ABSTRACT
This study aims to first analyze the customer service and quality levels of intangible service nature through the operation of DHL Express of DHL International Hong Kong Ltd. (DHL) and address how the company overcomes the problems in industrial section of express industry. The quality level will be analyzed through Service Quality Determinant and Gaps Model. The findings indicated DHL performs more than satisfactory in industrial express service. However, the company also needs to conduct more qualitative research and expand its offer in service differentiation. For long-term, the company should emphasize its “differentiation” image, maintain its high quality service and keep high employee morale.
Keywords: Express industry, Services marketing, Services quality, Customer satisfaction
INTRODUCTION
Customer service has been an important instrument for businesses to reach out to their customers. In turn, this feature allowed business organizations to be adaptable to customers’ specific needs and preferences. Moreover, customer loyalty is also achieved through quality and efficient customer services. At present, businesses are becoming more focused on becoming customer-oriented. This is mainly attributable to the many challenges the business industry is currently facing, particularly on the growing competition among similar organizations.
But the reliance to the internal resources of the organization will not do if environmental considerations of the company are not likewise considered. These include the significant market characteristics that directly and indirectly influence and dictate the strategic business implementation and sound decision-making from the options available. The forecast of subsequent political, economic, and social implications that change will result to also needs to be identified and enumerated to ensure the success and development of the organization as well as the welfare of the general public.
DHL has managed to enter China and Hong Kong’s logistics market through the only means available to them at the time, and that was by teaming up with a Chinese company called Sinotran. DHL’s entry took place in 1986, a time when Chinese regulations on foreign businesses were very strict and the only way to join the Chinese market was to enter a joint venture with a local company. But DHL took the risk and chose Sinotran because of Sinotran’s expertise in Chinese foreign trade and export industry ( 2004). After gaining a solid foothold in the Chinese market, DHL-Sinotrans then eyed expansion. Branches of this joint company where established in other Chinese cities. By 2004, they had built a network of DHL-Sinotrans all over China in only 3 years time since they started (2004).
DHL-Sinotrans is not the only logistics company in China. The American FedEx and UPS are also presenting this existing company good competition, among other companies such as TNT-Skypack Sinotran and the local China Couriers Service Company. FedEx entered China in 1984, two years before DHL, while UPS joined in 1988. Like DHL, they too established partnerships with existing local companies; FedEx with Da Tian Air Services Limited, and UPS with Sinotrans. DHL stayed on top of the competition by an expert combination of business strategies, product innovations and well-thought out company expansion ( 2004).
With annual revenues of nearly euro22 billion in 2003, DHL is the global market leader of the international express and logistics industry, specialising in providing innovative and customized solutions from a single source. DHL offers expertise in express, air and ocean freight, overland transport and logistics solutions, combined with worldwide coverage and an in-depth understanding of local markets. DHL’s international network links more than 220 countries and territories worldwide. Over 160,000 employees are dedicated to providing fast and reliable services that exceed customers’ expectations. DHL’s new Central Asia hub operated from Hong Kong International Airport (HKIA) at Chek Lap Kok beginning on March of 2000. DHL International also formed a partnership with Cathay Pacific Airways (2004). Among the major competitors of DHL are Fedex, UPS, TNT as well as national post carriers like the US Postal Service and Royal Mail.
The success of every DHL delivery is highly dictated by the company’s complex process of supplementary service chains. This includes taking the order, taking and picking, documentation, monitoring of the supplies and deliveries for assurance purposes and control, billing, packaging, transportation and delivery, and problem resolution to address the concerns and specifications of partners and customers. Short-comings during this process along with other possible failures lead to customer irritations and complaints since the company promises on-time delivery. Other failures are normally sequential in nature as directed by the delivery process adapted by the company which comprise abandoned calls and missed pickups; over-goods and late aircraft leading to late deliveries and subsequent traces and invoice adjustment requests. There are also instances of damaged packages as well as missing documentation (1997).
