Frame of Reference
This chapter presents the chosen theoretical framework and academic support applied to the research. It will go through the main topics of the research; customer service, brand, employees, management of service quality and overall service orientation (OSO).
The extent of any service offering in logistics varies between firms and therefore different definitions of LSPs have been developed. According to Hertz and Alfredsson (2003) the variation of the service offering depends on a firm‟s degree of customisation and problem solving capabilities. A firm with a relatively low degree of both customisation and problem solving capabilities are denoted as a carrier or transportation firm – they will only focus on bringing a product from point A to B. If a LSP has a higher degree of customisation and low capability of problem solving the firm is called a “traditional broker/agent” or a “warehousing firm”. A Warehousing firm is, as the name implies, a business dealing with storage. A warehouse can be classified as a distribution, production or contract warehouse. But the extent of their services varies; they might only handle the inflow and outflow of the warehouse to also hire the carriers coming and leaving the facilities. A Distribution warehouse consolidates several supply chains to one unit and distributes full shipments from the facility. A Production warehouse is used to store materials used in a connected production facility. A Contract warehouse operates for one or several customers to perform some sort of warehousing (van den Berg & Zijm, 1999). A broker or agent connects the shipper and carrier and handles all their paperwork but does not take any responsibility for the physical shipment (David, 2013). Integrators are LSPs with high problem solving abilities but low customisation – a general example are the express parcel service firms such as DHL express, they can assist with all sort of problems but does not adapt to their client‟s way of doing business. An LSP who has a higher degree of the customisation and problem solving capabilities are called 3PLs. A 3PL can customise parts of their process handling and will solve issues as they occur. With the highly competitive market today, firms are adopting more services and customising their processes more as well, hence the classification of LSPs is getting more complicated. Further there are some 3PLs who have taken the problem solving and customisation to even higher levels and becomes a 4PL, – 4PLs does not only have higher problem solving capabilities and customisation but work more proactively to make sure that problems do not occur. A 4PL can also take over the entire logistics part of a firm, compared to a 3PL who only partly take over it. Hence an LSP service offerings and the customer service varies greatly depending on the type of Logistics firm it is. A 4PL would, in its customer service, attempt to build a relationship by working closer to the customer while a carrier would be more distance and do whatever is feasible for them. 4PLs are non-assets based and therefore do not own their own trucks, can hire a 3PL to handle their physical operations, within a network of different types of LSPs collaborating to fulfil its obligations (Hertz & Alfredsson, 2003). Within this research a specific type of LSP is not assumed since networks more than often are built up by several types of LSP.
There are several definitions available that determine what customer service is and according to Turban (2002) it is “a series of activities designed to enhance the level of customer satisfaction – that is, the feeling that a product or service has met the customer expectation”. Whereas others define it as the service provided before, during and after the actual purchase, but it varies across industries (Langley et al., 2012). According to Christopher (2005), all involved factors affecting the process of making services and products available for the buyer is considered customer service. Johnson, Wood, Wardlow, and Murphy (1998) states, customer service consists of a collection of activities with the purpose of keeping customers happy, and creating a perception of a firm which is easy to do business with. Donaldson (1995) stated that customer service has a different meaning depending on who is carrying out and their role in a business transaction and regarded it as a pervasive, boundary spanning activity that takes place from both within and outside a firm. As such, customer service is described as a wide concept where it varies from firm to firm, where each individual firm follows their own policies, viewing “customer service” differently from one another.
More in depth service is inherently relational and developed based on the interactions of the firms involved. Relations and services are built from the first meeting and continue to be built with future interactions. A vital part to any interaction where a customer gets in contact with the firm, the quality of any service come downs to how customers perceive it in the terms “what”, “how” and “where”. What is the actual service that one receives and is seen as the technical aspect while how is the process and functionality of the service. Where is the physical location of the service and the environment and is often excluded when the service does not include any physical location. The what function and its technical aspect have been discussed many times as a non-competitive advantage. This since technical features of a firm can be easily copied by other firms by procuring the same system. The competitive advantage comes from how one manages the technical features and is ultimately in the hand of the employees and managers. The what and how are viewed through the image that the firm and its employees project and makes up the experienced quality. However, the quality of the service is also influenced by the expected quality that the customer gathered before interacting with the firm. This expected quality is made up by several factors, marketing communication such as sales and websites, prior experience and what has been heard from others, and finally the needs and values of the customer impacts what the customer expects to be excellent service. With this in mind the total perceived quality is made up of both the expected and experienced quality and together is a part of the firm‟s image (Grönroos, 2007).
