Logistics service provider quality private measurement, evaluation, and improvement

Journal of Business Logistics, 1998 by Harding, Forrest E

Customer service has become a crucial measure of competitiveness in logistics markets throughout the world. As competition has become more intense, service quality has become the primary determinant for creating overall customer satisfaction.' The necessity to achieve service excellence in markets characterized by shrinking margins and tight budgets has created a powerful challenge for logistics management. The challenge is to balance these operational realities with the need for quality customer service.

It is suggested that service quality can be effectively managed, even when market conditions are difficult and resources are limited, if the organization can focus on a limited number of high priority logistics service features. This paper proposes a customer-centered and priority-driven technique that can help management achieve this focus. It is based on two fundamentals that every logistics organization needs to know: the quality of its service (a performance rating) and what is most important to its customers (an importance rating). Performance/Importance analysis is widely recognized as a useful tool for the management of service quality.2

The technique presented here evaluates customer service and enables cost effective and timesensitive priorities to be set. It is structured for use by international logistics personnel. It is designed to be administered entirely by an organization's employees, independent of outside advisors or consultants.

The paper is divided into six parts. Part one discusses the measurement of service performance. Part two explains the use of techniques for identifying the service features most important to customers in determining overall satisfaction. Part three presents a performance-importance matrix that is the analytical tool used in data interpretation. Part four contains the results of an application of the technique to an international logistics company. Part five describes a customer-focused, cost and time-based system for the establishment of service improvement priorities. Part six is a concluding statement.

MEASURING SERVICE PERFORMANCE

Service Components

The first step in a customer-focused system for the measurement of service quality is to take a fresh look at the service flow. From a customer perspective: Where does the carrier's service actually begin? Where does it really end? What should happen between? The major service categories identified in this assessment are called service components, and they constitute the "several heterogeneous dimensions of the service package" that Dotchin and Oakland maintain are requirements for quality assessment.3 Focus group research identified certain major components of logistics service providers.4

Service Features

Within each major service component are a number of service features. Customer ratings of these features will become the foundation for subsequent strategy development, so each service feature must become a specific item in a service-quality evaluation instrument.5 For example, when the personnel service component of a logistics organization is considered, attitude, knowledge, and accessibility are the relevant features. When the billing component is considered, accuracy, timeliness, and completeness are the relevant features.

Instrument Design

Although many international logistics organizations currently have some way to assess service quality, it has been suggested that traditional industry measures may be limited in their ability to determine overall customer satisfaction.6 Existing instruments can be substantially improved by adding "importance to customers," (discussed later), "all things considered," and "bottom-line" questions.

"All Things Considered"

The "all things considered" dimension is necessary to measure customer satisfaction within specific components of service. This item should be added at the conclusion of each series of questions designed to measure satisfaction with each service component (personnel, delivery quality, billing, and so forth).

"All things considered" questions are important in evaluating service quality because they allow the customer to weigh the specific categories (or features) of each service component in individualized overall satisfaction ratings. Various customer segments and individuals will value some aspects of service more highly than others. This approach provides a more accurate measure of customer satisfaction than arbitrarily computing a mean rating score for each component (based on the assumption that every one of the services contributes equally to customer satisfaction) or to assigning weights to various service features (based on factors that may not be relevant to entire categories of customers).7

Table 2 illustrates an example of how this question can be written for the personnel service component.

The "Bottom Line"

Crucial in the overall evaluation of customer service quality is the "bottom-line" question. It should be the final item in the service-quality instrument. It is crucial because it allows customers to weigh the specific aspects of every single service feature and every service component into an individualized comprehensive rating of service performance. What is being sought is customers' overall perception of service quality. This is the "bottom-line" measurement of how an international logistics company is viewed by its customers.