This study is concentrated in DHL’s industrial express service in Hong Kong, as Hong Kong is one of the world’s busiest ports (2005) and DHL the global market leader of the international express and logistics industry, with annual revenues of over EUR 24 billion in 2004 ( 2005). Industries that DHL is targeting include manufacturing, automotive, textile, electronics, pharmaceutical, aerospace and financial services ( 2005). The specialized requirements of these industries are complicated. Therefore, DHL has tailor-made many different types of services to fulfill the unique shipping requirements of different industrial customers.
SERVICE CHARACTERISTICS
Most companies find it impossible to create any kind of sustainable competitive advantage based on product alone. It is common knowledge that every one of the successful companies sought and found a precise understanding of how it could create a customer-centered competitive advantage. (1996) emphasized the idea to take advantage of the competitive situation not just by being better in how that product gets sold, serviced, and marketed at the customer interface. It requires that companies create breakthroughs in how they interact with customers, and design a way of interacting that makes an indelible impression on customers, one that so utterly distinguishes them from others that it becomes a brand in itself.
Every year, DHL delivers 100 million shipments which includes transporting documents, parcels and weight shipments, as well as tailored products which resulted to a networks of planes, trucks and facilities monitored and controlled by the company’s IT system offering the customers lo9gistic solutions to meet demanding distribution specifications supported by state-of-the-art technology (1997). Customer service has been an important instrument for businesses to reach out to customers. In turn, this feature allowed business organizations to be adaptable to customers’ specific needs and preferences. Moreover, customer loyalty is also achieved through quality and efficient customer services. At present, businesses are becoming more focused on being customer-oriented, considering the growing competition among businesses. In order to respond to the challenges of the business world, companies are allocating considerable resources on how to improve their customer services.
As a member of the express industry, DHL is confronted with challenges that address speed and a reliable delivery system of the company as business operations essentials to compete competitively in today’s global trade business highlighting the value and importance of time. Accountability in terms of service deliveries define the success and competitive advantage of companies in the express industry in which the leading trading firms strategically manage time in their supply chains (1996). In this light, dealing effectively with customs and putting pressure to encourage rational and efficient customs operations is an integral part of managerial skills of time management in major trading firms as problems of inefficiencies and irregularities in functioning of customs in different territories significantly influences the trading environment where just-in-time supplies, electronic trading and increased internationalization govern the current trend in the express industry (2000). DHL despite it lead among its competitors are likewise confronted with such delivery and services issues.
SERVICE QUALITY ASSESSMENT
Customer service has been an important instrument for businesses to reach out to customers. In turn, this feature allowed business organizations to be adaptable to customers’ specific needs and preferences. Moreover, customer loyalty is also achieved through quality and efficient customer services. At present, businesses are becoming more focused on being customer-oriented, considering the growing competition among businesses. In order to respond to the challenges of the business world, companies are allocating considerable resources on how to improve their customer services.
The success of integrating quality in a company’s customer services depends heavily on the management. While some company management send their employees to training, some managerial factors would have to be used as well. As discussed by (1990), the manner to which management train, motivate and recognized their employees results to a significant effect on the quality of customer service they deliver. The level of commitment the management provides for instance has a direct impact to the quality of customer service the company provides. According to (2003), it is a common mistake for most management to think that they are highly committed in servicing the customers with quality when in fact their commitment is only based on internal and technical viewpoints.
According to (1997), in a participative organizational management, the empowerment of employees is a typical priority. This plays a significant role in speeding up the company’s utilization of personnel for optimal effectiveness. Within an organization, an important behavior is the inclusion of constant improvement, which enables it to apply innovations and strategies that are more appropriate. Training for employees and increasing their responsibilities are some of the important organizational behaviors that are applicable for every employee. Aside from enhancing the skills, these increase the employees’ sense of pride and self-worth. All of these organizational behaviors are vital in making work teams perform more effectively.
The value that the management puts on employee empowerment results to important customer service outcomes. For example, through proper employee training, employees become more efficient in handling customer concerns by providing effective solutions. Currently, customers are more knowledgeable, selective and expectant. Thus, the management must be committed in enhancing their employees to become good providers of customer service ( 2005). All these are taken into account by the DHL management which resulted to the high service quality as initiated by the members of the organization particularly the staff and employees who personally attend to the requirements and needs of the customers. This made the company reliable through strategic and efficient delivery services based on highly credited customer services by well-trained staff and employees.
