RELEVANT DIMENSIONS OF CUSTOMER SERVICE IN FOOD DISTRIBUTION: A STUDY BETWEEN WHOLESALERS AND RETAILERS IN BRAZIL

This work is based on a survey of wholesalers and retailers of food products to evaluate customer service in physical distribution. The sample of 240 respondents was divided into two subsamples according to the importance attributed to the customer service factor in their choice of suppliers. Subsamples were compared for significant differences in their expectations of nine dimensions of customer service and their respective attributes. The main differentiating attributes are identified and discussed as a subsidy to food manufacturers who wish to differentiate themselves based on the excellence of their customer service.

This paper draws on a survey among food products wholesalers and retailers in Brazil for the evaluation of customer service in physical distribution. The sample of 240 respondents was divided into two subsamples, according to the importance attributed to the service element in their choice of suppliers. The subsamples were compared as to significant differences in their expectations as to nine dimensions of customer service and their corresponding component attributes. The main differentiating attributes are identified and discussed as a subsidy to manufacturers in the food industry wishing to differentiate themselves on the basis of customer service excellence.

INTRODUCTION

Logistics is considered today, in most markets, as one of the main competitive weapons available to managers. The provision of excellent customer service has therefore been the competitive objective of countless companies that manufacture goods, which see meeting customer expectations as a way of guaranteeing loyalty and gaining new accounts.

Customers, in these times of fierce competition, are increasingly oriented towards obtaining greater value from their purchases. Heskett et al (1997) define value as the relationship between the benefits for the customer and the cost of having the product or service. The benefits derive from both the acquisition of the good or service and the quality perceived in the purchase process, while the cost is the price paid plus the costs involved in accessing the product or service, such as waiting time, displacements, risks in choosing suppliers , etc.

Based on this concept of value, and considering what has been happening in Brazil given the changes in the competitive environment throughout this opening decade, the great challenge for national manufacturers, in the sense of creating more value for their customers, has been the improvement of the processes through which the latter receive the products or the reduction of the cost of accessing them. Such a challenge can also be seen as an opportunity, since it is more difficult for importers to provide a distribution service that meets certain needs of the local consumer. In short, for Brazilian manufacturers, the identification and exploitation of the potential of their distribution system has gained relevance, in the sense of meeting those aspects capable of increasing the value content of the products they sell.

The food sector has been one of the sectors that has paid the most attention to the impacts on profitability obtained through logistical training, as the value added by logistical activities is high compared to other sectors, representing between 30 and 40% of the value total aggregate (Lambert, 1993). Adding value to the product through distribution logistics means, for product manufacturers, meeting the growing expectations of wholesale and retail distribution customers, at the lowest possible cost. Given the fierce competition in the consumer goods market in general, and food in particular, it has been in this sector that several initiatives to improve the logistics process have taken place, with emphasis on the ECR (Efficient Consumer Response).

This work aims to identify, through the results of a comprehensive survey with wholesale distributors and retailers in four Brazilian capitals, which customer service attributes in the physical distribution of food products are of greater relevance for those oriented towards service (i.e., for whom customer service is an element of greater relevance in making a decision to purchase a product). It is expected, with this, to present subsidies to the suppliers of these products in the planning of their distribution strategies and in the implementation of their logistic operations.

After this introduction, there is a brief account of the conceptual bases of this work. The methodology section characterizes the study and details how the research questions were answered. The results are presented and discussed below, concluding the work with an appreciation of its implications for manufacturers of food products.

CONCEPTUAL BASES

Christopher (1992) defines “customer service” as providing consistent time and place utility. It represents the product of a company's logistics system, as well as the “place” component of its marketing mix (Lambert, 1994). Of an eminently strategic character (O'Laughlin and Copacino, 1994), its role is to “raise the value-in-use, meaning that the product gains greater value in the eyes of the customer to the extent that the service added value to the product in yes. In this way, significant differentiation of the total offer (ie, the product itself plus the service package) can be achieved” (Christopher, 1992:16).

