Managing resources to create customer service quality.

2014

Master Thesis

Managing resources to create customer service

quality

Johan Lenis, 10278737

(MSc. In Business Studies – strategy Track)

Supervisor: Prof. R.M. Singh

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Preface

The research presented to you offers an understanding of the creation of customer service quality by the management of resources within one of the largest global steel producers. Customer service quality has my interest because of my background in customer services and the experience I have within the steel industry. As the creation of customer service quality is not something which can be done without the support of the organization, the realization of my thesis could also not have been completed without this support. Therefore I would like to thank everyone who helped me in making this thesis possible. Special thanks to the interviewees who provided their input and shared their knowledge. Finally, I would like to give specials thanks to my supervisor for giving me the right direction in order to complete this thesis.

Johan Lenis January, 2014

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Abstract

Both management of resources and customer service quality have been described in the strategy literature, however the relationship between the management of resources and customer service quality has not yet been investigated. The available research on customer service quality is mainly focused on business-to-consumer organizations, which is opposite to business-to-business organizations. With this qualitative study an attempt is made to explore how resources are managed in a business-to-business organization to create customer service quality. The study combines the literature on resource management and customer service quality, and offers a conceptual framework based on the resources – people, processes and technology – and the different constructs which measure customer service quality – reliability, attentiveness, responsiveness and perceptiveness. The findings first show that the organization needs to have capable people who are customer focused throughout the whole supply chain. Secondly, the cross-functional organizational processes need to be aligned between the departments. Finally, the findings show that the systems need to support the people and the processes to be reliable, attentive, responsive and perceptive in order to achieve high customer service quality. For future research it would be valuable to do research on this framework within other industries and sectors as well.

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Content

4. DATA AND METHOD ... 23

5. RESULTS ... 27

6. DISCUSSION ... 65

7. CONCLUSION ... 73

REFERENCES ... 75

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1. Introduction

Customer interactions – whether they are complaints, enquiries, or positive reviews – are important for the long-term relationship with the customer. The essence of good customer service quality is when the customer perceives these interactions to have been handled well by the firm (Salomonson, 2012; Chao, 2008). Poor service quality is a key factor in customer dissatisfaction. Imagine that you have bought an item and you have a complaint about the product. When the customer service representative is not interested in your complaint, this will have a negative impact on your motivation to buy again from the same firm. However, when your complaint is acknowledged and the customer service representative is willing to help, the story changes. Because you have received good customer service, your willingness to buy again from the same firm will increase. Service quality is positively related to ‘willingness to pay more’ (Alison et al., 2002), where customers set the quality of the service above the price or quality of the product. Overall, good customer service quality leads to customer satisfaction, customer loyalty and firm performance (Eklof 2008; Wouters 2004).

But how is a customer service quality focused organization created? Many articles have been written about customer service quality and the effect on customer loyalty, value creation and firm performance (Chao, 2011; Chen, 2008; Salomonson, 2012; Yee, 2010). Further, the literature on strategy suggests that in order to have a customer service quality focused firm, the firm needs to be reliable, attentive, responsive and perceptive towards the customer (Chand, 2010; Salomonson, 2012; Martinez, 2009). In general, a firm needs to create this reliability, attentiveness, responsiveness and perceptiveness by managing the resources within the organization. The strategy literature on management of resources is mainly focused on firm performance (Sirmon and Hitt, 2008; Bakay, 2011; Lau, 2011; Lo, 2012) and less on the creation of a customer service quality focused firm. The available research on customer service quality is mainly focused on business-to-consumer organizations. However, this does

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not imply that business-to-business organizations are not customer service quality focused. Business-to-business organizations have not been studied much with regard to customer service quality. Research within a business-to-business organization might lead to different insights compared to the business-to-consumer organizations. Thus, further research is essential. Therefore, I have chosen to do an in-depth case study within one of the largest global steel producers. This steel producer is one of the world’s most geographically diversified steel firms, with operations in 26 countries and commercial offices in over 35 countries. In Europe, this organization is the second largest steel producer. Several markets are served, such as Aerospace, Automotive, Construction, Consumer Products, Defense & Security, Energy & Power, Lifting & Excavating, Packaging, Rail and Shipbuilding. The organization is doing well, but there seems to be mismanagement when looking closely to the customer service quality which is created within the organization. So there is reason to get an understanding of how resources are managed within this organization.

This research will attempt to complete the gap which has been identified within the literature, by combining the management of resources and customer service quality. The management of resources will focus on the people, organizational (innovative) processes and technology within the organization. ‘People’ refers in terms of the knowledge, skills and experience in which they contribute to customer service quality. The innovativeness in service quality is the degree of efficiency in organizational processes which are underpinned by the technology. Within customer service quality the focus will be on reliability, attentiveness, responsiveness and perceptiveness. In general, past research has found these four constructs to have an influence on customer service quality (Chand, 2010; Salomonson, 2012; Martinez, 2009). These four constructs are most important for customer service quality because an organization needs to be able to: 1) live up to the agreements which are made with the customer (reliability); 2) communicate on the desirable level with the customer (responsiveness); 3)

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show commitment and focus towards the customer (attentiveness) and 4) understand the message of the customer (perceptiveness).

Without capable people, alignment of organizational processes and lack of the support of technology within an organization, conflicts of interest might occur within the organization. People within manufacturing might focus on efficiency where the sales department is more customer focused. When these conflicts are avoided by the alignment of organizational processes, the organization can have a clear vision and distinguish itself from their competitors. The research question which I try to answer within this thesis is:

“How do firms manage their resources to create high customer service quality?”

In the next section, the literature on customer service quality and resource management is described. In chapter three I present the theoretical framework, followed by the research design in chapter four. In chapter five the results of the data are presented. Chapters six and seven contain respectively the discussion and conclusion.

