A COMPREHENSIVE STUDY OF THE DEVELOPMENT OF CHANGE IN SUPPLY CHAIN MANAGEMENT SYSTEM FOR MAXIMUM CUSTOMER SATISFACTION

CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF THE STUDY

In the modern times of today, globalization, technological advancement, and customers’ increasing demands continuously raise expectations of the performers on the market (Fawcett & Magnan, 2012).  This progress has led to an increase in the felt competition by businesses competing with their products (Simchi-Levi, Kaminsky & Simchi-Levi, 2018; Fawcett & Magnan, 2012).  Today, providing the customer with a defect-free product faster and more reliably than the competition is no more perceived as a competitive advantage. Now it is a necessity to even remain in the game (Mentzer, DeWitt, Min, Smith, & Zacharia, 2010). The situation has forced businesses to direct their money and attention toward their supply chains (Simchi-Levi, Kaminsky & Simchi-Levi, 2018).

Businesses are experiencing pressures to improve the efficiency and effectiveness of the supply chain, seeking to deliver the best value to the ultimate consumer whilst remaining competitive (Ritchie & Brindley, 2010). The competitive edge of a company over its rivals depends heavily on its ability to cope with multiple challenges to rein in cost, enhance product quality and offer superior customer service (Lei, 2017). A very compelling reason for this is attributed to the fact that the competition is now being waged between or a cross supply chains, and not confined to only between companies anymore (Seth et al., 2016).

The changing business conditions of the 21st century has led to companies facing issues ranging from globalization, economic uncertainty to new technologies and increasing consumer demands. In the organizations, manufacturers design and build globally their supply chains become increasingly complex with challenges that often stand in the way of profitability and higher shareholder value such as long order-to delivery lead times, unreliable production schedules, and excess inventory across the supply chain, lengthy demand planning cycles and lack of visibility of suppliers. The effect of the global economic meltdown increased the pressure on organizations executives to make right decisions about their supply chain for better performance. In a highly challenging and competitive environment, where supply chain is a popular tool for improving the organizational competitiveness, an efficient and effective supply chain strategy is a must for manufacturers and their component manufacturers so as to meet changing consumer demands.

Customers are important stakeholders in organizations and their satisfaction is a priority to management. Customer satisfaction has been a subject of great interest to organizations and researchers alike. In recent years, organizations are obliged to render more services in addition to their offers. The quality of service has become an aspect of customer satisfaction. It has been proven by some researchers that service quality is related to customer satisfaction (Jenet, 2011). Customer satisfaction attempts to match the level of expectations and perception of customers. However, it is essential to note that the degree of expectation of any customers will depend on their own behaviors’ (Walidin, 2017; Waskita, 2017). Meeting a customer’s pre-purchase expectations is an important aspect of customer satisfaction that has been described in the marketing and services operations management literature. Supply chain relationships play an important role in achieving the firm’s goals (Hendriks, 2017).

Supply Chain Management (SCM) is the process of planning, implementing and controlling the operations of the supply chain with the purpose to satisfy customer requirements as efficiently as possible (Chopra et al., 2012). SCM is the coordination of materials, information and financial flows between and among all participating enterprises. Many organizations have started recognizing SCM as an important key for building sustainable competitive edge for their products and services in global market with crowded customers (Jones, 2018). SCM practices includes the set of activities undertaken by an organization to promote effective management of its supply chain (Koh et al., 2017). Li et al., (2016), identify five aspects of SCM practice through factor analysis: strategic supplier partnership, postponement, customer relationship, level of Information sharing and quality of information sharing.

Customer satisfaction is the key to business growth and continued existence (Chow, 2014; Sun and Kim, 2013). It has been identified as the key indicator that differentiates between high or successful business performance and a low or unsuccessful business performance within the business environment presently (Sharifl et al., 2013). In other words, when a customer is satisfied, there is a strong possibility that the customer might become loyal, which results in the improvement of organisational performance (Terpstra and Verbeeten, 2014). A chain of customers is established through word of mouth as a result of customer satisfaction derived from the product or service supplied by a particular organisation (Subramanian et al., 2014). Organizations therefore face the challenge of adopting appropriate strategies necessary to satisfy their demanding customers.

