The database accumulated in the last seven editions of the Benchmark Survey – Customer Service enables a consistent analysis of the physical distribution service offered by the consumer goods industry to the supermarket trade.
This article aims to present the evolution of the importance of the distribution service in the supermarket trade purchase decision process, as well as the level of retail satisfaction with the performance of industrial companies. At the end, a brief assessment is made on the opportunities for differentiation in the market. The analyzes are based on periodic research carried out by the Center for Studies in Logistics – COPPEAD/UFRJ, between 1994 and 2001.
EVOLUTIONARY ANALYSIS OF THE RESULTS
Regarding the Evolution of the Importance of Customer Service in the Purchasing Decision Process
Over these years, a clear influence of the performance of the Brazilian economy (see Table 2) can be seen on the behavior of agents in the consumer goods supply chain. Table 1 and Graph 1 show the evolution of the retail purchase decision process in the period from 1994 to 2001.
It is observed that customer service stands out as the purchase decision variable that gained greater relative weight as the economy stabilized from 1994 onwards, when inflation rates showed a drastic reduction – from hyperinflationary levels to moderate levels current. In this period, customer service increased from 14,4% to 20,1% in terms of relative importance, that is, it showed a significant growth of 40% between 1994 and 2001.
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Until 1998, there was a period of GDP growth, an increase in average consumer income and a currency devaluation at the same levels as the increase in inflation, according to Table 2. In this macroeconomic scenario, the price, which in 1994 was the main decision variable shopping, it lost space for the product and customer service. Speculative movements, which underpinned the behavior of economic agents along the supply chain, gave way to demands based on a better level of service and quality and variety of products offered. That is, initiatives aimed at financial gains were replaced by others aimed at business profitability. In this period, price lost around 15% of its importance (from 38,5% to 32,9%) while the product grew by 17% (from 30,8% to 36,0%) and customer service by 14%. % (from 14,4% to 16,4%).
| General information |
| The Customer Service Benchmark survey, carried out periodically since 1994 by the Center for Studies in Logistics, has been sponsored by industrial companies, leaders in their respective sectors. The research scope considers about 600 interviews, carried out in five Brazilian capitals (São Paulo, Rio de Janeiro, Curitiba, Belo Horizonte and Recife), considering four categories of products: perishable food, non-perishable food, paper, and hygiene and cleaning .The methodology evaluates 9 dimensions (operationalized through their respective distribution service attributes): Product Availability, Order Cycle Time, Delivery Time Consistency, Delivery Frequency, Delivery System Flexibility, Failure Remediation System , Support Information System, Physical Delivery Support and Post-Delivery Support. |
| Sponsoring companies |
| Belfam steel wool Ceval Coca-Cola Unilever – HPC Unilever – BESTFOODS J. Macedo Johnson & Johnson kraft kibon Kimberley-Clark improvements Nestlé Perdigão Reckitt Benckiser Sadia Santher Santista Foods Union |
In a subsequent period, from 1999 onwards, a slight slowdown in economic activity can be observed, characterized by low GDP growth rates, a strong reduction in average consumer income, high levels of exchange rate devaluation and rising inflation. It is observed that the strong loss of consumer purchasing power permeated the behavior of the supply chain, notably between industry and commerce, starting to give increasing importance to price and mainly to customer service to the detriment of the product.
Graph 1 shows that, between 1999 and 2001, commerce gave increasing importance to price (from 31,8% to 32,6%), once again becoming the main variable in the purchase decision. It can be seen that the decline in the product was significant, losing about 14% of relative importance in the period considered (from 36,9% to 31,6%). On the other hand, the weight of customer service had a significant growth of approximately 19%, that is, from 16,9% to 20,1%. And according to forecasts for 2003, customer service should gain even more space in relation to other purchase decision variables.
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It is because of these forecasts that leading industries in their sectors will have to invest in the logistics services offered to strengthen their positions in an increasingly competitive market (see the table below), where margins are already reduced and consumers are no longer able to to absorb price increases, without these not implying a reduction in consumption.
| If, on the one hand, the results of the survey show adherence to the performance of the economy, it is also worth analyzing them in the light of accumulated knowledge about organizations and market behavior. Currently, there is general acceptance that differentiation is at the root of winning strategies, based on the realization that unless competing products can be differentiated, there is a high possibility that the market will perceive them as “commodities”, making price the core of competition, which in turn can lead to diminishing profitability. It is also generally accepted that the best way to get around this “trap” is to incorporate services into the products offered as a way of adding value so that the market differentiates them from the competition. This situation is aggravated if we consider that in the consumer goods market there is a technological convergence, which makes it difficult to differentiate based on product characteristics. level of service and cost reduction in the supply chain. The retail market is increasingly aware of the benefits arising from the greater reliability and responsiveness of its suppliers, which are reflected in the rationalization of operating costs due to better use of installed capacity and reduction in inventory levels. It is worth remembering that, currently, shareholders consider return on assets to be one of the most relevant performance indicators in evaluating their companies. ultimately these will be reflected in the price paid by the final consumer. Leading companies recognize that the basis of competition has shifted from company versus company to supply chain versus supply chain. |
AS TO THE PERCENTAGE OF CUSTOMERS DISSATISFIED WITH THE PERFORMANCE OF THE INDUSTRY
Table 3 and Table 4, obtained from the results of the survey carried out in São Paulo and Rio de Janeiro, present the percentage of retailers dissatisfied with their suppliers in three of the main dimensions of the physical distribution service (see Table 5). Table 3 refers to dissatisfaction with suppliers with performance equivalent to the market average, while Table 4 presents the percentage of retailers dissatisfied with their best suppliers.
