Improvement In Trucking Service Quality Of Apl Logistics

Published Date: 02 Nov 2017

Improvement in trucking service quality of APL Logistics Vietnam by measuring and managing service provider performance

ABSTRACT

Customers always require high standard service quality with right delivery in the right time. The quality in trucking service that APL Logistics Vietnam is offering to customers is also required to improve to meet customers’ satisfaction. However, APL Logistics now cannot provide hundred percent met because of many reasons, in which the major comes from the constraint in quality of outsourced trucking service from service providers. Therefore, the measuring and managing the quality offered by service provider are critical to evaluate APLL’s service quality and improve it.

In this paper, the author will use SERVQUAL model to measure the trucking service quality of both APL Logistics and APL Logistics’ service providers in the perspective of customers’ expectation and perceptions. Further, through observation and survey service providers, some reasons of service gaps and service failures will be indentified.

In the research, the author aims to obtain more information about quality parameters of services provided by trucking service providers and to find out as to how much these parameters rate are as per the expectations of the customers; find service gaps between APLL’s service and its customers’ expectaion; and between APLL’s expectaion and its service providers’ service; and determine the attributes of APLL’s added values before providing outsourced service to its customer. Finally, the good measurement will give suggestions for the correct and proper management for service quality improvement.

The result of this paper may provide APLL management team and operational team an overview of current performance of trucking providers and the solution in managing them. Currently, APLL has a modest number of trucking service providers, this thesis can apply in evaluation and management the increasing number of service providers in the future.

INTRODUCTION

APL Logistics (APLL), a sector of Singaporean Corporation, APL-NOL, is a global logistics service provider (3PL). In Vietnam, after becoming the 100% foreign investment enterprise in 2007, besides the main service of cross-docking consolidation, APLL developed many added services, in which trucking management is the focus of the company. APLL outsources trucking service from local providers and adds management before serving to its customers.

In the difficult situation of the economic crisis, all enterprises are struggling to find the proper ways to remain and develop business. APLL is not out of this cycle. In the condition of limitation in investment in Vietnam, foreign shipping lines and logistics providers are not allowed to possess their own trucks for business. Therefore, outsourcing becomes the best also the unique choice. However, 3PLs like APLL have to face with the fact of the gaps between standard of service quality offered by providers locally and customers’ requirements globally. For this reason, to ensure and improve the service quality provided to the end customers, it is a must for APLL to measure, control and also find solution to manage its service provides. This paper is made for this purpose.

The paper will be presented in 5 parts:

+ Introduction

+ Literature review about (1) Service and characteristics of service; (2) Service quality, (3) SERVQUAL model; (4) SERVQUAL criticism; (5) Trucking service quality (6) Added values of Logistics service providers.

+ Research methodology: (1) APLL - General introduction; (2) Dimensions modified and questionnaire development for trucking service quality; (3) Data collection

+ Analysis

+ Conclusion and recommendation.

II. LITERATURE REVIEW

1.1. Service and characteristics of services

Service

Service is a term that has been being popularly used in our lifetime. Actually, in the vast of researches, service has been defined in many different ways. Most researchers describe service as activities, processes or interaction (Vargo and Lusch, 2004a, Solomon, M.R., Surprenant, C.F., Czepiel, J.A. and Gutman, E.G. 1985). [12] [13]. The service definition, service concept and service notion are very clearly reviewed and debated in "Service portraits in service research: a critical review"of Bo Edvardsson, Anders Gustafsson and Inger Roos in 2005. Authors gave evidences of changes in understanding and developing the service concept from time to time. For example, Hill (1977) asserted that service is as the changes in the condition of a person or something in customer’s possession perspective. Bo Edvardsson, himself in 1997, found "service as a part of the winder concept of the product". That meant a product is the combination of goods, services, information and so on. Gronroos (2000) considered service as solutions provided to deal with customer’s problems. In the research in 2005, Bo Edvardsson el at used the concept "service portrait" to explain service definitions and characteristics empirically. Finally, authors affirmed that "service always relates to a perspective"

Characteristics of services

Distinctive characteristics of service has been well-documented as intangible, heterogeneity and inseparability (Parasuraman, A., Zeithaml, V., Berry, L., 1985) [3]

First, services are basically intangible. When buying a product, customers can see it, touch it and feel it. However, with a bought service, customer may rely on the promises, the reputation of service providers. It is abstract to ensure the service quality in advance because most of them are not tested, verified and counted, just after implementing services, customers may have their evaluation or complaint if the service cannot match their expectation. Because of the intangibility nature of service quality, service providers are always in obscurity of recognizing customers’ service perception and their evaluation.

Second, services are heterogeneous. Service quality is various from one service to another, different from producers to producers and changed from day to day. The same service provided to different customers in different period of time is evaluated in different levels. Especially in labour intensive services, firms cannot obtain the uniform or standard service quality to their customers and the consistency of service quality is really toilsome to ensure.

Third, the production and consumption of service take place simultaneously, they are inseparable. Unlike products, where the quality is created in the manufacturing process, service quality is produced at the time of consumption. With service, the participation of customer in the offered service is often intense. For example, service of a restaurant is produced while the customers are in this restaurant and served.

