Wen-Kai Kevin Hsu ( 許文楷 ) 2014.10.29 Department of Shipping & Transportation Management,...

Wen-Kai Kevin Hsu ( ) 2014.10.29 Department of Shipping & Transportation Management, National Kaohsiung Marine University

Outline Introduction Literature Review Research method Discussions Conclusions

Introduction

Whats the problem Global logistics and Door to Door services lead to third party logistics or Distribution Centers getting increasingly important. An IDC links import and export firms. Relevant literature indicates that quality customer service and its performance has been shown to have a direct link with import firms/export firms performance [3]

Most of relevant studies focus on users service requirements [4-5]. Few articles examine the service operations of IDCs. Service requirements indicate what the needs of users are. service operations indicate how to satisfy the users needs.

The research purpose The purpose of this paper is to examine the service quality of IDCs. The service requirement attributes (SRAs) of the IDCs are first investigated from the perspectives of IDC users. A Quality Function Deployment (QFD) with fuzzy AHP model is then proposed to translate the SRAs into the service operations attributes (SOAs) of IDCs. Finally, as an empirical study, the IDCs in Taiwan were investigated to validate the research model.

Literature Review

The measurement of service quality SERVQUAL Scale: Tangibles, Reliability, Responsiveness, Assurance and Empathy. For business customers, the SERVQUAL scale have to be revised by considering the business features, such as port services [12-13], air cargo services [14], shipping liner services [15], container terminal services [16], etc

The service quality of IDCs Lu [18] assessed the market segmentation of IDCs, based on shipper service requirements. 30 SRAs were created, from which 7 dimensions : value-added services, support services, distribution services, information and transportation services, cargo related services, consolidation services and storage services.

Lu [4] examined the difference between shippers and forwarders perspectives on those SRAs. The results indicated that four dimensions of SRAs are found to significantly differ between shippers and forwarders: value-added services, consolidation services, support services and distribution services.

Tsai [5] discussed the determinants of shippers that use multiple country consolidation services in IDCs. In the study, 18 SRAs were constructed, from which 5 dimensions were extracted: Logistics information technology service, Political incentive, Logistics operation, Logistics cost and Warehousing and distribution.

Thai [19] investigated the quality of logistic services. In the article, five factors with 20 logistics service quality (SRAs) were validated, which named as: Customer focus quality, Order fulfillment quality, Corporate image, Timeliness and Information quality.

Hsu and Huang [20] evaluated the service requirements of international distribution centers at ports. In the study, five constructs with 15 SRAs were created. The results indicate IDC users pay more attentions on Correctness of bill of lading, Adequacy of storage space, Punctual delivery, Handlings of damaged cargos, and Perfect delivery of cargos.

Quality function deployment (QFD)

Research Method

Research framework

The hierarchical structure of SRAs Layer 1CodeLayer 2: Service attribute Tangibles (TG) TG1Adequacy of service branches. TG2Adequacy of frequency and routes of transportation. TG3Adequacy of storage space for cargo. TG3Adequate diversity of logistics processing services. Reliability (RB) RB1Punctual delivery of cargo RB2Correctness of shipping orders. RB3Perfect delivery of cargo. RB4Capability to compensate for damage cargo. Responsiveness (RP) RP1Capability to deal with emergency orders. RP2Prompt handlings of customers complaints and appeals. RP3Promptly dealing with the problems of damaged cargo. Empathy (EP) EP1Proactively providing services for special cargos. EP2 Proactively providing extra shipping information, such as new rules of customs, shipping schedules, etc. EP3Proactively providing information about beneficial transportation modes. Convenience (CV) CV1Provide convenient ordering procedures. CV2Provide an information system for cargo tracking. CV3Provide a one-stop service window. CV4Provide diversity in electronic commerce services.

Questionnaire design Fot Fuzzy AHP method, a pair-wise comparison questionnaire [27] with a nine point rating scale was used to measure the relative perceived importance of SRAs for respondents. Based on the hierarchical structure of the SRAs in Table 1, an AHP questionnaire with 5 criteria with 18 sub-criteria was created. In order to validate the scale, four IDC users were invited to pretest the questionnaire and to check whether the statements were clear.

Research sample As an empirical study, the IDCs in Taiwan were investigated From the Directorate General of Taiwanese Customs (2012), there are a total of 16 IDCs in Taiwan,Directorate General of Taiwanese Customs In this paper, 4 IDCs were firstly sampled by the proportion of the total 16 IDCs in different regions. Each sampled IDCs was asked to provide 8 main customers currently. The sample contains 32 subjects. The consistency index (C.I.) was firstly used to confirm the consistency of each pair-wise comparison matrix.