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As a rule, the results indicate that retailers differentiate their best suppliers from those with the industry's average performance, even considering that the percentages of dissatisfied people are still at very high levels. In both cases, there is a significant reduction of dissatisfied retailers in the consistency of delivery time dimension, from 2000 to 2001, which, however, are still at very high levels. On the other hand, the Order Cycle Time shows a reduction in the percentage of retailers dissatisfied with suppliers with performance equivalent to market practice, while the same did not occur with regard to best practices.
When analyzing product availability, a generalized deterioration in the performance of the industries is observed, with the best practices having the highest percentage of dissatisfied people since the beginning of the survey in 1994. It is important to emphasize that the industry must be aware that this is the dimension most important of customer service in the perception of commerce. That is, not having a product available to take an order or accepting an order but not delivering it can be seen as a very efficient way of referring customers to competitors.
It is interesting to note that, with the exception of the consistency dimension of delivery time, there was a significant deterioration in the services provided by best practices in the most important dimensions of customer service, if we consider the number of dissatisfied retailers a relevant measure of the performance perceived by the trade. supermarket. These results go against the grain of the analysis made earlier in relation to the sector's competitive environment.
In this same period, retailers became increasingly demanding with the performance of the industry. If in 1994 it was acceptable to deliver, on average, 87% of the confirmed order, in 2001 the trade revealed to be dissatisfied with a performance below 90%. In the same period, the maximum tolerated delay time dropped from 3,8 days to 1,8 days. In terms of delivery time from the date of receipt of the order, the tolerance was reduced, on average, from 4,2 days in 1994 to 2,8 days.
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When analyzing the relative importance of the dimensions that make up the physical distribution service “package” (see Table 5), it can be seen that those referring to time and space are indicated as the most valued by retailers throughout the period surveyed. That is, delivering the right product, in the right place and at the right time is a basic condition for the development of a successful logistics strategy.
However, it is worth remembering that the opportunities for differentiation against the competition can be obtained through accessory dimensions, such as Physical Delivery Support, Fault Remediation System and Flexibility. The important thing is to segment the customer base and offer differentiated services considering their needs vis-à-vis the profitability of each segment.
ANALYSIS OF OPPORTUNITIES FOR COMPETITIVE DIFFERENTIATION
In this section, the main results of the research are summarized, seeking to indicate to industrial companies the best opportunities to gain competitiveness through the improvement of the physical distribution process. This analysis is based on both companies with performance equivalent to market practice and those that stand out for presenting the best practices.
AS TO SEGMENTATION CONSIDERING THE DIMENSIONS OF CUSTOMER SERVICE
Graph 2 presents two 2 X 2 matrices with the dimensions of customer service allocated to the quadrants according to the level of importance and the percentage of dissatisfied customers. The resulting 2 X 2 matrices make it possible to visualize the main opportunities for improving the physical distribution service. That is, the idea is to identify the most important dimensions with the greatest number of dissatisfied people. In this sense, the upper right quadrant points to the likely candidates for the establishment of improvement programs that will be more valued from the retailer's point of view.
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It is observed, therefore, that in the case of companies with performance equivalent to market practice, the dimensions Consistency of Delivery Time, Failure Remediation System and Physical Delivery Support consist of the best opportunities for differentiation against the competition. In the case of best practices, the most promising opportunities to leverage the competitiveness of companies are Physical Delivery Support, Fault Remediation System and Support Information System. That is, these dimensions represent the most effective way to retain dissatisfied customers.
AS TO GEOGRAPHICAL SEGMENTATION
It is interesting to observe that the level of dissatisfaction with the physical distribution service provided by the industries varies substantially with the researched market. Table 6 indicates that Recife and Rio de Janeiro stand out, in that order, as the markets most satisfied with the performance of industries, while São Paulo is the most dissatisfied market.
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It appears, therefore, that there are clear opportunities for differentiated positioning in relation to the location of customers.
CONCLUSION
This article sought to demonstrate that the supermarket trade, in recent years, has increasingly valued the physical distribution service offered by the consumer goods industries. Ultimately, it was found that customer service became a key factor in the trade purchase decision process.
Research results reveal that the market is constantly changing and that understanding customer needs is critical to developing a winning service strategy. It is observed that the level of trade demand is increasing, implying the need for periodic reassessments of the levels of services offered by industries to maintain customer satisfaction.
As a final message, it is important to emphasize that the research effort is essential to keep the business in line with the real needs of the market. It is from the continuous monitoring of the competitive environment that opportunities can be identified to better satisfy the customer, anticipating and surpassing the competition.
BIBLIOGRAPHY
LA LONDE, BJ; COOPER, MC; NOORDEWIER, TG: Customer service: a management perspective. Oak Brook, Ill., Council of Logistics Management, 1988.
LAMBERT, DM; HARRINGTON, TC Establishing customer service strategies within the marketing mix: more empirical evidence. Journal of Business Logistics, 10(2), p. 44-60, 1989.
FLEURY, PF, LAVALLE, CR Evaluation of the physical distribution service: the relationship between the consumer goods industry and the wholesale and retail trade. Management and Production, vol. 4, nº 2, August 1997.
BOWERSOX, DJ; CLOSS, DJ Business Logistics: the supply chain integration process. Atlas publishing house, 2001.