One major problem is the relative lack of empirical evidence supporting the benefits attributed to supply chain management. Likewise, most of the research related to strategic relationships is dynamic in nature. It describes primarily how two companies can improve their relationships, but it seldom includes an actual supply chain. Similarly, most of the research concerning supply networks is operational nature and have been based on case examples of focal companies such as Benetton, Toyota and Nissan (Stock et al., 2010). Lamming et al., (2010), pointed out that a problem is that these studies concentrated on a particular industry, typically the automotive industry. Thus, managers in other industries lack theoretical foundation for managing their particular businesses since networks vary not only between industries but along range of other aspects.

With the increasing use of information technology, processes changed from intra- to cross-company operations (Chen, Yang, & Li, 2017). Due to the increase of knowledge-intensive activities in many industries not single companies compete against each other anymore, but rather whole supply chains (Javanmardi et al., 2012). More intense integration and collaboration that comes with the shift from traditional market-based relations to strategic relations are essential in a rapidly changing, global environment and can create differential advantage and profitability (Leng & Zailani, 2012; Javanmardi et al., 2012; Fawcett et al., 2011). Companies have to make complex decisions concerning the importance of information technology on supply chain performance. 

 Todays, management identified the customer satisfaction as the main item in business and indicated that the company’s success depends on improving management relationships. The current business environment is very different from the past and the competition has a special role (Gilaninia & et al,2011).New forms of structural reforms, competitive and exchange process causes communication paradigm for the long-term relationships between buyers and suppliers (Seyedi, Moosavi, Heidari, 2019). Activities such as supply and demand planning, material preparation, production and product planning, product service, maintenance and inventory control, distribution, delivery, customer service which used to be performed by company, now it has be done by the supply chain. A key issue in the supply chain management is to control and coordinate all these activities. Supply chain management is a phenomenon that provides the fast and reliable service with high quality and lowest cost to customers (Maboodi, Javanshir, Rashidi, Valipour, 2010). In the present competitive market, evolution and rapid changes has compelled the organizations to overcome the competitors by taking more attention on systems that influence the progress of organization activities (Shekari, Akhondi, Fatollahi, Sayadmanesh, 2016). Therefore, new approaches and attitudes about supply chain management have developed. Therefore the study of development of change supply chain management system for maximum customer satisfaction is worth of study.

1.2 STATEMENT OF THE PROBLEM

The earlier system of establishing a business once and then reaping fruits of that business for years and years peacefully without being bothered by any change in the external business environment no more exits. Today the ever changing business environment is resulting in an ever increasing need for making changes in your internal business system to counter the changes in external environment. Fast changing market environments and fluctuating customer demands require the efficient operation of logistical processes [Kovács, Kot 2016]. Because a lot of foundations and administrative concepts changed in the last decade, where the shape of the relationship with suppliers and customers has changed, towards more cooperation and coordination for the formation of the supply chain, and achieve goals such as reducing cost, the main question was formulated: What is the effect of successful supply chain management in improving customer service?

According to Lysons and Farrington (2016), supply chain practices encompasses management of complicated supply chains in their entirety with the objectives of synchronizing all value-adding production and distribution activities and the elimination of such activities that do not add value. It is different from SCM in a sense that the latter deals with controlling various elements in the supply chain. Today’s, to develop and survival in economic competition, Companies and organizations should be given special importance to customer orientation and build strong relationship with the buyer of goods (Abbasi, Torkamani, 2010). The customer is central to all marketing activities (Gilaninia&Et Al, 2011).Senior managers know well that their success in achieving the overall goals of the organizations is customer satisfaction (Seyedi, Moosavi, Heidari, 2019). In the age of global competition, the various products should be available according to customer’s request. Customer demand for high quality and fast services has increased pressure on companies, so that the companies cannot manage all things alone (Heidari Gharehbagh, 2019). Organizations have used different ways to review and revise their strategies and found the satisfaction of customer as the key of survives. For effective supply chain management, supplier and customer interact together in a coordinated way and using sharing and full information communication. This rapid flow of information among the chain elements enables them to create an effective supply chain (Shekari, Akhoondi, Fathollahi, Sayadmanesh, 2016)