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2. Literature review

Customer service quality has become an important subject in the strategy field in the past decade, and for good reason. Service quality is an essential criterion for customers in selecting and evaluating their providers (Chao, 2008). In general, customer service quality is a main indicator for firm performance, customer satisfaction and customer loyalty (Eklof 2008; Wouters 2004). Without the presence of good customer service, organizations are less capable of creating value for their customers (Salomonson, 2012). Customer service quality supports the creation of value by the attentiveness, perceptiveness and responsiveness of the customer service representatives. Being attentive, perceptive and responsive is needed to achieve organizational excellence and to make up for organizational mistakes which affect the customer. For organizational excellence, organizations work towards reliable processes by understanding and implementing daily management practices throughout the value chain. When an organization achieves operational excellence, it is able to act on a proactive basis towards their customers due to the reliability of their processes. The organization acts reactively when a customer complaint needs to be solved due to an organizational mistake. In both examples, providing customer service helps in creating the value for the customer. Overall, value creation is important to create a competitive advantage.

2.1 Concept of customer service quality

Despite the fact that customer service quality is stated as an important factor within the strategy literature (Wouters 2004; Chao, 2008; Eklof 2008; Salomonson, 2012), there is no consensus about the definition of customer service quality. A few definitions of customer service quality in the strategy literature are: “customers’ assessment of service quality is determined by comparing their expectations with their perceptions of actual performance” (Chao, 2008); “the consumer’s judgment about a product’s overall excellence or superiority”

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(Martinez, 2010); “the consumer’s overall impression of the relative inferiority/superiority of the organization and its services” (Martinez, 2010). These three definitions combined describe that there is always a perception or expectation of the customer towards the organization, the product or the actual performance. To influence this perception, several scholars describe different attributes within customer service quality such as tangibility, reliability, responsiveness, assurance and empathy (Chand, 2010) and attentiveness, perceptiveness and responsiveness (Salomonson, 2012; Martinez, 2010). In each of the articles the concept exists of multiple attributes, but the content is not fixed. Martinez (2010) describes six conceptual models of service quality: Grönroos Model (GM), Rust and Oliver’s Model (ROM), SERVQUAL, SERVPERF, RSQS and BCM. In these (multidimensional) models the problem might occur that a customer is satisfied with one attribute but dissatisfied with the other at the same time. Therefore, the dilemma with these models arise that it is difficult to measure the service quality properly. Within my thesis, I have chosen four attributes which I think have the maximum impact on customer service quality: reliability, attentiveness, responsiveness and perceptiveness. These four attributes combined are important to determine whether the expectation of the customer on the performance is met. Therefore I will use the definition of Chao (2008), which is closest to my research area: “customers’ assessment of service quality is determined by comparing their expectations with their perceptions of actual performance.”

2.2 Importance of customer service quality

Although there is no consensus about the definition of customer service quality in the literature, there is consensus on the importance of customer service quality. The importance of customer service quality is based on the direct influence it has on customer satisfaction and customer loyalty, and its indirect influence on firm performance (Eklof 2008; Wouters 2004). Customer satisfaction has proven to be of influence to predict the long-term financial

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performance of any company. Customer satisfaction is driven by the satisfaction of the employees within the service organization of a company (Eklof, 2008). The service organization within a firm is the customer service department which has direct customer interactions around order entry, order fulfillment and complaints management. This department of the organization is closest to the customer and is therefore able to translate the customer needs into the organization. Also, the customer service representatives within this department have a high contact level with the customer, and the loyalty of the employee to the organization is related to the service quality of the firm (Yee, 2010). This indicates that a valuable resource for a firm to determine customer service quality is the people within the organization. Because other departments within organizations (i.e. Supply Chain Planning and Manufacturing) are generally less close to the customer, the customer service department needs to be able to bridge the gap between the customer requirements and the other departments within the organization. Without the availability of a customer service department and the absence of customer focus within other departments of organizations it is highly unlikely that an organization can create high customer service quality.

2.3 Resource management

Resources help a firm in creating value for their customers. In the resource-based theory Barney and Peteraf (2003) mention the importance of critical resources. Critical resources are valuable, rare, inimitable and non-substitutable resources (VRIN) which are necessary for an organization to create competitive advantage. The resource-based theory argues that firms differ in their resource position, and that such resource heterogeneity is a source of performance differences across firms (Ahuja and Katila, 2004). The resources within an organization refer to: “an asset or input to production (tangible/intangible) that an organization owns, controls, or has access to on a semi-permanent basis” (Helfat and Peteraf,

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2010). In addition to this, an organization not only needs to own the resources, the organization must also manage these resources to realize a competitive advantage (Holcomb et al, 2008; Hollow et al, 2007; Sirmon and Hitt, 2003, 2008, 2009). Sirmon and Hitt (2008) describe resource management as the structuring of a firm’s resource portfolio, bundling the resources to build capabilities and leveraging those capabilities to realize a competitive advantage. Creating a competitive advantage is necessary to increase firm performance. According to Bakay (2011), managing and allocating the resources needs to be done with a clear purpose to increase the performance of the firm. Focusing on the firm resources has an (indirect) effect on strategic orientations of the firm and also on the performance of the firm (Lau, 2011; Lo, 2012). In highly competitive markets, firms tend to deploy and utilize their best resources (people, organizational capital and management capabilities) to create a competitive advantage (Lahiri, 2013). Besides the importance of customer service quality and its effect on firm performance, the literature also shows that the management of resources has an effect on firm performance. To determine which resources are necessary for customer service quality it is important to mention the key processes within customer service: order entry, order fulfillment and complaint management. To create high service quality in these three processes, organizations need to be reliable, attentive, responsive and perceptive in these processes (Chand, 2010; Salomonson, 2012; Martinez, 2009). The resources which contribute to this are the people (knowledge, skills and experience) within the organization, the organizational (innovative) processes and the technology to underpin these processes.