Further, perishability is also the typical characteristic of service. In general, services cannot be stored, transported, resold or returned (Donnelly, 1976; Zeithaml et al, 1985) [7]. For example, an airline cannot save the empty seats in the lack season for the overbooked demands in the next season. This nature often causes the problems of capacity and uncertainty (Bo Edvardsson, Anders Gustafsson, Inger Roos, 2005) [8] and always as concern of service providers because customers just recognize this issue when the insufficient supply and waiting situation incur. (Russell Wolak, Stavros Kalafatis and Patricia Harris, 1998) [9]

Because of these abstract natures, it is difficult to identify the service quality definition and measurement while they are always concerns of all related parties in the market (customers, service providers, marketers or researchers)

1.2. Service quality

The intensifying competition of business environment in the trend of increasing globalization has led firms in both productions and service sectors to struggle for the profitable business. They all are under high pressure to understand the market and satisfy the requirements of customers to survive and develop in the competitive environment (Kong and Mayo, 1993). [1] Customers in the market do not buy a service for being nice. They always want to buy a service with related quality because of expectation of best perceived value-to resource choice. (John C. Groth, Richard T. Dye, 1999) [2]. Therefore, delivery of high service quality to meet customer satisfaction is considered as a critical success strategy in the business and the ultimate goals of service provider (Parasuraman et al., 1985; Zeithaml et al., 1990; G.S. Sureshchandar, Chandrasekharan Rajendran, R.N. Anantharaman, 2002) [3] & [3a]

Despite the fact that service and service quality are intangible, inseparable, heterogeneous and perishable (Parasuraman et al, 1985; Rushton, A.M. and Carson, D.J. 1989) [4a] (Zeithaml et al., 2006) [4b] and difficult to be measured, for their important roles in marketing and business, service and service quality are ones of the most popularly debated and researched topics in the marketing study in the last two decades.

The relationship between service quality and customer’s satisfaction is highly emphasized in almost researches. (Daugherty et al., 1998; Innis and La Londe, 1994; Stank et al., 2003) [4c] The famous researcher, Parasuraman in 1985 presented service quality as the degree of discrepancy between customer’s expectation of the service and their actual perceptions. [5]. It is important to note that satisfaction is not equal to the perception of quality of service. Satisfaction is the result of a specific transaction (Parasuraman, Zeithaml, & Berry, 1988) or the comparison between the rewards and costs of purchased service in relationship with the anticipated consequences [Churchill and Surprenant, 1982). [5a]

In 1988, Parasuraman had his further developed definition of service quality "the overall evaluation of a specific service firm that results from comparing that firm’s performance with the customer’s general expectations of how firms in that industry should perform". [6]. Bo Edvardsson, 1998 also pointed that service quality corresponds to the customers’ expectations and and satisfy their needs and requirements. However, this customer oriented definition does not mean that the high quality of a service is evaluated once fully complying with the customers and their wishes. He suggested, the service quality should satisfy needs and meet expectations of customers, employees and owners. Once fully understanding and balancing the various needs and expectations of these groups, the provider can build the right quality of service offering. [4]

In further development, service quality is expressed as an overall evaluation of service and can be described as an attitude (Parasuraman et al and Zeithaml, 1988). Although the two concepts well resemble each other, yet they may not be identified. Gillbert a. Chutchill and Carol Surprenant, 1982 [5a] mentioned "the primary distinction between satisfaction and attitude derives from temporal positioning: attitude is positioned as a predecision construct and satisfaction is a postdecision construct". The two concepts are closely related since empirically in all type of service, customers use almost the similar criteria to evaluate service quality (Parasuraman et al, 1988; Churchill & Surprenant, 1982).

Improving service quality as well as customer satisfaction are recognized as the critical factors to remain the loyalty of customers to increase business and widen market share [4c] (Daugherty, P.J., Stank, T.P. and Ellinger, A.E. 1998; Anderson, 1996).

In order to have the improvement, the measurement of service quality is a must to evaluate the service offering and service receiving, to know how much customers satisfy with their perception, and in what extent service providers need to adjust and enhance their services in physically and in attitudinally. Therefore, going along with the increasing number of researches dealing with service quality, there are many researchers developing methodologies for measuring service quality. These tools provide users clear visibility and method to measure such the intangible subject, service quality. However, sometimes they may get confused and difficult to choose the proper tool among the variety of papers. This results in the adjustment of measurement tools and dimensions for more suitable usage in particular cases.

1.3. SERVQUAL

SERVQUAL is one of most popular method providing technology to measure and manage quality of service on customers’ perspective. It was firstly innovated by Parasuraman, Zeithaml and Berry in 1985. The method allows customers to assess the service quality of a certain provider by evaluating the gaps between their expectation of the service and the actual perception offered by service provider. (Francis Buttle, 1996) [10].

In the paper, Parasuramna et al modeled the framework of service quality with five quality gaps founded, four gaps on the service provider’s part and the last one on the customer’s.

Table2: Service quality model (Parasuraman 1985)

Gap 1: The discrepancy between customer expectation and management perception reflects the lack of information about customers’ expectation of service providers.