This differentiation requires a more segmented marketing approach, in order to identify the value requirements of certain customer segments to be served. According to Christopher (1992:5), “different groups of customers within the total market attach different importance to different benefits. The importance of this segmentation of benefits lies in the fact that there are often substantial opportunities for creating differentiated appeals to specific segments”. Customer service requirements thus drive the structure of the supply chain, including manufacturing, marketing and logistics, and an understanding of customer requirements is essential for formulating a customer service strategy that meets expectations ( O'Laughlin and Copacino, 1994).

Customer service elements have been classified, since La Londe and Zinszer (1976), into three groups: pre-transaction, transaction and post-transaction. Several studies have been devoted to classifying and identifying the main components of each of the phases of customer service, as evidenced by the already considerable existing literature (among others, La Londe et al., 1988; Bowersox and Cooper, 1992; Christopher, 1992 , Lambert, 1994, Bowersox and Closs, 1996). In establishing their customer service strategy, it is necessary for manufacturers to have a good understanding of customer expectations, in order to properly dose the proportion of different components, avoiding both falling short of what customers want and offering more than they expect, unnecessarily decreasing profitability (Lambert, 1994).

METHODOLOGY

An empirical research, of the survey type, was conducted in 1997 in four Brazilian capitals (São Paulo, Rio de Janeiro, Curitiba and Recife) with 240 wholesale and retail distributors, seeking to know the distribution service standards that require (expectations) of their food suppliers.

The benchmarking methodology was inspired by Christopher (1992). A structured questionnaire was used, based on 9 dimensions (operationalized through their respective distribution service attributes), defined from studies by Bowersox and Cooper (1992), Christopher (1992) and La Londe et al (1988): Availability Product, Order Cycle Time, Delivery Time Consistency, Delivery Frequency, Delivery System Flexibility, Fault Remediation System, Support Information System, Physical Delivery Support and Post-Delivery Support.

The survey instrument asked respondents to distribute 100 points according to the importance they attributed to the variables product, price, customer service (place) and promotion and advertising in their decision to choose a supplier of food products. Recognizing that not all distributors give the same importance to purchasing decision variables, the subgroup of respondents defined as those more service-oriented was extracted from the total sample, these being the ones who attributed 25 points or more to the service variable to the customer in 1997 and maintained or increased the score when asked about the importance it would have in 1999. This work considers, therefore, the two subsamples: the group of more service-oriented distributors – Group I, with 64 respondents, and the group of the rest of the sample – Group II, with 176 respondents.

The following table brings together some characteristics of the sample and of the two groups into which it was divided for the purposes of this work:

Using a Likert-type scale of 1 to 5, respondents were asked to indicate the degree of importance they attributed to the 9 dimensions of the distribution service. The dimensions were operationalized through questions about specific attributes, measured in terms of minimum performance expectations.

Considering the two groups of interviewees, the following research questions were defined: What are the customer service standards demanded by the most service-oriented distributors? Are these more demanding than distributors oriented towards the other purchasing decision variables?

In order to identify which dimensions and attributes differentiated the two subsamples, the data were submitted to t tests of mean significance (Stevenson, 1981), processed through the SPSS statistical program, in order to investigate the existence of significant differences between the two groups in terms of customer service requirements.

PRESENTATION AND DISCUSSION OF THE RESULTS

The results obtained regarding the 9 dimensions of customer service are summarized in Table 2, below:

It is observed that in just two dimensions (Product Availability and Delivery Time Consistency) the more service-oriented merchants have lower average expectations than the other respondents. A possible interpretation for this result is that, although more oriented towards other decision variables, the rest of the sample sees product availability and consistency of delivery time as qualifying criteria (Hill, 1993), that is, they are aspects in which the customer expects a minimum of performance to then judge other criteria (order winners) and decide whether to be a customer of that supplier.

Significant differences were obtained in the importance attributed by traders in Group I and Group II to the Support Information System and Post-Delivery Service dimensions. These are, therefore, two dimensions to be explored by suppliers interested in serving the most demanding distributors in terms of good service.

Next, the results for each of the dimensions in Table 2 will be analyzed, detailed according to the attributes that constitute them.

