The Impact of Employee Satisfaction on Quality and Profitability in High-Contact Service Industries

Inbound logistics today is highly inefficient. Most retailers use multiple systems to manage the process and so suffer from fragmented visibility. Prioritisation and scheduling of orders are done on an ad hoc basis, with little consideration of current demand and inventory, while scarce resources, such as dock door and yard capacity, are often poorly utilised.

W. W. Grainger, Inc. is recently thinking of redesigning the supply chain for shipments from China/Taiwan. The reason being as an obvious to reduce costs, lead times and to improve supply chain efficiency. The major issue identified was the lead time and a huge fixed overhead because of small shipments which then were consolidated by the company to make a full 40-feet container load. Through a thorough cost analysis and weightage of pros and cons of three alternatives, the team recommends to use an NVOCC (Non-Vessel operating common carrier) for small shipments which will lead to a lot lesser lead times and will help reduce costs as well. Along with this, the recommendation is also to increase packing efficiency for

• Advanced warehouse and logistics solutions, including package management and support for both automated and complex delivery” (Lawson, 2012)

In Vietnam logistics is almost new concept and still there is no official authority authority with total responsibility over logistics. Consequently, the Vietnamese government has not yet been able to be in a position to specify any comprehensive

(Bowersox, D.J., Closs, D.J., and Cooper, M.B. (2010). Supply Chain Logistics Management. (3rd Edition) New York, NY: McGraw-Hill/Irwin.

Distribution costs and time is also another factor that the economy plays part it. Because of the requirements of modern distribution, the issue of time is becoming increasingly important in the management of commodity chains. Time is a major issue for freight shipping as it imposes inventory holding and depreciation costs, which becomes sensitive for tightly integrated supply chains (Dr. Jean-Paul Rodrique and Dr. Markus Hesse, “Logistics and Freight Distribution,” 12/30/2007, http://people.hofstra.edu/geotrans/eng/ch5en/conc5en/cn5c4en.html, accessed on April 15, 2008).

Transportation is at the centre of logistics as it represents the physical movement of materials between points in a supply chain. High customer expectations and little tolerance for inadequate performance create a competitive environment for operating a fleet, which forces fleet managers to achieve high levels of reliability and cost-efficiency (Peter Mbuthia Gitahi, Dr

In today’s world, competence is taking on new dimensions. The ability to compete is being determined by the degree of responsiveness to customers & key issues handling. How fast you deliver the goods/ products, what the price paid by customers & what value customer is getting throughout the service is considered in a schematic & ordered way. Markets are quick demanding & customization of each logistics activities is essential for each customer, & has become the essential factor in logistics management.

CRANFIELD UNIVERSITY CRANFIELD SCHOOL OF MANAGEMENT CRANFIELD CENTRE FOR LOGISTICS & SUPPLY CHAIN MANAGEMENT MSc THESIS

Oakden, R., Leonaite, K. (2011). A Framework for Supply Chains Logistics Operations in the Asia Pacific Region. Sydney NSW: McGraw Hill. Chapter 1, Topic: Value chain. (pp. 6).

However, as one looks to the future, technology will play an essential role in enabling the desired changes. Technology will help make feasible the new logistic capabilities needed to support future industrial concepts and the type of efficient, responsive logistic system that business forces will demand”.[1] Traditionally, China is a country with relatively weak formal institutions; more importance is given to informal constraints, e.g. personal relationships. As a result, Chinese companies rely upon a network-based strategy of growth, based on personal trust and informal agreements among managers. These are important considerations for managers when forming business relationships and designing their supply chains in China. “Although customers are spending more on average for logistics outsourcing, the percentage of budget devoted to outsourcing logistics, and the services outsourced, haven’t changed dramatically over the past several years. Companies continue their general tendency to outsource relatively commoditized services”.[2] As a result of the market shift from cost-driven to quality-driven in the near future, the strategies for logistics service providers will include: more flexibility, quicker handling, better price stability, higher transparency and increased professionalism, in order to meet the challenges. “The next five years will see a significant increase in outsourcing activity. 3PLs will be the main beneficiaries of this process and as the

Good leadership is a key characteristic associated with business in today’s society. It can be said that good leadership directly relates to the quality of business. Meaning that the better the leadership, the better the business. Quality leadership one of the major keys of developing good customer service and employee satisfaction. Considering obedience defines whether we obey or disobey the authority, many individuals today have no choice but to obey. Leaders of businesses are far along being autocratic to their leadership style instead of democratic. Individuals feel afraid and feel like slaves to the higher ranked authority that has all the power and control. Employee’s feel like slaves because they feel like they do not get a choice in the decision making process, they are always being pushed and never helped when a problem occurs. The employee’s should take command and ask for help when a problem occurs, so that the employee knows how to handle the situation in the long run and become more effective to the business, plus this will implement democratic leadership from the business leader.

According to the article, the service-profit chain establishes relationships between profitability, customer loyalty, and employee satisfaction, loyalty, and productivity. The links in the chain are as follows: Profit and growth are stimulated primarily by customer loyalty. Loyalty is a direct result of customer satisfaction. Satisfaction is largely influenced by the value of services provided to customers. Value is created by satisfied, loyal, and productive employees. Employee satisfaction, in turn, results primarily from high-quality support services and policies that enable employees to deliver results to customers (J. Heskett, T. Jones, G. Loveman, E. Sasser, & L. Schlesinger, 1994). They have found that the value of a satisfied customer is huge because they can become a loyal customer, and will also affect their peers to become loyal customers as well. Over time, a loyal customer can bring in thousands of dollars for a company.

The last few years has witnessed a renewed interest in the logistics for both scholars and the commerce industry. The development can be attributed to a number of factors, but the most prominent is the realization by the commerce professionals and scholars of the significant levels of efficiency achievable through effective planning, management, and control of operation processes across the supply chain. Information technology has also contributed to the growing attraction to the field of logistics. Advances in IT have made it possible for organizations to integrate sophisticated decision making systems in their operation processes. The systems have simplified monitoring processes across the chain supply, collection of information, and control of business strategies.

Forward logistics (or conventional logistics) is the regular distribution channel followed by the manufactures from time immemorial. Forward logistics concentrates on the products (goods or services) reaching the consumer end and deals with the line of flow from the manufacturer’s end to the consumer’s end. It deals with the very essence of Supply Chain Management and logistical activities of an organization. It has a significant impact on the primary operations carried out, which act as the basic revenue generating aspect of a business. In this logistical system, the flow is a “one-to-many” type and the forecasting or traceability is quite simple.