BENCHMARK SURVEY – CUSTOMER SERVICE

The quality of the delivery service of consumer goods from the industry to retailers (supermarkets): Presentation of the main results

From a practical and conceptual point of view, customer service represents a key component that differentiates modern logistics from the traditional approach that dealt only with issues related to operational efficiency. Currently, considering customer needs is the starting point for developing a cutting-edge logistics strategy.

This article aims to demonstrate the evolution of the distribution service as an important factor in the purchase decision in the consumer goods supply chain, more specifically in the link between supermarket trade and industry. The analysis of the results includes the level of satisfaction perceived by the commerce, considering the performance of the market practice and of the industrial companies that have the best practices, throughout the period considered. It also explores opportunities for competitive differentiation in relation to the dimensions of the physical distribution service. Finally, a brief assessment of the potential for geographic differentiation is made. The analyzes are based in part on the results of a periodical survey carried out by the Center for Studies in Logistics – COPPEAD/UFRJ, between 1994 and 2000.

EVOLUTIONARY ANALYSIS OF THE RESULTS

Regarding the Evolution of the Importance of Customer Service in the Purchasing Decision Process

The results point to the confirmation of permanent changes in the competitive environment in the supply chain of consumer goods. The 90's reveal the indisputable growth of the physical distribution service as a differentiating factor of winning competitive strategies.

Over these years, we have proven that the consumer goods supply chain is experiencing significant changes in terms of retailers' service requirements/needs and the perception of the performance of the consumer goods industry. Both expectations and best practices are constantly changing due to the growth in the sector's level of competitiveness.

Graph 1 and Table 1 show the evolution over time of the retail purchase decision process, over the six phases of the survey. For analysis purposes, it is interesting to correlate the research results obtained with the country's economic performance over the period considered.

  During the period of rapid economic growth in the country, between 1994 and 1997, due to the stabilization of the currency and the opening of the internal market to imports, substantial changes were observed in relation to the relative importance of the four variables in the purchase decision of retailers. The fall in financial profits redirected the attention of the top management of companies in search of operational profitability. A new management perspective then emerged, which directed initiatives for productivity improvements beyond the borders of companies with the objective of reducing product inventories along the supply chain.

This period was characterized by two drastic changes in the retailers' purchase decision process: price ceased to be the main variable, giving way to the product; customer service was the one that gained the most importance.

From a strategic point of view, the most significant issue was verifying that the physical distribution process had been raised to a new level of importance for the relationship between commerce and the consumer goods industry. The customer service variable gained in importance in the decision-making process for commercial purchases, going from 14,4% in 1994 to 18,7% in 1997, implying growth of approximately 30% !!

Between 1994 and 1997, it is observed that the price lost about 20% in importance, while the product increased by 7% and promotion and advertising by about 6%. That is, the relative importance of price fell from 38,5% to 30,9%, while the product grew from 30,8% to 33,0% and promotion and advertising from 16,4% to 17,8%.

It is important to emphasize that the loss of relative importance of price indicates that this variable is no longer differentiating to become a qualifying variable in the purchase decision process on the part of the trade. In other words, price is a basic competitive factor to remain in the market, with customer service being an opportunity to attract and keep customers. Realizing that customer service can have a significant impact on the cost of acquiring products (product price plus order processing costs, inventory maintenance, etc.), commerce has increasingly valued logistics in its process of purchase decision.

The years between 1998 and 2000 were marked by the weak performance of the economy until 1999 and an apparent recovery at the turn of the millennium, when we consider the forecasts for 2002. Graph 1 and Table 1 present a dynamic of changes that point to what could be to come in the coming years. After the sharp drop in price in contrast to product growth as the main variable in retailers' purchasing decisions in 1995, a convergent trajectory of these variables can be observed over the period considered. Product and price tend to remain at the same level of importance, at a level just above 30%, consolidating themselves as the basic variables in the purchase decision.

On the other hand, it is observed that the importance of customer service, after falling in 1998 and 1999, indicates that it is changing to a higher level. Forecasts indicate that customer service should surpass the 20% level of importance in 2002. The valuation of customer service, between 1994 and 2002, reaches the incredible mark of 44% !!!!. Promotion and advertising, on the other hand, shows a sensitive trend of stabilization of relative importance, over the period surveyed, between 1994 and 2002.

In short, when comparing the relative importance of the four retail purchase decision variables between 1994 and 2002, it is evident that negotiations that initially focused heavily on the product and price, began to increasingly consider customer service. client.

