The effect of service quality on customer satisfaction of logistics companies

Abstract

Service quality play’s crucial role in the operational activities of a company since service quality heavily affects the satisfaction and the loyalty of a customer. The study set out to examine The impact of bank services quality on customer satisfaction (a) to find out the effect of reliability and customer satisfaction (b) find out the effect of responsiveness and customer satisfaction (c) to examine the impact assurance customer satisfaction. From these objectives, four research questions were formulated and hypotheses state in both null and alternative forms was equally formulated. The study adopted the survey research design with a sample 50 employees and customer of two logistics companies, through a Purposive and convenient sampling procedure. The study used questionnaire for data collection. Result of the study revealed that indicates that just about 29.4% (see the Adjusted R-square value in the model summary) variation of customer’s satisfaction is explained by service quality. The model’s Fisher test (F-test) value 2.615 significant at 10% level of significance indicates that the model is of a good quality. This means there is clear assurance that reliability, responsiveness, assurance and empathy are able to explain customer’s satisfaction. However, it is important to proceed with the analysis in order to see if this is also sustained by the OLS regression results. Base on the findings of the study, the following conclusions was drawn that that the companies addresses customers concerns and request on time, employees assist all customers in caring manner and without discriminations. It was therefore, recommended that top management should educate staff on how to sensitize customer on services available should be prioritize. Again the company’s way of notifying customers about their products and services as well as their confidentiality should be prioritized.

CHAPERONE

INTRODUCTION

1.1 Background of the Study

The origin of service quality can be dated right back to the 1920s when inspection activities were performed in the production. Frederick W. Taylor, father of scientific management employed the inspection as a justifiable action to have an effective and efficient quality control tool (Hounshell, 1985). In this emerging era of the formal marketing field, the marketing courses were started to be taught in the universities in the USA such as the University of Pennsylvania, University of Michigan, and New York University in the name of Marketing of farm products and Methods, Marketing of Products and Mercantile Institutions, respectively. The attention was paid to the distribution of produced farm and agricultural goods in these courses (Bartels, 1951). The concept of service quality is also growing, East African countries are members of ISO (international organization for standardization) and certification has been on the increase in the region as a quality management measure. In East and Central Africa, Kenya has the highest number of ISO 9001 certifications with a total of 257, followed by Uganda with 44, Tanzania 12, Republic of Congo two, and Rwanda one. Globally, the 2008 ISO survey reported 982,832 certifications in 176 economies, with China leading with 224,616 (ISO survey, 2008).

Logistics companies should maintain their service quality maintenance to thrive in the business competition. The well-maintained service quality of logistics companies helps boost the customers’ commitment to using the products and/or services of those companies in the long term. This customers’ commitment may impact on the expansion of the market share of the products and/or services of a company. Companies with superior services are capable of boosting their corporate financial performance  (Aryani, Dwi., Rosinta, Febrina. 2010).

The concept of service quality has been developed in a wide variety of sectors including logistics. In value chain management (Porter, Michael. 2010), logistics is divided into two areas: inbound and outbound. The inbound logistics covers activities related to input collection, storage, material handling, inventory control, transport scheduling and return to suppliers. Meanwhile, outbound logistics covers activities related to finished product collection, storage, and its distribution to buyers, material handling, delivery fleet, ordering process and scheduling.

Service quality in logistics is the key component of marketing to boost customer satisfaction (Mentzer, J. T., Flint, D. J, Hult, G. T. M.. 2001). The wide coverage of logistics companies is an interesting scope to review. The aim of the study is to measure the service quality of a logistics company in order to improve customer satisfaction and loyalty.