Customer Service in Logistics
Lalonde, Cooper and Noordewier (1988) have managed to form a definition for customer service in a logistical setting;
“Customer service is a process which takes place between the buyer, seller and third party…..In a process view: Customer service is a process for providing significant value-added benefits to the supply chain in a cost-effective way”- p 5
This describes customer service as a value adding process in the supply chain between different actors from the producer down to the customer – by value adding, it is concerned with the creation of an experience which surpasses the customers‟ requirements and expectations. The value adding can take place throughout the chain or at only a single or few locations. Firms may gain competitive advantage by providing more extending forms and levels of logistical customer service to the buyer (Langley et al., 2008). Langley & Rutner (2000) suggests that there are three key themes of logistics value, which are customer service, cost/profit and quality. Just as customer service varies across sectors it can also vary within a sector, it is up to the individual firms to determine the level of customer service it offers. The variation between firms depends on the type of LSP and what the market demands of them (Langley et al., 2008).
Daily customer and businesses are in contact with brands and few never reflect that they just made an association with them. A brand builds up in our mind depending on how and when one sees it. If a brand has been managed well it can add substantial value to the firm. Rowntrees, the creators of KitKat, After Eight, Quality Street, bought in 1998 by Nestlé and they paid what many considered a great overprice. More than half of price was just to pay for the brand image. The value of the brand has both financial gains and management issues. One has to manage the brand in such a way that the customer perspective on the brand increases its value (Blombäck, 2005).
When considering brand as a concept, it is mostly found to be a concept which involves a symbol, design, term or name (Kotler, 2000) and is often referred to as brand elements (Blombäck, 2005). They all affect the total brand, perceptions and values customers build up about these elements, and are called; brand image. The image is determined by the brand contacts of the customer, that means how many times and how the customer sees any of the brand elements (Blombäck, 2005). The brand can also be seen as something that customer identifies themselves with. That firm’s products or services might be something reflecting the customers‟ needs, benefits, and/or personality in the best possible way and create associations with it (Blombäck, 2005). Kapferer (1992) states that brand represent the tangible and intangible dimensions of the concept. Hence, a brand may be perceived by the nature of an individual, firm, good or a service which creates a meaning and explanation of the brands‟ direction and origin for the one making an individual judgement. Finally Ind (2007) states that a brand is built up through the continuous communication between it and its employees and that it builds both the employees work environment and also how the employees build the brand by projecting how they sees it to the customers they come in contact with, as illustrated in Figure 1. It is important that the employees share the same brand perceptions as the firm and project it correctly customers. Training of employees provides with higher employee satisfaction, morale and improvement of employee skills. Increase of knowledge, brand perception and skills of employees have been argued to influence the customers‟ perception of the brand. Many firms are not utilizing the aspect of brand because it is not determined that brand it contributes the financial growth (Christodoulides & Leek, 2011). Hence, by building and living the brand, employees are able to enhance and form the brand.
Brand in a LSP Setting
Branding among logistic firms is becoming more and more important since firms are looking at closer relationships with fewer suppliers, to gain cost efficiencies such as economics of scale and being able to send full loads. In turn it puts more pressure on logistics providers to stand out, usually with the help of its brand – examples includes a brand which one has positive associations with, such as consistent and timely deliveries, but also that the expectations of the customer are fulfilled (Davis et al., 2008). The logistics market is becoming more and more competitive as the market grows, more actors enters the market, to stand out firms have to differentiate themselves appropriately through their brand (Blombäck, 2005).
1.2 Problem Discussion
1.4 Research Question
1.6 Disposition of Thesis
2 Frame of Reference
2.1 Defining LSPs
2.2 Customer Service
2.3 B2B Brand
2.5 Managing Service Quality
2.6 Conclusions of the Theoretical Framework
3 Methodology & Method
3.1 Research Approach
3.3 Data Collection
3.4 Time Horizon
3.8 Quality of Method
4 Empirical Findings
4.2 Customer Service
4.4 Value Creation in Brand & Customer Service
5.1 Analysis of SERV*OR Results
5.2 Analysis of Interviews Findings
7 Discussion & Future Research
7.1 Theoretical Implications
7.2 Managerial Implications
7.3 Future Research
GET THE COMPLETE PROJECT
LSPs employees’ perception of customer service How it influences the brand