Product Availability

The survey sought to find out the minimum expectations of traders regarding:

• to the percentage of demand satisfied when taking the order,
• to the delivered percentage of the total order,
• to the percentage of orders that are delivered complete and
• to the waiting time to receive the pendencies. For the first three attributes, the frequency distributions, considering the 64 interviewees more oriented to the service, presented, respectively, the averages of 91,1%, 92,7% and 93,4 %. The same analysis, considering the rest of the sample, showed averages of 87,8%, 88,3% and 90,6% respectively. Regarding the waiting time to receive pending items, the average minimum expectations were 1,9 days in Group I and 2,1 days in Group II. If the four variables above are considered, only the difference found for the percentage of the total order delivered was significant (at 0,05).Order Cycle Time

  While the more service-oriented group had an average expectation of having the order fulfilled in 2,3 days, in the rest of the sample this period was 3,6 days. However, the difference in means was not statistically significant in this case. This result seems to be corroborated by the observation that the median of the distribution of the expectation variable regarding order cycle time is, in both groups, 2 days.

  Delivery Frequency

  The statistical test also showed no significant difference between the two groups surveyed [9,9 deliveries/month for Group I and 7,7 deliveries/month for Group II]. An analysis carried out with the medians of this variable showed that the more service-oriented respondents had a minimum performance expectation equal to that of the rest of the sample, with the median distribution in both groups being 4 monthly deliveries. Apparently, distributors as a whole do not have expectations that suppliers will make more frequent deliveries.

  Delivery Time Consistency

  As shown in Table 2, the importance attributed to this dimension by the rest of the sample is slightly higher than that of the target group. For a better analysis, this dimension was divided into two attributes: percentage of late deliveries and average delay.

  A surprising result was obtained regarding the expectation for the percentage of late deliveries. While the average distribution for the more service-oriented group was 6,7%, for the rest of the sample it was 10,1%, exactly for the group that declared to give greater importance to the consistency of delivery times. The difference in means, however, was not statistically significant.

For the attribute minimum expectation regarding the average delay, the median distribution was the same in both groups: 2 days. The averages obtained in both groups are also practically the same: respectively 2,5 and 2,8 days.

Fault Recovery System

This dimension was evaluated using three attributes, as shown in Table 3.

In the test of means, the first group was significantly more demanding than the second in terms of the percentage of requests that result in complaints. The same did not happen with the expectation regarding the percentage of complaints resolved in the first request.

Observing the median of the distributions, it is seen that the distributors of Group I, for the most part, do not admit having to make complaints (median 0%) and, when they do, they want the problem to be solved in the first request ( median of 100%) . The other elements of the sample are somewhat tolerant in relation to these two attributes (medians of 3% and 90% respectively).

There is no difference between the groups, regarding the expectation about the deadline for solving problems. In addition to the means being very close, the medians of the two distributions are equal to 2 days.

Flexibility in Distribution

This dimension was subdivided into eight attributes, five related to special delivery conditions and three associated with regular conditions. Considering a scale of 1 to 5, Table 4 presents the average degrees of importance obtained for the special delivery conditions.

Although no attribute received an expressive score, there was a significant difference between the requirements of the two groups in two variables: advance notice of delivery and unloading operations at a special location.

The table refers to expectations regarding special delivery conditions. But the most important result regarding flexibility is the significant difference (at 0,01) between the two groups in terms of the percentage of orders subject to some special delivery condition. While the more service-oriented group demanded a special condition in 50% of the requests and expected that at least 95% of these requests would be satisfied satisfactorily, in the rest of the sample only 20% of the requests required a special condition, with 90% minimum level of expectation regarding service to them.

With regard to regular delivery conditions, the results of the averages (in Table 5) show that issues such as information about the expiry date are the ones that deserve the most importance, which is not a surprising result as the survey worked with distributors of food products. Expiry dates would thus be, as has happened with other attributes, a qualifying criterion to be met by suppliers. The explanation is not difficult to rehearse: the expiry date, although it can be considered as a service element, is actually perceived as an attribute of the product; therefore, those more product-oriented distributors give maximum importance to validity, which is not necessarily the case with the more service-oriented respondents.

Physical Delivery Support

The Physical Delivery Support dimension was subdivided into five attributes. In this question, the scale also ranged from 1 to 5, where 1 represented a low and 5 a high expectation. Table 6 brings together the results obtained for the average expectations.

The particularity of this set of attributes is that, for all, the statistical test of difference in means indicated that the most service-oriented distributors are significantly more demanding than the rest of the sample. This is a very important result for suppliers prepared to provide a good delivery service.