1.3 AIMS OF THE STUDY

The major purpose of this study is to examine the development of change in supply chain management for maximum customer satisfaction. Other general objectives of the study are:

1. To examine the effect of supply chain management practices on customer satisfaction.
2. To examine the impact of successful supply chain technology implementation on customer satisfaction.
3. To examine how development of change in supply chain management affect customer satisfaction
4. To examine the relationship between supply chain management and customer satisfaction
5. To examine which supply chain management practice contribute the most to customer satisfaction
6. To recommend ways of enhancing consumers satisfaction through development of change in supply chain management.

1.4 RESEARCH QUESTIONS

1. What is the effect of supply chain management practices on customer satisfaction?
2. What is the impact of successful supply chain technology implementation on customer satisfaction?
3. How does development of change in supply chain management affect customer satisfaction?
4. What is the relationship between supply chain management and customer satisfaction?
5. Which supply chain management practice contributes the most to customer satisfaction?
6. What are the ways of enhancing consumer’s satisfaction through development of change in supply chain management?

1.5 RESEARCH HYPOTHESES

Hypothesis 1

H0: Development of change in supply chain management does not affect customer satisfaction

H1: Development of change in supply chain management significantly affects customer satisfaction

Hypothesis 2

H0: There is no relationship between supply chain management and customer satisfaction.

H1: There is a significant relationship between supply chain management and customer satisfaction.

1.6 SIGNIFICANCE OF THE STUDY

Despite the importance of supply chain management and its role in business development in enabling companies to operate effectively, but it has not received the attention of researchers, especially as it has become one of the effective tools to keep up with the rapid and modern developments. The importance of this study is based on extrapolation and diagnosis of the current situation of supply chain management, the analysis and assessment of its responsiveness to the requirements of the surrounding environment, and raising the efficiency of its management and its achievement of different purposes, primarily in improving sales management and customer service in the company. Therefore, this study is gaining importance through the following points:

1. It supports studies, theoretical and applied research in the field of supply chain management on the company’s performance to improve sales management and customer service, offering these companies the right notes and evaluation, which help them to perform their important role in achieving comprehensive development.

2. This study deals with a commercial- industrial sector, and thus comes as a contribution to the definition of the importance of this sector as an essential and important factor.

3. Provides information and data about the reality of supply chain management and its impact on improving sales and customer service.

4. Helps the company’s director and staff in the procurement, storage and marketing of the company, to get to know the importance of supply chain management on improving performance in sales management and customer service.

1.7 SCOPE OF THE STUDY 

The study is based on a comprehensive study of the development of change in supply chain management for maximum customer satisfaction.

1.8 LIMITATION OF STUDY

Financial constraint– Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).

Time constraint– The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.

1.9 DEFINITION OF TERMS

Management: The organization and coordination of the activities of a business in order to achieve defined objectives. Management is often included as a factor of production along with machines, materials, and money.

Supply Chain:  Supply chain is a system of organizations, people, activities, information, and resources involved in supplying a product or service to a consumer.

Supply Chain Management: Supply chain management, the management of the flow of goods and services, involves the movement and storage of raw materials, of work-in-process inventory, and of finished goods as well as end to end order fulfilment from point of origin to point of consumption.

Customer: A customer is the recipient of a good, service, product or an idea – obtained from a seller, vendor, or supplier via a financial transaction or exchange for money or some other valuable consideration.

Customer Satisfaction: Customer satisfaction is defined as a measurement that determines how happy customers are with a company’s products, services, and capabilities. Customer satisfaction information, including surveys and ratings, can help a company determine how to best improve or changes its products and services. Customer satisfaction is a term frequently used in marketing. It is a measure of how products and services supplied by a company meet or surpass customer expectation.

Development: Development is a process that creates growth, progress, positive change or the addition of physical, economic, environmental, social and demographic components.

Change: Change is a general transition of something or phase to another state condition