2.3.1 People

Knowledge, skills and experience are important contributors within human resource management (Kor and Leblebici, 2005). An organization’s knowledge can be developed both by acquiring it from external sources and by developing it in house. When knowledge is

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acquired, it might be valuable but often not rare. It is valuable when the acquired knowledge helps the organization in creating a competitive advantage. However, because it has been acquired, it is relatively easy for competitors to acquire the same knowledge which makes the gained competitive advantage less sustainable. When the knowledge is developed internally within the organization (tacit knowledge), competitors are not able to acquire the same knowledge. It is this tacit knowledge which is difficult to imitate because it is built up over a longer period of time. Therefore, with the creation of tacit knowledge the organization is more likely to create a sustainable competitive advantage over its competitors.

Communication skills, social skills, product knowledge, flexibility and stress resistance are important skills to have within customer service departments (Martin and Fraser, 2002). As customers are more and more demanding, communication is an important feature of creating customer satisfaction. Customer service representatives need to have these communication skills combined with the knowledge of the products, to be responsive and perceptive towards the customer (Chand, 2010; Salomonson, 2012; Martinez, 2009). The people within the organization need to be attentive as well. Attentiveness reflects the focus and commitment towards the customer. This customer focus is needed in the supply chain of an organization to create value for the customer (Salomonson, 2012). When there is less customer focus within the people in the supply chain, it is the up to the customer service representative to create support within the organization. Therefore, the customer service representative needs to have the social skills to convince other departments to do what is in the best interest for the customer. This results in a continuous field of tension between the customer service representative and the internal organization. Therefore, people within the customer service department also need to be flexible and stress resistant.

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When employees work for a longer period within the same organization, they gain experience within a particular industry or sector. The people within the organization who are experienced know the organizational processes, know the customer requirements and have built up tacit knowledge over the years. Further, within large organizations it often appears that people have been in different functions in different departments. This cross-functional experience and the length of employment have a positive influence on the service quality (Kuo, 2010). Within human resources, processes and routines are important to assure that situations in customer service can be handled properly.

2.3.2 Organizational (innovative) processes

Innovation can be labeled as new product development (NPD) and as service innovation. Within NPD new tangible products are created and this type of innovation is seen as radical innovation with fundamental, disruptive changes (Crossin, 2010). Toivonen and Tuominen (2009) describe the service innovation process as follows: “a service innovation is a new service or such a renewal of an existing service which is put into practice and which provides benefit to the organization that has developed it; the benefit usually derives from the added value that the renewal provides the customers.” The service innovation process is an organizational process. Organizational processes are not static and need continuous improvement to stay aligned with the organization. The innovations on the organizational processes are incremental by nature and represent variation in existing routines and practices (Crossin, 2010). It is also possible that a review could shed a different light on the process which might lead to a fundamental change. Reviewing these processes on a regular basis will ensure that changes are made within these processes.

Organizational processes are the ‘way things are done within firms’ (routines) and have three roles: coordination/integration, learning and reconfiguration (Teece, 1997). Coordination and

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integration is needed for linking the customer demand to the internal processes. For example, the organization can create a tool which transfers the customer demand directly into the manufacturing systems. Linked to the resource ‘people’ is the learning role of the process. Learning is done by a collective set of people who are dealing with specific problems which can lead to process amendments or even complete new processes. Coordination and learning are followed up by reconfiguration, which is a learning skill (Teece, 1997). In a demanding and changing environment, firms need to reconfigure their resources to be competitive.

2.3.3 Technology

The processes as described in the previous section need to be supported by the systems within the organization (Kor and Leblebici, 2005). Without the systems to underpin the processes, manual head-hand actions are needed to fulfill customer demands. Head-hand actions have a higher failure rate compared to actions which are automated via systems. Further, the systems in different departments in the supply chain of the organization need to be aligned. From a customer requirement within a sales department up until the delivery of this requirement towards the customer: the systems need to be aligned. The alignment creates transparency throughout the supply chain, which helps the organization in creating customer service quality. In example, a customer complaint has been captured in a formal system. All of the involved departments have access to this system. The system pushes the complaint towards the responsible department for resolving the complaint. When the complaint has been resolved, it will be automatically communicated with the customer. So, the systems within an organization are important to support the people and processes to be perceptive and responsive.

Where this is an example for complaints management, the systems should also be aligned in every area which affect customer service quality. All customer related data (i.e. enquiries on

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order fulfillment, complaints, order acknowledgements) needs to be captured in a formal system to ensure availability of data at all time, which needs to be visible for all departments within the supply chain. Customers desire a high customer service level, and firms need to evaluate their operational systems to create the value and improve the service level (Tsou, 2012).

2.4 Research gap

Customer service quality and the management of resources are extensively described in the strategy field; however, there is little knowledge about the management of resources to create customer service quality. Without capable people, alignment of organizational processes and lack of support of technology within an organization, conflicts of interest might occur within the organization. This conflict might harm the customer service quality. Are the skills and knowledge of the customer service representatives at the desirable level and aligned with the processes and the systems they use? Are all the departments within the supply chain of the organization customer focused? Customer service quality has an (indirect) influence on the firm performance (Eklof 2008; Wouters 2004). Achieving higher firm performance is one of the ultimate goals of a firm (Bakay, 2013; Lau, 2011); therefore it is necessary that the organization manages their resources to create high customer service quality. The research question based on the gap mentioned above, which I try to answer within this thesis, is:

3. Theoretical framework

To answer the research question ‘how do firms manage their resources to create high customer service quality’ I need to know how firms

responsive, attentive and perceptive in the eyes of the custome found these four constructs to

Salomonson, 2012; Martinez, 2009

service quality because an organization nee

are made with the customer (reliability); 2) communicate on the desirable level

customer (responsive); 3) show commitment and focus towards the customer (attentiveness) and 4) understand the message of the customer (perceptiveness).

depends on how these constructs are handled organizational (innovative) processes and technology.