Gap 2: The discrepancy between management perception and service quality specification is caused by the wrong service quality standard.

Gap 3: The difference between service quality specifications and service deliver is the service performance gap.

Gap 4: The gap between service delivery and external communication is caused by the inadequate communication which results in mismatches between promises and actual performance.

Gap 5: The difference between the expected service and the perceived service reflects that the level of service quality is dependent on how customer perceives the actual performance in comparison with what they expected. This is the focus of SERVQUAL model.

In order to indentify the gaps, authors identified structures of service quality. In the research of Parasuraman et al 1985, service quality was described as a multi-dimensional construct. Originally, through developing 97 items, researchers classified 10 dimensions of service quality (reliability, credibility, responsiveness, communication, competence, courtesy, understanding/knowing the customers, access, tangibles and security). These 10 elements were basis of service structure from which these authors built a tool to measure service quality with abstract characteristics of intangibility, heterogeneity, inseparability and perishability. However, these dimensions were potentially overlapped, for example reliability and credibility, communication and responsiveness. Three years later, after evaluation and further purification, Parasuraman and his co-researchers reduced the number of components of service quality with five precise and more aggregate dimensions (empathy, reliability, assurance, tangibles, responsiveness) basing on 22 items.

Dimensions

Definition

Items in scale

Reliability

The ability to perform the promised

service dependably and accurately

4

Assurance

The knowledge and courtesy of employees and their ability to convey trust and confidence

5

Tangibles

The appearance of physical facilities, equipment, personnel and communication materials

4

Empathy

The provision of caring, individualized attention to customers

5

Responsiveness

The willingness to help customers and to provide prompt service

4

Table I. SERVQUAL dimensions (Buttle, 1996)

22 surveyed items with 5 determinants will be prepared twice in 2 different sections. The first is to evaluate the customers’ expectation and the later is for customers’ perception measurement. In some researches later, Parasuraman refined some words in questions to be more properly application, however, basically the main content of 22 items are still remained (Buttle, 1996). Through rated questionnaires, customers can evaluate their expectation and perception by scoring each question. Therefore, the analyst can obtain the unweighted scores of service quality basing on the Gap score (Gap score = Perception score (P) – Expectation score (E)) for five dimensions. Further, these five elements will be also weighted to determine the relative importance among them. The weighted scores are obtained from respondents for each item to identify the relative rating, then to compute the weighted average SERVQUAL score. (Manjunatha. K and Shivalingaiah. D, 2004) [11]. Forms in analysis SERVQUAL data can be set in several types: item-by-item (e.g. P1 – E1, P2 – E2); dimension-by-dimension (e.g. (P1 + P2 + P3 + P4/4) – (E1 + E2 + E3 + E4/4), or basing on single measure of service quality ((P1 + P2 + P3 …+ P22/22) – (E1 + E2 + E3 + … + E22/22)) (Buttle, 1996)

The clear-cut features in quantifying the abstract characteristics of service quality of SERVQUAL model makes it widespread in application in both academic and business environments.

1.4. Criticism of SERVQUAL

SERVQUAL model is well-known for its widespread application in measuring service quality in many aspects, such as banking, hospitality, tourism, advertising, library, transportation and mass services. However this model is still subject to variety of criticisms. The most common concern is whether or not determinants of service quality can be applicable for universal industries. In the article "SERVQUAL: review, critique, research agenda", Francis Buttle (1995) reviewed and criticized SERVQUAL model in perspectives of theory and operation. He emphasized "SERVQUAL’s five dimensions are not universals" and "SERVQUAL fails to draw on established economic, statistical and psychological theory".

In fact, there are many suggestions to modify dimensions of SERVQUAL in particular areas to gain the suitability. It was supported by J. Joseph Cronin, Jr.and Steven. Taylor (1992) [15] who proposed the alternative model SERVPERF which measure service quality in term of only performance instead of expectation and perception. On the way of measuring quality of university service, Salvador-Ferrer (2010) tried to improve SERVQUAL’s internal consistency and assess its dimensional structure by designing SERPVAL Scale for service personal value with expectation of contribution to the services marketing literature [14].

Furthermore, SERVQUAL which is much more focused on process quality of service delivery and missed the outcome of service encounter has been also criticized in (Buttle, 1995). Grönroos (1982) introduced three different elements of service quality (technical, functional and reputational) in which the outcome of service encounter is expressed in technical quality; the process of service delivery is concerned in functional quality; and the image of service providers is reflected in reputational quality. Cronin and Taylor (1992) argued that components of service quality set by Parasuraman et al missed outcome quality.

In responding to criticisms of various researches, Parasuraman et al had strong attempt to review and defend for SERVQUAL model with sharp explanations (Parasuraman et al, 1991, 1993, 1994) [16]. However, the critiques and arguments are still continued by later researchers. In the positive perspective, this is the valuable contribution for the more useful measurement tool of service quality which will help users to have clear and easer application.

1.5. Trucking service quality

https://vpnua2.ua.ac.be/+CSCO+ch756767633A2F2F6A6A6A2E77666762652E626574++/action/showPublisher?publisherCode=ama

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