The contribution of this study is the generalization of the variables in service quality of a logistics company. The attribute of the service quality of logistics services in this study is based on the five dimensions of service quality (Huang, Yu-Kai., Kuo, Yi-Wei., Xu, Shi-Wei, 2009). Information Quality, Ordering Procedures, Timeliness, Order Condition and Order Discrepancy Handling on customer satisfaction and loyalty. The impacts of logistics in strategic management correlate positively with customer satisfaction (Sachin S. Kamble, M. R. 2011) and service quality is a crucial factor in defining customers’ decision making to achieve satisfaction (Chin, Sze Hui, Soh, Keng Lin, Wong, Wai Peng. 2013) . Operational and relational performances in providing logistics-related services correlate positively with customer satisfaction (Kau, Ah-Keng., Loh, and Elizabeth Wan-Yiun, 2006). Logistics service quality correlates positively with customer satisfaction (Huang, Yu-Kai., Kuo, Yi-Wei., Xu, Shi-Wei, 2009). Based on the evidence, the hypothesis is: logistics service quality impacts on customer satisfaction. Customer satisfaction is measured to ensure that customers continuously purchase, increasingly purchase, and continuously recommend the service providers based on the service quality of the service providers (Huang, Yu-Kai., Kuo, Yi-Wei., Xu, Shi-Wei, 2009). Logistics plays an important role in achieving customer loyalty to a service provider (Rym Bouzaabia, O. B. 2013). Logistics service quality impacts positively on customer loyalty (Huang, Yu-Kai., Kuo, Yi-Wei., Xu, Shi-Wei, 2009) and relates to market share through customer satisfaction and loyalty (Daugherty, Patricia J., Theodore P. Stank, and Alexander E. Ellinger, 1998). Based on these supporting statements, thus, the hypothesis is written as: logistics service quality impacts on customer loyalty.

Customer satisfaction and customer loyalty correlate positivelyIrene (Gil Saura, D. S, 2008) and this means the more satisfied a customer is with a service provider, the more loyal a customer is to that service (Huang, Yu-Kai., Kuo, Yi-Wei., Xu, Shi-Wei, 2009). However, two critical boundaries interfere with the correlation between customer satisfaction and customer loyalty (Bowersox, Donald J., David J. Closs, and M. Bixby Cooper 2002) ]. When customer satisfaction reaches a certain level, customer loyalty will significantly increase. However, when customer satisfaction decreases to a certain level, customer loyalty will also significantly decrease. Customer satisfaction towards a service provider impacts positively on customer loyalty (Huang, Yu-Kai., Kuo, Yi-Wei., Xu, Shi-Wei, 2009). Thus, the hypothesis is written as: customer satisfaction impacts on customer loyalty.

1.2 Statement of the problem

The success of logistics companies heavily relies on their ability to deliver high-quality services that meet or exceed customer expectations. In today’s competitive business environment, customer satisfaction has become a critical factor for sustaining and growing logistics businesses. However, despite the significance of service quality in influencing customer satisfaction, there is a need for a comprehensive investigation to understand the precise relationship between these two constructs within the context of logistics companies.

Existing research on service quality and customer satisfaction in various industries has highlighted the positive correlation between the two variables. However, the dynamics of the logistics industry present unique challenges that may influence the nature and strength of this relationship. Logistics companies are responsible for the movement, storage, and handling of goods, making their services a crucial part of the supply chain. Consequently, the impact of service quality on customer satisfaction within the logistics sector requires a deeper exploration.

Additionally, logistics companies operate in a complex and constantly evolving environment. Factors such as transportation infrastructure, technological advancements, global trade regulations, and customer demands all contribute to the challenges faced by logistics service providers. Understanding the effect of service quality on customer satisfaction within this intricate landscape is crucial for logistics companies to develop effective strategies that enhance their competitive advantage and ensure long-term success.

Moreover, the logistics industry encompasses a wide range of services, including transportation, warehousing, inventory management, order fulfillment, and information systems. Each of these service dimensions may have varying effects on customer satisfaction. Consequently, there is a need to examine the specific dimensions of service quality that have the most significant impact on customer satisfaction within logistics companies.

To address these gaps in the existing literature and provide practical insights for logistics companies, this thesis aims to investigate the effect of service quality on customer satisfaction in the context of logistics companies. By conducting a comprehensive analysis of the unique challenges, dynamics, and dimensions of service quality within the logistics industry, this study will contribute to the development of strategies that enable logistics companies to enhance customer satisfaction, improve business performance, and gain a competitive edge in the market.

Ultimately, a thorough examination of the relationship between service quality and customer satisfaction in logistics companies will provide valuable insights for both academics and practitioners, enabling them to make informed decisions and implement effective measures to improve overall service quality and customer satisfaction in this critical sector