IE-49 - YMCA University of Science & Technology, Faridabad

Proceedings of the National Conference on
Trends and Advances in Mechanical Engineering,
YMCA University of Science & Technology, Faridabad, Haryana, Oct 19-20, 2012
SYSTEMATIC MODEL DEVELOPMENT TO ANALYZE SERVICE QUALITY IN
SUPPLY CHAIN FOR A MANUFACTURING ORGANIZATION
Tarun Kumar Gupta 1 , Vikram Singh 2
1 Mechanical Engineering Department, NGF College of Engineering and Technology, Palwal, Haryana, India
2 Mechanical Engineering Department, YMCAUST Faridabad, Haryana, India
e-mail: tarungupta1976@yahoo.com
Abstract
In today cut throat competition, individual firm cannot compete as an independent entity rather they have to
work as an integral part of supply chain links. Today most of the organizations are seeking for close association
in their upstream and downstream for maximizing their supply chain efficiency, their profit, reduce the lead time.
The key to sustainable competitive advantage, in this competitive era, lies in delivering high quality service and
that will result high customer satisfaction and ultimately customer delight.
Keywords: Service quality in supply chain (SQSC), Distributor service quality (DSQ), Retailer service quality
(RSQ), Customer service quality (CSQ).
Introduction and literature review
Today, in the time of tough competition, every organization changing its focus from profit maximization to
maximizing the profit through increase customer satisfaction (Seth et al, 2005). Every organization wants to
increase the customer base to reduce the marketing expenses. During the last three decades the scenario of
business has considerably changed and organizations are putting more emphasis on quality of service. Quality is
a concept, a philosophy and in true sense of realization can be observed when the service delivered results in
utmost satisfaction. In this competitive fast developing world economy, there is radical pressure on the
organizations to find new ways to improve the services and satisfy the customers, as these are the key to success.
It is very easy to calculate the loss due to poor sale but very tough to calculate the loss due to poor service
(Gupta and Singh, 2012). The literature of service quality is very enriched by definitions, models and
measurements supported by a number of empirical studies from a variety of services. Though there is no
universal accepted definition, but many authors & researchers (Lewis & Booms 1983, Gronroos 1984,
Parasuraman et al 1985, Zeithaml et al 1988, Christopher 1992, Asubonteng et al 1996,) gives the definition
according to their ideas and work but in the current scenario & related to service quality in supply chain Gupta
& Singh (2012) define the Service quality in supply chain as how well an organization meets or exceeds the
customer expectations in unidirectional or bidirectional for each element of a supply chain i.e. supplier,
manufacturer, distributor, retailer and customer or end consumer. The gap model developed by Parasuraman et al
(1985) was considered as most accepted model and many research and models are based on that.
Supplier service quality
During the last decade the purchasing environment has became one of the most crucial elements in establishing
the value added contents for the products and services and hence has become the vital determinant to ensure the
profitability and survival of business organization in the dynamic international market (Mohanty and Deshmukh,
1993). A supplier becomes part of a weak managed supply chain and “it will have a lasting effect on the
competitiveness of the entire supply chain” (Choi and Hartely, 1996). An extensive study performed by Rossler
and Hirsz (1995) found that closer interaction with internal customers improved internal customers perceptions
of purchasing responsiveness, but technical knowledge was even more important. Purchasing arguably is a
critical link to adding value in the supply chain because it has both internal and external customer and acts crossorganizationally
as manager of external suppliers (Giumnipero and Vogt, 1997). Rota et al (2002) developed a
simulation based planning model, which can help the supplier manager to determine what parameters affect the
company performance. Seth et al (2006) discussed a tool called SSQSC to measure the supplier service quality in
supply chain.
953