Regarding the Percentage of Clients Dissatisfied with the Industry's Performance

Table 2 and Table 3, obtained from the survey results 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. Table 1 refers to dissatisfaction with suppliers with performance equivalent to the market average, while Table 2 presents the percentage of retailers dissatisfied with their best suppliers.

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. With regard to market practice, it is interesting to observe the decrease in dissatisfied retailers from 1998 onwards. With the exception of order cycle time, best practices showed an increase in dissatisfied retailers in the same period.

It is important to note that in this same period retailers became increasingly demanding with the performance of the industry. In the case of the Product Availability dimension, if in 1994 it was acceptable to deliver, on average, 87% of confirmed orders (refers to the delivered percentage of the total order, that is, how much, on average, is delivered of a standard order) , in 2000 the trade indicated that it was dissatisfied with an average performance of the industry below 94%. In the same period, the delay tolerance (variable of the Term Consistency dimension), when it occurs, dropped from 3,8 days to 2,2 days. In terms of Order Cycle Time, the tolerance has been reduced, on average, from 4,2 days in 1994 to 3,4 days.

The analyzes indicate that, due to the high levels of dissatisfaction, despite the consistency of the delivery time (see Table 4) being considered more important than the order cycle time, the industries persist in not adequately addressing this issue. In other words, research results indicate that retailers prefer a supplier with a longer cycle time, but with little delay, than another supplier that promises a shorter time, but is frequently late. This is explained by the fact that to compensate for delays, retailers need larger safety stocks (implying higher costs) to avoid product shortages.

Table 4 reveals some interesting information regarding the sophistication stage of the physical distribution process between industry and retailers (supermarkets). When analyzing the service “package”, it is observed that the four most important dimensions are related to the basic mission of logistics, that is, delivering the right product, in the right place and at the right time. On the other hand, it appears that the dimensions Flexibility and Support Information System are perceived as of little importance by the retail trade, despite these being recognized as dimensions that characterize advanced logistics systems. That is, Table 4 confirms evidence that the consumer goods supply chain still has much room for improvement. This finding should be seen as an opportunity for companies interested in differentiating themselves from the competition.

As a final message, it is important to emphasize that the relevance of this effort to monitor the competitive environment lies in revealing relevant market information that can feed the companies' planning process, as well as subsidize changes in course that may be necessary. The fundamental idea of ​​this research is to contribute so that the positioning of companies adheres to the real needs of their customers.

ANALYSIS OF OPPORTUNITIES FOR COMPETITIVE DIFFERENTIATION

This session summarizes 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.

Regarding Segmentation Considering Customer Service Dimensions

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. It is observed, therefore, that the dimensions Consistency of Delivery Time and Failure Remediation System should be seen as the best opportunities to leverage the competitiveness of companies in the sector, both for companies with performance equivalent to market practice, as well as those that stand out for representing the best practices. That is, reducing delays and remedying failures satisfactorily is the most effective way to retain dissatisfied customers.

Regarding Geographic Segmentation

It is interesting to observe that, from a segmented analysis, the level of dissatisfaction with the physical distribution service of the industries varies substantially according to the geographic region. Table 5 indicates that Rio de Janeiro and Curitiba stand out, in that order, as the markets most satisfied with the performance of industries, while São Paulo reveals itself to be the most dissatisfied market.

It appears, therefore, that there are clear opportunities for differentiated positioning in relation to the location of customers.

CONCLUSION

In short, research results indicate that the market is constantly changing and suggest that a service strategy is only relevant if it is based on the customer's point of view. However, maintaining relevance for the customer presupposes that companies that intend to stand out from the competition have a continuous market monitoring system. It is through continuous monitoring of the needs and performance perceived by retailers that industrial companies can promote periodic reviews of the levels of services practiced with the aim of ensuring the relevance of the current service strategy.

It is important to verify that the effectiveness of the distribution service, in terms of contribution to business results, is related to the ability, firstly, to know the differences between the different customer segments, and then to determine specific actions for those profitable segments. . Offering standard service to the entire customer base leads, as a rule, to undesirable situations where price-sensitive customers may be receiving service levels beyond their expectations; or even demanding customers, willing to pay a premium price, may be dissatisfied with receiving a service below their needs.

This article sought to demonstrate that the supermarket trade, in recent years, has increased the perceived value of the physical distribution service offered by the consumer goods industries, with a view to achieving a higher level of competitiveness in the face of the competition. Ultimately, it was found that customer service became a key success factor in the development of winning logistics strategies.

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.