Support Information System

This variable was also evaluated in five attributes, as shown in Table 7.

On all attributes, the most service-oriented distributors are significantly more demanding than the rest. As in the previous dimension, this is valuable information for suppliers interested in focusing their attention on the segment of distributors that most value customer service when deciding who to buy from.

An interesting result obtained in relation to information also researched in this topic concerns the order placement format. Asked about the preference for the system on a scale of 1 to 5 (from low to high), the answers were as shown in Table 8:

The statistical test showed that there was a significant difference between the preference of the more service-oriented distributors for placing their orders electronically, eliminating the salesperson's visit, in relation to that of the rest of the sample. On the other hand, a salesperson's visit is the means preferred by the rest of the sample.

after delivery service

The Post-Delivery Service dimension, in which a significant difference was observed between the level of demand of service-oriented distributors and the rest of the sample (Table 2), allowed us to verify, when evaluated according to its two component attributes, that the differences would say basically regarding the percentage of requests answered, as shown in Table 9:

An interesting data raised by the survey is that among the more service-oriented distributors, in 35,5% of cases, there is a request for information and/or assistance about the product, a proportion that contrasts significantly with the percentage verified for the remainder of the sample, 19,4%. Table 9 suggests that the first group has a higher expectation regarding the percentage of requests answered, a result confirmed by the statistical test.

With regard to the waiting time for receiving requests, it was not possible to confirm the existence of a significant difference between the two groups studied.

CONCLUSION

From the results presented, it is possible to enunciate some conclusions about the distribution service standards expected by Brazilian food distributors and, in particular, by those who most value customer service as a criterion for selecting suppliers.

The dimensions “Support Information System” and “Post-Delivery Service” marked a special difference in the degree of demand between the more service-oriented distributors and the rest of the sample. When the surveyed dimensions were broken down into attributes, the results obtained revealed important differences between the two studied groups. The former are significantly more demanding than the others in all the attributes of Support in Physical Delivery (promptness, cordiality and punctuality in delivery, speed in unloading and support in merchandising), in all attributes of the Support Information System (promptness, cordiality , agility in confirming the order, ease of placing the order and credibility), in two attributes of Flexibility (prior notice of delivery and special place for unloading) and in an attribute of the dimensions Product Availability (percentage delivered of the total order), Failure Recovery System (percentage of orders that result in a complaint) and Post-Delivery Service (percentage of orders that result in a request for information/assistance).

Still with regard to the Support Information System, it was observed that the most service-sensitive distributors have a significant preference for the EDI system to place their orders, contrary to the other elements of the sample, which prefer the traditional salesperson's visit. The well-known advantages of EDI seem not yet to be fully exploited in supplier-buyer relationships and are therefore better taken advantage of by more service-oriented traders.

Another important difference between the two sets of respondents concerns the demand for flexibility in the distribution system. While 50% of orders from more service-oriented distributors are subject to some special delivery condition, in the other group this percentage is only 20%. It is concluded that flexibility is an attribute that suppliers need to pay special attention to if they want to serve more demanding customers in terms of customer service.

The occurrence and response to complaints is another attribute with a reasonable difference in the profile of responses in the two groups. The vast majority of those more service-oriented have an expectation that the percentage of orders that result in a complaint will be 0%. And when they do need to complain, they want the problem resolved to their satisfaction on the first request. The other members of the sample are more tolerant in this regard. The recommendation to suppliers who want to meet the most demanding distributors is that they act preventively so that failures do not occur and that they have a structured recovery system in order to promptly resolve any problems that may occur.

In summary, the results indicated the existence of significant differences between the two groups surveyed, regarding the expectation of performance in a series of attributes related to the dimensions of customer service. Therefore, suppliers wishing to stand out for their service should invest in improving their performance in the identified attributes, meeting the expectations expressed by customers. In this case, it is possible that the segment of the food distribution sector that most values ​​the service is willing to pay a premium price for the acquisition of products, with a view to obtaining, thus, the “package” that provides it with greater value. .

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Authors: Kleber Figueiredo, Cesar Lavalle, Rebecca Arkader and Maria Fernanda Hijjar