Proceedings of the National Conference on
Trends and Advances in Mechanical Engineering,
YMCA University of Science & Technology, Faridabad, Haryana, Oct 19-20, 2012
Figure -1 Classification of service quality literature
Organization service quality
Within the last few years researcher and practitioners have increasingly focused their attention on customer
service and how to improve the quality of external service, encounters between the contact employee and
external customer. Bitner et al., 1990 was interested in the physical surrounding that improve service
encounters, while Parasuraman et al. (1985, 1988, 1991) focused on minimization of organization gaps that
effect customer satisfaction. When service quality levels are high, benefits are found to include greater
profitability, cost saving and increased market share (Thompron et al., 1985). Davis (1992) asserted that sound
service quality strategy results in cost saving and financial gain over the long term.
The importance of the internal environment and an employee role in delivering product and service quality to
external customers, however in a relatively new idea Heskett et al. (1994) asserted importance of internal service
quality to overall customer satisfaction by examining what they termed the “service – profit chain”. Based on
extensive care studies, they suggested that profit and growth resulted from customer loyalty, which is an
outcome of customer satisfaction service encounters play a vital role in external customer satisfaction and thus to
the firm’s overall success. Negal and Cilliers (1990) defined the internal customer as anyone who receives
product or services by others in the organization. For measuring service quality in the manufacturing side
researchers preferred to explored quality management practices and their implications.
Distributor service quality
Rapid global changes in the environments of industrial markets make distributor commitment more important to
suppliers and in some ways more difficult to achieve (Goodman and Dion, 2001). Ma and Deng (2002) also
advocated that the distribution part plays a crucial role in the management of a supply chain, so particularly
separated it from general supply chain and defined it as distribution chain.
Erengue et al. (1999) advocated for integrated production/distribution planning for effective supply chain
functioning. Numerous researchers advocated for manufacturer distributor partnership and alliances. Li and Lee
(1994) find that in competition between two equal firms, the one furnishing better service enjoys a larger
market share and a price premium. A higher-quality service is thus presumed to lead to greater sales revenue.
Consumers expect the whole package, which include distribution service (availability of stock, reliable delivery),
Kumar and Sharma (1992).
Retailer service quality
Technical service quality is an important contributor to product quality and value perceptions. Sales person’s
knowledge has a significant effect on perception of product quality and the value attached to a specific product.
Sweeney et al (1997) discussed that service quality at the point of purchase influences consumer’s perceptions of
value and willingness to buy. A good service first time and every time built up the confidence of customer in the
firm specially retailer firm.
954

Proceedings of the National Conference on
Trends and Advances in Mechanical Engineering,
YMCA University of Science & Technology, Faridabad, Haryana, Oct 19-20, 2012
Customer service quality
In the supply chain everyone in the downstream is the customer of upstream. Haywood – Farmer (1988)
discussed that customer is the ultimate judge and he judges the quality by comparing expectations and
perceptions of any organization.
The organization of paper is as follows: first is introduction and literature survey which further proceed to
service quality in supply chain. Then service quality for different elements of supply chain will be discussed.
After that model development and discussion will be their followed by conclusion.
Framework
It is evident from the literature that much work on service quality is in the area of services and models, but the
applicability of service quality concepts in supply chain management as a whole seems to be inadequate. Thus
there seems to be a gap in the modeling and measurement in supply chain management. This has motivated to
propose the model described in the next section.
Model development & Discussion
For measurement of service quality in supply chain in manufacturing industries a model is proposed along with
the detail of different types of gaps in forward and backward direction. This conceptual model is based on the
gap model used by different researchers ((Leminen, 2001; Guo, 2002; Seth et al, 2006) for different purposes. The
gaps shown in the proposed model are divided in to two categories:
Forward Gap: This gap is in the direction of material flow i.e. from supplier to organization, from organization
to distributor, from distributor to retailer and from retailer to customer.
Reverse Gap: This gap is in the direction of feed back or in the opposite of direction of material flow i.e. from
customer to retailer, from retailer to distributor, from distributor to organization and from organization to
supplier.
The proposed model i.e. fig -2 attempts to analyze the various service quality gaps in the supply chain. The
different types of bidirectional gap are:
1) Inter-organizational (between supplier and industry);
2) Intra-organizational (between industry and distributor);
3) Intra-organizational (between distributor and retailer); and
4) Inter-organizational (between retailer and customer).
The detail of these gaps is discussed in table 1. This model also indicates that if customer has any problem with
service or if customer is not satisfied it affect the whole supply chain.
It is visualized that a typical supply chain is always influenced by a variety of external environmental factors
which may play an important role in global economy (Seth et al, 2006). The implications of these factors on
supply chain are as follows:
Competitions: an industry may have a number of suppliers. There may be a competition for Technology, Lead
time, Market Share, Price, quality of service etc. for facing this tough competition the supply chain must be
review and re-oriented though Chinese, Taiwanese and Korean products affect many customer in Indian market.
Political Environment: Tax policies, Expansion policy, Resource allotment policy etc are the political affairs
which affect the supply chain. Many times government gives the relaxation in taxes etc. for development of a
particular region. It affect the plant location, warehouse, transportation cost etc.
Technical: Better feature and performance at fewer prices attract the customer and increase the market share.
Those who are having less market share offer fewer price in same segment. In case of cars, for a particular
segment, who gives more features and service at less price attract the customer more and enjoy the largest share
of market.
Price Fluctuation: Many times price fluctuation of the product force the customer to find some alternate. The
price fluctuation may be due to Fuel price variation in Global market, USD rate variation, Availability of SPMs,
Raw Material, Machining Price, Derivative etc.
955