Figure 1: influence of resources on customer se

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retical framework

To answer the research question ‘how do firms manage their resources to create high need to know how firms manage their resources to be reliable, responsive, attentive and perceptive in the eyes of the customer. In general,

to have an influence on customer service quality

; Martinez, 2009). These four constructs are most important for customer service quality because an organization needs to be able to: 1) live up to the agreements which are made with the customer (reliability); 2) communicate on the desirable level

(responsive); 3) show commitment and focus towards the customer (attentiveness) sage of the customer (perceptiveness). The degree of influence depends on how these constructs are handled by the resources of the organization: people,

processes and technology.

influence of resources on customer service quality

To answer the research question ‘how do firms manage their resources to create high their resources to be reliable, r. In general, past research has have an influence on customer service quality (Chand, 2010; These four constructs are most important for customer to be able to: 1) live up to the agreements which are made with the customer (reliability); 2) communicate on the desirable level with the (responsive); 3) show commitment and focus towards the customer (attentiveness) The degree of influence by the resources of the organization: people,

The propositions will be based

entry, order fulfillment and complaint management.

procedure process from the start of a new customer order, the b delivery and possible complaints of the customer.

chain analysis is done to determine which resources (and the importance of these resources) are necessary for each step in the process to

and perceptiveness which lead to customer service quality.

Figure 2: value chain – theoretical model

3.1 Resources

The resources people, organizational processes

important for the different steps within the three key processes. The

resources determines the ability of an organization to be reliable, responsive, attentive and perceptive. These four constructs will be explained in further de

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The propositions will be based upon the three key processes within customer service: entry, order fulfillment and complaint management. These processes encompass

process from the start of a new customer order, the booking process, production, delivery and possible complaints of the customer. For this total process, a backward

chain analysis is done to determine which resources (and the importance of these resources) are necessary for each step in the process to create reliability, responsiveness, attentiveness and perceptiveness which lead to customer service quality.

theoretical model

people, organizational processes and technology are both separate

steps within the three key processes. The alignment of these the ability of an organization to be reliable, responsive, attentive and These four constructs will be explained in further detail in the next section.

upon the three key processes within customer service: order encompass the total ooking process, production, this total process, a backward value-chain analysis is done to determine which resources (and the importance of these resources)

create reliability, responsiveness, attentiveness

are both separately and jointly alignment of these the ability of an organization to be reliable, responsive, attentive and

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3.2 Constructs customer service quality

Reliability of an organization means that the provider of the products or services makes sure that the agreements with the customer are lived up to. As an organization, you can be reliable when you make sure orders are booked conform to the customer specification, the delivery of the product or service is within the agreed period and if there is a complaint that it is handled properly. To achieve this, the people within the organization need to have knowledge, skills and experience. Furthermore, processes need to be reviewed on a continuous basis to assure that these processes are useful to meet the customer demand.

Responsiveness reflects the level of understanding or agreement between the provider and the customer (Salomonson, 2012). Being responsive also means that the provider needs to make sure that they respond quickly, and that they check with the customer whether the message is understood. In many organizations there are exceptions that need to be managed. In large organizations, there are several departments influencing the exceptions. In case of an exception in order fulfillment (material ordered by the customer that will not be delivered in the agreed period), departments such as manufacturing, supply chain, outbound logistics and customer service influence these exceptions. To make sure that the organization acts quickly, all the resources within these departments need to be aligned to avoid conflicts of interest.

Attentiveness reflects a provider’s focus on the customer. The provider adjusts his behavior to make sure he shows his consideration, commitment and involvement. Attentiveness cannot be created by one department within a large organization. The customer service representatives are trained to have focus on the customer and feel strong commitment towards them. However, they depend on other departments within the organization to meet and exceed customer demand. It is therefore important that the customer demand is cascaded throughout the departments within the supply chain.

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Perceptiveness reflects the listeners attempt to understand the message of the customer (Salomonson, 2012). When the listener has a high perception this means that he can identify the needs of the customer and offer specific services or products to meet and exceed these needs. When the message of the customer contains a complaint, this complaint needs to be registered formally. When the complaint has been registered, the customer service representative needs to make sure that the root cause of the complaint is known and that the complaint is addressed to the responsible department.

3.3 Key processes of customer service

The three key processes—order entry, order fulfillment and complaints management— encompass the total process from the start until the end of an order. Within this thesis, these processes are viewed from the perspective of a large industrial steel production company. Although the basis of these processes is the same for most production companies, these processes might be different in other organizations.

Within order entry, the following sub processes are defined: pre-order entry, order entry and order acknowledgement1. In these sub processes several different departments are involved and have a direct or indirect influence. Supply chain and sales need to make sure the allocation for the order has been reserved (pre-order entry), customer service needs to book the order (order entry) and sales needs to acknowledge the order (order acknowledgement). For the order entry process it is important to be able to react quickly and reliably. When customers send in their orders, they need a response within an agreed timeframe. To achieve this, people need to have the communication skills to be responsive. Furthermore, the

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response needs to be reliable. Reliability can be obtained when all involved departments make sure they follow the agreed order entry process.

Order fulfillment starts where the process of order entry ends. Order fulfillment implies that the order of the customer has been acknowledged and that the order is available for the supply chain and manufacturing department to produce the order conform to the customer requirements. The process of order fulfillment is also divided into several sub processes. First, the customer order needs to be launched for production. Second, the production of the order needs to be executed. Finally, when the order is ready for dispatch, it needs to be delivered to the customer. In theory, the process is fairly simple. However, within these sub processes several departments are involved such as sales, customer service and supply chain planning and there could be pitfalls within each of the sub processes. Within the sub process ‘launch material for production’, it might be that the agreed capacity for a set of orders is decreased and not all of the orders can be launched according to the agreed customer delivery week. Choices need to be made which will have an effect on the agreed delivery week for particular orders. During the execution of the order, production can be delayed due to production issues, quality issues or scheduling issues. Orders need to be monitored proactively to ensure the flow of material. In case of expected deviations with regard to the agreed delivery week the customer needs to be informed. When the order is ready for dispatch, it will be programmed for transport. During transport there can be a delay due to technical issues with the type of transport that is used. All of these examples of pitfalls are not in favor of creating high customer service quality. The customer expects reliability on the delivery as ordered regarding the requested delivery week. In case of deviations, the customer expects proactive information on the exceptions (responsiveness). The deviations should be communicated with a clear focus and commitment towards the customer (attentiveness).

