Determinants of Satisfaction and Quality

Understanding that customers’ satisfaction and quality perceptions depend upon their expectations and perception of the supplier’s performance, the question remains concerning what criteria are applied by customers to judge performance.

Product availability involves the ability of the supplier to provide a product when it is desired by customers. This is frequently measured in terms of the percentage of items or lines that can be filled from existing inventory. Or as the percentage of orders that are shipped complete. Capability refers to the length of time required to fill orders the ability of the logistics system to adapt to special requirements, and the avoidance of errors such as damage or mis-shipments. Information support is the assistance of the logistics system in the provision of accurate, up to date information concerning customer orders. Life cycle support is the support by a logistics system of a product throughout its life cycle, including the handling of such situations as product recall.

Customers form expectations of a supplier’s abilities in each of these critical logistics performance areas. Frequently they monitor and analyze supplier’s performance with respect to some, if not all, of these criteria. Their satisfaction and perception of the logistics quality of that supplier is directly related to how closely the actual performance matches their expectations and their needs.

In a pioneering study of marketing and service quality, three researchers identified a set of ten dimensions used by consumers in assessing overall service quality. While these dimensions are stated in general terms, suppliers must be concerned that customers form specific expectations within each dimension. A comprehensive assessment of perceived quality requires that suppliers translate these general dimensions into specific performance expectations that can be monitored and measured.

Determinants of logistics Service

Product availability
Stock-out percentage
Fill rate
Orders shipped complete
System capability
Order time consistency
System flexibility
Shipment presentation
Errors/error correction

Information Support:
Inventory status
Order status
Shipment tracing
Order document

Life cycle support:
Repair parts and service
Technical service
Reverse distribution

Organizational Complexity: In a distribution channel context, customer satisfaction and perceived quality assessment is particularly complex because distribution channel partners are usually business organizations made up of numerous individuals. Some individuals within the firm may be satisfied with performance while others may not. This discrepancy can exist because of differences in the level of expectation or the perception of actual performance, or because different criteria may be used by the individuals. For example, merchandise buyers in a retail organization may be particularly concerned with the suppliers’ product availability and on time delivery. Operations personnel in the same firms may be more concerned with other attributes of the supplier’s services

Determinants of Service quality:

1. Reliability: Performance as promised. Service is performed correctly the first time.
2. Responsiveness: Willingness and ability to provide prompt service.
3. Credibility: Believability, trustworthiness.
4. Security; Confidentiality; freedom from risk
5. Competence: Knowledge and skill of personal
6. Courtesy: Friendliness of personnel
7. Access: Ease of contact. Of obtaining service.
8. Communication: Explanation and provision of information
9. Tangibles: Appearance of facilities and personnel
10. Understanding/ knowing customers: Adaptation to customer’s specific requirements.

Clearly the assessment customer satisfaction is a difficult process. The framework suggests a number of gaps that must be monitored and measured so that customer satisfaction can be fully understood and quality performance improved.

This gap represents the difference between the channel partners’ real expectations and the supplier’s perception of those expectations. Buyers’ expectation should be measured in term of all there types of expectations: What they perceive to be ideal, what they perceive actual performance will be, and their minimum requirements. Additionally, the expectation of multiple individuals in the buying organization should be measured so that the complete range of expectation can be understood.

The second gap is the difference between the perception of buyer’s expectations and the internal performance standards. For example, the supplier may believe that a buyer expects 100 percent product availability but still an internal performance standard of 98 percent fill rate.

The gaps refers to the difference between the standard and actual performance, from the above example, if actual fill rates are 95 percent, there exists a gap of 3 percent between standard and actual performance.