FeaturesRangeFrequency. Percentage (%) Type of business Electronic and Electrical products1237.50 Plastic & Chemical products825.00 Mechanical products618.75 Precision, Metal and forwarder618.75 Company Age (Years) Under 10825.00 10-20412.50 21-30412.50 31-401237.50 Above 40412.50 Company Scale (Millions) Under 101237.50 11-20618.75 21-50825.00 51-100412.50 Above 10026.25 Work experience (years) 5- 10618.75 11-15825.00 16-2026.25 Above 201650.00 Job title Assistant to president or above412.50 Manager/assistant manger1443.75 Section chief825.00 Senior staff618.75 The respondents profile of IDC users

The weights of SRAs by Fuzzy AHP Layer 1: SRAs A: The global weights of Layer 1 (%) Layer 2: SRAs B: The local weights of Layer 2(%) The global weights of Layer 2 (%) TG23.62 TG122.375.28 TG230.047.10 TG333.227.85 TG414.383.40 RB24.31 RB133.958.25 RB236.288.82 RB321.275.17 RB408.502.07 RP19.59 RP121.334.18 RP211.552.26 RP367.1213.15 EP15.83 EP135.695.65 EP233.405.29 EP330.904.89 CV16.65 CV133.015.50 CV220.773.46 CV318.563.09 CV427.664.61

The QFD Model The development of service operations attributes (SOAs) is based on the organizational structure and IDCs SOPs. In this paper, the direct divisions and their operational procedures are employed to develop the SOAs of IDCs.

The operational procedures of IDCs

The Relationship Matrix and Correlation Matrix For the Relational Matrix, four grades of relationship strength were defined and rated as: strong = 5, medium =3, weak = 1, and none = 0. [23] For the Correlation Matrix, the coefficients are generally measured in a range of [-1.0, 1.0]. Five experienced experts from the sampled IDCs in the empirical study were invited to determine the coefficients of the two matrixes.

Profiles of experts consulted in developing the Relationships Matrix ExpertsJob titleSeniority (years)Experiences of divisions AManage 10 SA, TR BVice Manager 24 CS, WL, TR CVice Manager 24 CA, SA, TR EManager 26 WL, TR FManager 26 TR, WL

The weights of SOAs Service operations (VOEs) Relationship Matrix Service requirements (VOCs) SalesCustomer ServiceCustomsWarehouse LogisticsTransportation The SRAs weight of IDC users (%) Cargo forwarding Business Inquiry Order processing Customer complaints Cargo damage Service Paper operations Customs clearance Dispatching Cargo stowage or discharge Consolidati0n & deconsolidation Storage management Logistic processing Cargo return operation Delivery scheduling Cargo loading Delivering operations Cargo handover operation Tangible TG10.0800.060 0.0200.0600.020 0.080 0.0600.0205.28 TG20.0980.073 0.0240.0730.024 0.0730.024 0.0730.0490.0980.0730.0980.0497.10 TG30.1050.079 0.0260.0530.026 0.0530.079 0.0530.0790.053 0.0267.85 TG40.0850.064 0.0210.0430.021 0.085 0.0430.0850.064 0.0433.40 Reliability RB10.0750.057 0.0190.0750.019 0.0750.0570.075 0.0570.075 8.25 RB20.0750.0380.0190.075 0.019 0.0750.0570.075 0.0570.075 8.82 RB30.0630.0480.0160.063 0.048 0.0630.0480.063 0.0480.063 5.17 RB50.1380.1030.0340.138 0.034 2.07 Responsive -ness AA10.0710.0540.0710.0180.0710.036 0.0540.0710.0540.071 0.0540.0360.0184.18 AA20.0740.056 0.037 0.0560.0740.056 0.0740.056 0.037 2.26 AA30.1050.0790.0530.105 0.026 0.0530.0790.0260.0790.053 0.026 13.15 Empathy EP10.095 0.0710.0240.0710.024 0.0710.0950.048 0.0240.0950.071 0.0245.65 EP20.0790.053 0.0260.1050.026 0.079 0.053 0.0260.053 0.1055.29 EP30.089 0.0670.0220.0670.022 0.067 0.044 4.89 Convenience CV10.094 0.1250.031 0.0940.031 0.0940.031 5.50 CV20.083 0.028 0.0830.028 0.0560.0830.056 0.0280.056 3.46 CV30.0650.0480.065 0.0480.065 0.048 0.0650.0480.0160.0653.09 CV40.081 0.1080.0540.0810.1080.0270.0810.027 0.054 0.027 0.0544.61 SOA weights (%)6.0306.3375.8014.7415.8475.8134.8596.3076.6566.7516.1376.4716.0156.5736.2143.9775.471 SOA weight by Division6.1835.8015.3366.3905.559