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Once the material has been delivered, it is possible that the customer will not be satisfied and may send in a complaint. The way the complaint is handled is the process of complaints management. The dissatisfaction can be caused by several reasons. Within customer service quality, we only discuss the complaints which are caused by service issues. Technical complaints (i.e. the coil is not produced conform the agreed mechanical properties) are out of scope. Service issue may arise when there are exceptions in order entry, order fulfillment or also in customer care, which is related to the communication with the customer. The way complaints are handled is very important for the customer. Again, responsiveness is a key item. An organization needs to be able to act quickly on complaints and assure that the complaint is addressed properly within the organization. In addition to responsiveness, the people from the organization need to be able to understand the message from the customer: what is the real issue for the customer and what is needed to resolve the issue?

Combining the resources and the key processes within customer service as mentioned above leads to the following propositions on customer service quality.

Proposition 1: the more the capability that people have in managing order entry, order fulfillment and complaints management the more likely is the organization to achieve high customer service quality

Proposition 2: the more alignment there is in the organizational processes between sales, supply chain and manufacturing to manage order entry, order fulfillment and complaints management the more likely is the organization able to create high customer service quality

Proposition 3: the more the technology between sales, supply chain and manufacturing is aligned to support the organizational processes the more likely is the organization to achieve high customer service quality

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Proposition 4: the more customer focus is created throughout the departments within the supply chain, the more likely is the organization able to create high customer service quality

All of the above four propositions are linked to the constructs reliability, responsiveness, attentiveness and perceptiveness, which are used to measure customer service quality.

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4. Data and method

In order to answer the research question, it is necessary to do extensive qualitative research within several comparable companies. Due to the timeframe and available resources this is unfortunately not possible to do within my thesis. Therefore, I have chosen to do an in-depth case study within one of the largest global steel producers. With a case study, the results can be fruitful for the case itself due to the fact that case studies are rich, empirical descriptions of particular instances based on a variety of data sources (Eisenhardt and Graebner, 2007; Saunders et al., 2011). This variety of sources is easily accessible because of the network I have built up within the organization. However, the case study may not be easily generalizable for other companies and would need to be further corroborated by future research (Flyvbjerg, 2006).

The case study will be done in one organization. The research will be on two sites within this organization: the site for strip products in the Netherlands (site A) and the site for strip products in the United Kingdom (site B). This steel producer is one of the world’s most geographically diversified steel firms, with operations in 26 countries and commercial offices in over 35 countries. In Europe, this organization is the second largest steel producer. Several markets are served, such as Aerospace, Automotive, Construction, Consumer Products, Defense & Security, Energy & Power, Lifting & Excavating, Packaging, Rail and Shipbuilding. The organizational structure has a matrix form (see Figure 3). The Sales & Marketing department is a department which is sector aligned. The Supply Chain Planning and Manufacturing departments are located and focused on the two sites.

Figure 3: organizational chart

The focus within the study is on site

The unit of analysis within this case study resources. In order to get the data, the value

services was were analyzed backwards. These three key processes are order entry, order fulfillment and complaints management. These processes

the start of a new customer order, the booking process, production, delivery and possible complaints of the customer. This analysis

importance of these resources) are necessary

responsiveness, attentiveness and perceptiveness within the organization which lead to customer service quality.

To gather the information, I have conducted

different departments within both sites. The interviews

24 Figure 3: organizational chart

tudy is on site A, because most of the data will come from

The unit of analysis within this case study (Yin, 2009) will be the proce

resources. In order to get the data, the value chain of the three key processes within customer analyzed backwards. These three key processes are order entry, order fulfillment and complaints management. These processes encompass the total

the start of a new customer order, the booking process, production, delivery and possible complaints of the customer. This analysis was done to determine which resources (and the importance of these resources) are necessary for each step in the process to create reliability, responsiveness, attentiveness and perceptiveness within the organization which lead to

gather the information, I have conducted nineteen interviews with various people from fferent departments within both sites. The interviews were held in the native language of the

come from this site.

will be the process of managing chain of the three key processes within customer analyzed backwards. These three key processes are order entry, order the total procedure from the start of a new customer order, the booking process, production, delivery and possible done to determine which resources (and the for each step in the process to create reliability, responsiveness, attentiveness and perceptiveness within the organization which lead to

interviews with various people from held in the native language of the

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interviewee, to make it as natural as possible for the interviewee. In order to get the rich data needed, these people were selected based on function, experience and department. The several departments involved have direct or indirect influence on the three key processes of customer service. Because of the different departments, it will be a cross-functional research which is necessary to create a multidisciplinary view. The main focus is on site A, where thirteen interviews were held: four interviews within Sales & Marketing, five interviews within Supply Chain Planning and four interviews within Manufacturing. Six interviews were held on site B: three interviews within Sales & Marketing, two within Supply Chain Planning and one within Manufacturing. The choice for this number per department is to have a relatively equal spread amongst the interviewees per department, to avoid the possibility of one department having a lot of influence on the results. The functions which were interviewed within these departments are middle management functions and the people from daily operations. The people from the middle management functions are aware of the strategy of the organization and also know how this is cascaded into the shop floor; the people from the daily operations know exactly how it is executed. An overview of the interviewees can be found in Appendix 1.