Proceedings of the National Conference on
Trends and Advances in Mechanical Engineering,
YMCA University of Science & Technology, Faridabad, Haryana, Oct 19-20, 2012
Figure 2. Proposed service quality model for supply chain
Poor Quality of Service: Lack of trust in goods and services from supply chain, reduced wages of employees,
increase employees turnover are some cause for poor quality of services. Due to poor quality organization may
lose market share & profit.
Demographic: Generally most of the products or services are designed as per the customer characteristics &
requirements. Age, sex, income of family etc. affect the product/ services utmost.
Uncertainty: When product does not deliver on time, it loses the faith of customer in organization. This
uncertainty may be due to non availability of transport, road conditions, Traffic jam etc.
Labor union: More interference of labor union in day-to-day work may results more strike or less production
per day which may looses confidence of supply chain in organization. The reason for interference may be more
salary requirement due to high inflation, working hour, safety features etc.
Socio-cultural: Caste, religion, family, locality etc. affect the future of some supply chains as some products or
services like Jewellery items, Food chain etc may not be acceptable for a particular religion/area, e.g. McDonald
prepared veg. burger first time in India
Economic: Many times Profitability, less sale price, GDP, WTO implication etc. affects the entire supply chain
operation. Many times outsourcing may favor economic conditions.
Finance problem: During the death of technology/ product/ service organization looses the market share which
result in increased inventory and reduces profit. It is better to change or adopt the new technology/ product or
service during the death time.
956

Proceedings of the National Conference on
Trends and Advances in Mechanical Engineering,
YMCA University of Science & Technology, Faridabad, Haryana, Oct 19-20, 2012
Table 1. Gap amongst Supply Chain Echelons
Sr. No. Gap Type Between
1 Gap 1F Forward Supplier and Organization
2 Gap 1R Reverse Organization and Supplier
3 Gap2F Forward Organization and Distributor
4 Gap 2R Reverse Distributor and Organization
5 Gap 3F Forward Distributor and Retailer
6 Gap 3R Reverse Retailer and Distributor
7 Gap 4F Forward Retailer and Customer
8 Gap 4R Reverse Customer and Retailer
Conclusion
The model proposed is an attempt to measure the service quality in supply chain considers the unidirectional and
bidirectional gaps, their interdependence and may be interrelationship. This paper also indicates that dissatisfy
customers affect whole supply chain. This paper may be considered as an attempt to enlighten the specific gaps
in SQSC and will help researchers and practitioners to find the gap in their supply chain and to increase the
efficiency of their supply chain though there is a need for empirical validation of the model and need for further
study to check whether these gaps vary with functional responsibilities or products of different industries.
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