Discussions

Results For the first layer, the IDC users pay more attention to RB (Reliability, 24.31%) and TG (Tangible, 23.62%) constructs. For the SRAs in the second layer, the top five SRAs IDC users perceive importance are: RP3 (Promptly dealing with the problems of damaged cargo, 13.15%), RB2 (Correctness of shipping orders, 8.82%), RB1 (Punctual delivery of cargo, 8.25%), TG3 (Adequacy of storage space for cargos, 7.85%) and TG2 (Adequacy of frequency and routes of transportation, 7.10%). For the SOAs, the five SOAs with higher weights are: Consolidation & deconsolidation (6.751%), Cargo stowage & discharge (6.656), Delivery scheduling (6.573%), Value-added services (6.471%) and Business Inquiry (6.337%). In addition, by divisions, the Warehouse Logistics (6.390%) is the department with highest weights in SOAs.

Suggestions Raising the turnover rate of the storage space For improving the SOAs: Cargo stowage & discharge, Consolidation & deconsolidation and Logistic processing, a greater storage space may be necessary. The relevant studies indicate that storage service is one of the basic logistic service requirements for IDCs [18], and adequate storage space is one of the most important SRAs for IDCs at ports [20]. To expand the storage space may not be feasible in short term. This paper suggests the IDC operators may raise the turnover rate of the storage space to increase its utilization. For example, for import cargos, IDC operators may increase the rental rate (the rental fee increases with the storage time of the cargos) to urge owners to reclaim their cargos as soon as possible.

Enhancing the professional capability of staffs With regard to the SOA: Delivery scheduling and Business Inquiry, the staffs professional capability may need to be enhanced. An adequate scheduling plan for vehicles and routes may increase the transportation frequency and the number of routes of IDCs. This may depend on the scheduling staffs capabilities and experiences. Further, for any of business inquiries from customers, generally, the staffs may also need enough professional capability to deal with the inquiries. This paper suggests that regular training programs for staffs could be necessary to improve their professional capabilities.

Constructing an adequate Information System (IS) An IS always plays an aid role for staffs to perform SOAs. For example, an IS may assist the customer-service staffs to reply the inquiries of customers correctively and punctually. An IS may propose an initial suggestion of truck scheduling, by which, delivery staffs may schedule the vehicles efficiently. An IS may indicate the information of storage spaces in real time, by which warehouse staffs may utilize the storage spaces. Thus, the post-interviews suggested that it is important to select an adequate IS for IDC operations. The relevant studies also indicated that information technology significantly influence the performance [5] and quality [20] of logistic services.

Conclusions

Academic contribution In this paper, a QFD with fuzzy AHP model is proposed to examine the service operations of international distribution centers (IDCs). In the relevant literature, most studies focus on users service requirements. Few articles further examine the service operations of IDCs. The results of this paper not only indicate the What information (what is users needs), but also provide How information (how to satisfy users needs). Specifically, the How information may provide substantial instructions for IDCs to improve their service quality efficiently.

Practice contributions To validate the research model, the IDCs in Taiwan were empirically investigated. The results indicate that the top five SOAs with higher weights for IDCs are: Consolidation & deconsolidation, Cargo stowage & discharge, Delivery scheduling, Value- added services and Business inquiry. With respect to those SOAs, some improvement policies are proposed, such as raising the turnover rate of the storage space, enhancing the staffs professional capabilities and constructing an adequate Information System. The results also indicate that Warehouse Logistics is the most important division in IDC organization. Thus, IDC manager should pay more attention to this department.

Limitations and Further research The empirical study was conducted in Taiwanese IDCs. Thus the finding may not be entirely applicable for other areas. In practice, in order to increase operational flexibility, IDC operators may outsource some service operations to their partner firms. This paper did not examine the service quality of those partner firms in detail. In practice, the performance of partner firms may also be a determinant of service quality for IDC operators. Thus, this may also be a topic for further research. For better confirming the results, more representative samples may be still necessary in future research.

Reference

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Wen-Kai Kevin Hsu ( 許文楷 ) 2014.10.29 Department of Shipping & Transportation Management,...

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