The interviews which have been held are semi-structured interviews. Within these interviews, an interview protocol (see Appendix 2) is used which covers the propositions. The propositions are based upon the unit of analysis: how do firms manage resources? (Yin, 2009) Within the protocol there is a hierarchy of questions per key process of customer service. First, general questions were asked about the key process. Second, the four constructs— reliability, responsiveness, attentiveness and perceptiveness—are taken into account. After this, questions were asked on how for example the reliability can be increased with the available resources. Finally a check has been done on the cross-functional alignment of processes and the support of technology to underpin these processes. In addition to the

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questions, the interviewees were also asked to score the constructs on a five-point Likert scale. Triangulating this quantitative data with the qualitative data from the interview transcripts helps in ensuring the validity of the data (Saunders et al., 2011). The interviews had an average duration of forty-five minutes (approximately fifteen minutes per key process), and were recorded and transcribed. The interviews for site A were all done face-to-face, whereas the interviews for site B were done by phone or web conference. After all the interviews were held and transcribed verbatim, analysis was done on the transcripts. During the analysis of the transcripts, fragments of the transcripts were put in the coding scheme. A fragment is a sentence or part of a sentence from an interviewee which reflects a resource combined with one of the constructs of customer service quality.

5. Results

From the analysis of the transcripts of the nineteen based upon the resources, key process

are the foundation for the result section. fragments can be found in Appendix

Figure 4:% fragments per construct

In accordance with the theoretical framework this chapter is divided in

first section the constructs which measure customer service quality are briefly explained. In each of the following sections one proposition

interviews. For the first three

fulfillment and complaints management within customer services will be analyzed. last proposition, which is about the customer focus throughout the

departments within the supply

5.1 Constructs customer service quality

The constructs from the theoretical framework which measure customer service quality are reliability, responsiveness, attentive

have an influence on customer service quality (Chand, 2010; Salomonson, 2012; Martinez, 2009). These four constructs are most important for customer service quality because an

17% 16% 16%

% Fragments per

construct

the transcripts of the nineteen interviews, 908 fragments were coded , key processes, constructs and possible subthemes. These fragments for the result section. The coding scheme with the explanation of the

Appendix 3.

:% fragments per construct Figure 5: % fragments per resource

e theoretical framework this chapter is divided into five sections. In first section the constructs which measure customer service quality are briefly explained. In each of the following sections one proposition is analyzed, based on the

propositions the value chain of key processes order entry, order fulfillment and complaints management within customer services will be analyzed.

last proposition, which is about the customer focus throughout the supply supply chain will be analyzed.

Constructs customer service quality

The constructs from the theoretical framework which measure customer service quality are , attentiveness and perceptiveness. In general, these four constructs have an influence on customer service quality (Chand, 2010; Salomonson, 2012; Martinez, 2009). These four constructs are most important for customer service quality because an

51%

% Fragments per

construct

% Fragments per

resource

fragments were coded ible subthemes. These fragments The coding scheme with the explanation of the

: % fragments per resource

five sections. In the first section the constructs which measure customer service quality are briefly explained. In analyzed, based on the data from the the value chain of key processes order entry, order fulfillment and complaints management within customer services will be analyzed. For the chain, the different

The constructs from the theoretical framework which measure customer service quality are . In general, these four constructs have an influence on customer service quality (Chand, 2010; Salomonson, 2012; Martinez, 2009). These four constructs are most important for customer service quality because an

38%

% Fragments per

resource

organization needs to be able t

customer (reliability); 2) communicate on the desirable level with the customer (responsiveness); 3) show commitment and focus towards the customer (attentiveness) and 4) understand the message of the

5.2 Proposition 1 – People

Proposition 1 suggested that the more capability

fulfillment and complaints management the more likely is the organization to achieve high customer service quality. This section starts with the backwards analysis of the value chain key processes of customer services and ends with an overview of proposition 1.

On the resource ‘people’, 344 out of 908 fragments

sentence from an interviewee which reflects a resource combined with one of the constructs of customer service quality) were captured during the interviews. These 344 fragments were spread relatively equal amongst the different constructs

shown as follows: attentiveness 78 responsiveness 90 (26%).

Figure 6: % of fragments per construct on resource ‘people’

Attentiveness Perceptiveness

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to be able to: 1) live up to the agreements which are made with the customer (reliability); 2) communicate on the desirable level with the customer ); 3) show commitment and focus towards the customer (attentiveness) and 4) understand the message of the customer (perceptiveness).

People

Proposition 1 suggested that the more capability people have in managing order entry, order fulfillment and complaints management the more likely is the organization to achieve high This section starts with the backwards analysis of the value chain key processes of customer services and ends with an overview of proposition 1.

344 out of 908 fragments (a fragment is a sentence or part of a m an interviewee which reflects a resource combined with one of the constructs were captured during the interviews. These 344 fragments were spread relatively equal amongst the different constructs. In Figure 6 this spread has

: attentiveness 78 (23%), perceptiveness 78 (22%), reliability 99

% of fragments per construct on resource ‘people’

23% 22% 29%

26%

People

Perceptiveness Reliability Responsiveness

o: 1) live up to the agreements which are made with the customer (reliability); 2) communicate on the desirable level with the customer ); 3) show commitment and focus towards the customer (attentiveness) and 4)

people have in managing order entry, order fulfillment and complaints management the more likely is the organization to achieve high This section starts with the backwards analysis of the value chain key processes of customer services and ends with an overview of proposition 1.

(a fragment is a sentence or part of a m an interviewee which reflects a resource combined with one of the constructs were captured during the interviews. These 344 fragments were igure 6 this spread has been , reliability 99 (29%) and

29 5.2.1 Complaints management

Within the resource ‘people’ and the key process complaints management, 134 fragments have been captured. The majority of these fragments (110) were captured within the Sales & Marketing and Supply Chain Planning department. This is due to the fact that the people within Manufacturing are almost never involved in service complaints.

