifth were communication and assurance, respectively. Contrast, extra characteristics, style, aesthetics, price and style were the least important determinant. American nationalities of deciders interested to the reputation, the expertise was the second and safety was the third highest. Other top five of highest important factors were safety, co-operation and durability but the least mean score were the behavior, accessibility, aesthetics, price, and goodness dimension that were the little importance. For European nationality of decider, top five of highest important were expertise, co-operation, assurance, assurance, serviceability and reliability. The least important of European nationality was aesthetics, styles, goodness, adaptability, and price. Others nationalities of deciders, the first was the co-operation, the second was the expertise, the third was reliability, the forth and the fifth were assurance and friendship, respectively. Performance Safety Logistics Flexibility Service Tangibles Comfort Others Table 4: Relationship between Nationality of Deciders and Logistic Service Dimensions Standardization Thai Reputation Asian

6 Table 4: Relationship between Nationality of Deciders and Logistic Service Dimensions (Continued) Reputation Safety Durability Perceived quality Responsiveness 5. Discussion and Conclusion American Accessibility Goodness European Goodness Others Comfort To study the most important dimensions for logistic service quality, the thirty three factors were investigated and determined by their customers. The significant dimensions of all industries were expertise, trust, reliability, communication and service ability. Importantly, the expertise was the most important dimension of all industries for this research. This dimension was mentioned by Parasuraman, Berry and Zeithaml (1985). It should be proposed the necessary skill, knowledge and information to perform the logistic service effectively for the manufacturers. Moreover, the result of this research which included two service quality dimensions in ten general criteria of dimensions by Parasuraman et.al (1985). and were the highest important ranking in the top five of highest mean scores. Therefore, the logistic service companies should have the ability to provide the pledged service on time, accurately and dependably through to the back office that was accuracy in all documents. Moreover, they should inform many services in a language that the customers can understand and listen to them. Thus, the service quality dimensions; expertise, reliability, communication which posses by Parasuraman, Berry and Zeithaml can become the basic key factors of the logistic service quality. Regarding the result of this study, Thai logistic providers have to establish and implement the quality strategy focusing on expertise, trust, reliability, communication and service ability to their services, speedily to build the competency in addition to maintain and continue improving of quality service dimension which are possess in the company for keeping the current customers and finding the new customers among the competitive market. The result of this research generated to explore the major logistic service quality dimension, which were the most important for the logistic services management and gained more insight into their dimensions to meet the manufactures requirements. The researcher expected to help the logistics organizations to be better understood the services quality, which will be expected and perceived by their customers to create and increase satisfaction of their client. The limited resource should be allocated to emphasize the most important service quality dimensions However, they should not ignore the least important dimensions; aesthetic, extra characteristics, style, behavior and adaptability in order that these dimensions may be very important for some firms such as jewelry, chemical. They depend on the firms characteristic that have contacted. Nevertheless, the company can use the information to be the basic factors to precede your service and build them to find the competency for your company. References [1] Beamon, B. Performance measures in supply chain management, Proceedings of the Conference on Agile and Intelligent Manufacturing Systems, Rensselaer Polytechnic Institute, Troy, NY, [2] Caplice, C. and Sheffi, Y., A review and evaluation of logistics performance measurement system, the international Journal of Logistic Management, 6(1), 1995, [3] RIixer, A., The Principles and Basic Elements of the Quality Strategy of Rail Passenger Transport, Min oség és Megbízhatóság, pp [4] Parasuraman, A., Zeithmal, V.,& Berry, L.L., A conceptual model of service quality and its implications for future research. Journal of marketing, 1985, [5] Parasuraman, A., Berry, L.L. and Zeithmal, V.A. Refinement and reassessment of the SERVQUAL Scale, Journal of retailing, 67 (2), 1991, [6] Tenner, A. R. Detoro, I. J., Total Quality Management, M uszaki Könyvkiadó (1997) (in Hungarian). [7] McKnight, H., Cummings, L. and Chervany, N. Initial trust formation in new organizational relationships, Academy of Management Review, 2(1), 1990,

7 [8] Mooman, C., Zaltman, G. and Deshpande, R., Factors affecting in market research relationships, Journal of Marketing, 57(1), 1993, [9] RIixer, A., Toth, L. and Duma, L., Management-concept and quality strategic elements of transport-logistic services, Pericdica polythecnica Ser. Man. Sci, 9(2), 2001,

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