For Reliability, a step has been made in making sure the service complaints from the customers are registered. The people within Sales & Marketing do not always feel the urge to register all the complaints. Instead of registering they feel more obliged to solve the issue for the customer. Creating reliability is key in achieving customer service quality. Even when an organization scores high on attentiveness, responsiveness and perceptiveness, if it is not reliable it will not be perceived positively by the customer. Further, the organization is not doing well at discovering the root cause of service complaints. The organization is easily satisfied with the first answer and stops at ‘one times why’, when in practice a deeper analysis could be done to identify the real root cause of a service complaint.

The Attentiveness within all departments of the organization is high. Sometimes, due to environmental factors, employees are put in a difficult position. People are not always given the options to build a solution when they have found one. So, there is room for improvement but generally the people are committed. Based on the coding scheme (complaints management; attentiveness; people) 13 out of 19 interviewees mentioned that the attentiveness within their departments is high with regard to complaints management. This resulted in an average score of 3,8 (Table 1) on attentiveness.

Is the communication with the customer on service complaints at the desirable level? The Responsiveness within the organization is reasonable; there are good and bad examples. The

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people are able to solve the service complaints at the moment they occur and customers are informed accordingly. However, there is room for improvement in showing the customer that the organization is a learning organization, which helps ensure that these complaints are prevented in the future.

The organization understands the customer needs and is therefore perceptive. The people within the organization are not always able to fulfill these customer needs. This is mainly due to the differences between departments. Within Sales & Marketing the perceptiveness of the people is higher than further in the value chain. Supply Chain Planning say they can improve on this area, because they have too little information about the end-customer. The people within Manufacturing and Supply Chain Planning are feeling remote towards customer needs. The people within Sales & Marketing influence the service complaints management process the most. The majority of the influence is on attentiveness and reliability.

The skills of the people are in general well developed. The perceptiveness however differs between people. When there are a lot of service issues, the amount of customer complaints is not reflecting this. This is dependent on training and experience. Although not all complaints are captured at all times, the overall reliability is good. The people within the organization are becoming aware and more capable. The overall attentiveness is also high. In Table 1 the average score is displayed of the capability of the people on the four constructs within service complaints management. Also in Table 1 is the number of interviewees given who support proposition 1 on complaints management, supported by quotes from the interviewees.

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Construct Average score on actual capabilities of people

# of interviewees supporting actual people capabilities

Reliability 3,6 13

‘not all complaints are registered’

Attentiveness 3,8 13

‘the attentiveness has increased in the last years’

Responsiveness 3,5 12

‘in terms of responsiveness there is always someone there to take the call’

Perceptiveness 3,6 13

‘most of the people understand the customer needs’

Table 1: capability of people on complaints management (n=19)

When evaluating the differences between sites or departments, the biggest difference is the lack of visibility of service complaints for the people within the manufacturing department. This is the case for site A and site B. The visibility of the service complaints fades as it cascades down the supply chain. Two interviewees from Manufacturing gave the following response on this:

(A) ‘we are not involved in service complaints, we do not do anything with it.’ (B) ‘we never get complaints from external customers.’

Are the people within the organization capable, when handling service complaints, of creating high customer service quality? The attentiveness and perceptiveness is high within Sales & Marketing, but decreases further in the supply chain. The customer complaints is handled within the Sales & Marketing department, and from there it is pushed towards a responsible

32

department (i.e. Manufacturing) to resolve the complaint. You would expect high involvement from the responsible department. However, as mentioned in quote (A) and (B), Manufacturing is almost entirely not involved in the service complaints process. Within reliability and responsiveness people need to make sure that the capturing of the complaints is in line with the amount of service issues and make the step towards continuous improvement on service complaints by finding the root causes.

5.2.2 Order fulfillment

Within the resource ‘people’ and the key process order fulfillment, 120 fragments have been captured. These fragments (sentence or part of a sentence from an interviewee which reflects a resource combined with one of the constructs of customer service quality) are based on the coding scheme which combines ‘people’ and ‘order fulfillment’ and have a consistent spread amongst the different departments. In general, people are highly capable on order fulfillment.

People have a bit of influence on the reliability on order fulfillment, but not that much. People have the skills to be reliable in what they need to do (i.e. within Manufacturing ensure the flow of material). The influence people have lies in the management of exceptions. The people within the organization are capable of managing the exceptions, but there are opportunities for improvement. The potential within people to innovate needs to increase to make sure structural improvements will be made. Sometimes, when influencing order fulfillment, it is the strength of the people making a decision. According to one interviewee from Sales & Marketing:

(C) ‘the desire for skills is on plan, the current capability is variable (due to a lot of new people). People are not always given the capabilities to do it.’

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Sales & Marketing people have great amount of attentiveness and customer focus. There is a huge drive for the customer. Commitment is high within all departments; however, customer focus is decreasing further in the supply chain. But when there are issues with a customer, people from all departments are willing to help out. One interviewee from Supply Chain Planning made the following comment on attentiveness:

(D)‘I think the attentiveness is there, when there is a customer delivery issue everyone is committed getting the material delivered.’

For the long term, to resolve these issues in order fulfillment, you need to organize in a different way to improve structurally. Customer focus needs to be the driver within all departments. Within Manufacturing the customer is not visible. People within Manufacturing are volume driven instead of customer order driven, because that is what they are being held accountable for. Below is a comment made by an interviewee from Manufacturing.

(E) ‘in our department we do not see the customer. We see only the customer name, but we do not know anything about the consequences of a particular order.’

Responsiveness: as Sales & Marketing communicates with the customers, the people within Sales & Marketing have a huge influence on responsiveness. However, throughout the whole supply chain on order fulfillment the responsiveness is not at the desirable level. There are also differences within the sales sectors. Within Automotive the responsiveness is on a higher level than for the Industry sector. Overall there is room for improvement, because it is not proactive in each of the sectors. When an organization is proactive it means that it is able to inform the customer at all times up front about order fulfillment. When the organization fails in being proactive, this will harm the customer satisfaction because the customer gets confronted with unexpected situations. The ability of being proactive is also dependent on the

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reliability of the internal responsiveness. Sales & Marketing is depending on the information from Supply Chain Planning and Manufacturing. The people within Manufacturing are used to program the installations; communication is not their top priority.

Perceptiveness within order fulfillment starts at the Sales & Marketing department. The people within this department are closest to the customer and therefore most aware of the customer needs. Depending on the sector people are in, the level of maturity in perceptiveness varies. The sales sector needs to translate the customer needs further in the supply chain. And because the maturity level varies, the perceptiveness within the Supply Chain Planning and Manufacturing department varies as well. When people from Sales & Marketing have made the customer requirements clear within the supply chain, the perception is that Supply Chain Planning and Manufacturing do not always act upon these requirements. But in the end there is no doubt on the capability of the people. The people are reliable and have commitment. From the current point of view they do what they are asked to do. Responsiveness and perceptiveness could be better in all areas, but are also cross-functional dependent on each other.

Are the people within the organization capable, when handling order fulfillment, of creating high customer service quality? Overall the people are capable on all constructs, but on all constructs there is also room for improvement. The customer focus needs to increase throughout all departments and the internal responsiveness should improve to get the external responsiveness at the desired level. In Table 2 the average score of the capability of the people is displayed on the four constructs within order fulfillment. Table 2 also displays the number of interviewees given who support proposition 1 on order fulfillment, supported by quotes from the interviewees.

35 Construct Average score on actual

capabilities of people

# of interviewees support actual people capabilities

Reliability 4,1 16

‘we have a big influence on the reliability of the order fulfillment process’

Attentiveness 4,1 15

‘no doubt whatsoever on the commitment of the people’

Responsiveness 3,8 16

‘we could do better in informing proactively’

Perceptiveness 3,9 15

‘The perceptiveness comes in terms of understanding what is required. Once we know what we need to do, we will do it.’

Table 2: capability of people on order fulfillment (n=19)

5.2.3 Order Entry

Within the resource ‘people’ and the key process order entry, 75 fragments have been captured. Within site A the fragments are equally spread over the constructs. The majority of the fragments (sentence or part of a sentence from an interviewee which reflects a resource combined with one of the constructs of customer service quality) for both site A and site B are related to reliability (23 out of 75 fragments) and responsiveness (22 out of 75 fragments). Within order entry I found a split in three parts where people influence the most. These three parts are the forecasting process within pre-order entry, the administrative process of booking the orders correctly and the acknowledgement of the customer order.

Sales & Marketing has a large amount of influence on the order entry process. The administrative process is stated as reliable. Supply Chain Planning and Sales & Marketing

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have an influence on the reliability in the pre-order entry phase: Supply Chain Planning in assuring the allocation to book the order is reliable, and Sales & Marketing in assuring that the forecast of what is going to be booked is reliable. The reliability in the acknowledgement is dependent of the combination of the reliability in the pre-order entry phase and the order entry phase.

The attentiveness is high, as is the customer focus within Sales & Marketing. Within order entry, the people within Supply Chain Planning are able to change production routes. When they do so, they do not take the consequences for the customer into account, as stated in the following comment from an interviewee from Supply Chain Planning:

(F) ‘an order is booked for a certain delivery week; when we change the production route then we do not look at the consequences for the customer’

In terms of Responsiveness, the organization does not act very well on exceptions in order entry. An interviewee of Sales & Marketing stated:

(G) ‘on around 80% of the order entry the responsiveness goes smoothly, but the people within the organization do not respond very well on the other 20%.’

This is due to the fact that a big part of the order book is repetitive, so people are experienced in this. The other 20% are about the special orders, which are coming in less frequently and they take a longer lead time in the order entry process.

Overall the people within Sales & Marketing know what the customer wants when an order is booked. The influence of the people within Sales & Marketing on perceptiveness within order entry is high. The customer requirements are known, the overall perceptiveness is depending on how this is cascaded into the supply chain. Unless there is a good mix of people with

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experience in within Supply Chain Planning and Manufacturing, the perceptiveness is less high compared with the Sales & Marketing department. The experience of the people within Sales & Marketing differs because of a higher attrition rate. Overall the people are capable, but responsiveness and perceptiveness could be better throughout the value chain. In Table 3 the average score is displayed of the capability of the people on the four constructs within order entry. In Table 3 is also the number of interviewees given who support proposition 1 on order entry, supported by quotes from the interviewees.

Construct Average score on actual capabilities of people

# of interviewees support actual people capabilities

Reliability 4,3 13

‘within the administrative process the reliability is high’

Attentiveness 4,2 12

‘the commitment is always high’

Responsiveness 4,0 12

‘within the repeating order book the responsiveness is high’

Perceptiveness 3,9 11

‘sometimes we don’t really know what the customers want’

Table 3: capability of people on order entry (n=19)

People have the skills to be reliable in the administrative process. The acknowledgment towards the customer is reliant on the administrative process and the pre-order entry phase. Mainly in the pre-order entry phase people should be more accurate (i.e. by forecasting the demand) to increase the reliability.

38 5.2.4 Overview proposition 1

Proposition 1: the more the capability that people have in managing order entry, order fulfillment and complaints management the more likely is the organization to achieve high

customer service quality

Construct Key Process Results theoretical Results actual # of interviewees supporting actual results

Reliability Complaints management 13

Order fulfillment 16

Order entry 13

Attentiveness Complaints management 13

Order fulfillment 15

Order entry 12

Responsiveness Complaints management 12

Order fulfillment 16

Order entry 12

Perceptiveness Complaints management 13

Order fulfillment 15

Order entry 11

Table 4: overview results on proposition 1

The actual results are based upon the number of interviewees (out of 19) supporting the proposition, where:

= strongly supported (≥ 13 interviewees); = not strongly supported (7 ≤ interviewees < 13); =