SERVICE QUALITY MODEL
The importance of quality in customer service has been recognized by companies worldwide. Several major companies have applied prioritized quality in customer services, resulting to positive business outcome. Customer satisfaction, loyalty, employee satisfaction and profit growth are some of the main advantages of this business practice. In order to cope with the present business challenges, several businesses have implemented different strategies that will enhance their respective customer services. Consumer studies, trainings and application of information technology are some examples of the most commonly used strategies for customer services. However, it is said that these strategies are not enough for quality integration. Values, skills and most importantly, involvement of the members of the entire organization must be part of the quality customer service framework.
According to (1982) is the output of the service delivery system among pure service systems which refers to customers’ appraisals of the service core, the provider, or the entire service organization ( 2002). Normally, it is assumed that service quality leads to customer satisfaction thereby resulting to loyalty to a particular service delivery provider (1994; 1990, 1989). The SERVQUAL instrument developed by (1988) provided means of measuring the perceived quality of service by analyzing the gaps between the expectations of the customers and the assessment of the finality of the service accorded using five dimensions. These dimensions include the variables of (1) tangibles, (2) reliability, (3) responsiveness, (4) assurance, and (5) empathy.
According to (2002) tangibles are the physical facilities, equipment, and appearance of the employees providing the services. Reliability is the ability to perform the specific service requested by the customers with the promise of being dependable and accurate in delivering the services. Responsiveness entails the willingness to assist the clients immediately and as they deem demand. Assurance is the ability of the people from the service provider company to imply their knowledge and courtesy of helping the customers in order to gain trust and confidence in providing the requested services while empathy is the attention accorded by the staff on the concerns and situation of the clients in need of their services.
In the case of DHL, the company makes it a point to minimize the gap between the expectations of the customers as well as partners and the output of their services. This is evident in the highly technological and dependable networks that the company maintains in order to meet the demands of the clients in delivering the requested services. For this, the company has long been established as the leading service delivery provider in the world in terms of efficiency and accountability. The advances in technology greatly contributed to the fast and on-time delivery of documents and parcels entrusted by clients to the company leading to high customer loyalty to DHL not just among individual persons availing the service but also of big firms and corporations that DHL assists. The networks of planes, trucks and other efficient delivery facilities utilized by the company made possible the success of the company in gaining a considerable market share in the express industry.
Moreover, the tangible assets of DHL made possible the reliable service characterization of the company through strategic operations management and supply chin as guided by the organization’s goal of meeting the requirements of the clients. The high quality customer service provided by the company to clients characterized and illustrates the responsiveness of the organization to address the needs of the customers. As such, DHL was able to satisfy and meet the expectations of the people who avail their services as the staff try to minimize failures in delivering the shipments. The responsiveness of the customer services facilities of the company resulted to increased assurance among clients regarding the safe delivery of the shipments. The ability of the staff to empathize with the concerns and considerations of the customers lead to the success of DHL as the leading service delivery organization in the assisting the complex demands and specifications of international market players and common citizens alike.
CONCLUSION AND RECOMMENDATION
The company should among others, consider the viewpoints of it customers, including their needs, interests and preferences. Rather than concentrating on personal objectives and requirements, the company should exert effort in studying their customers. By doing so, their level of commitment towards service quality significantly increases. The management however, should not only be committed to its external customers. The internal customers, or the workforce, also need committed support from the company management. Hence, they must be empowered.
In order to improve service quality, it is necessary to contact employees regularly and assess their service experiences. Like the external customer, an internal customer too considers categories of service attributes, such as reliability and responsiveness, in judging the quality of the internal service. With the knowledge of the internal service quality dimensions, the service organizations can then judge how well the organization or employees performed on each dimension and managers could identify the weakness in order to make improvements.
So far, DHL’s business strategies in China and Hong Kong are working well. They cater to their customer’s needs, always keeping in mind the need for speedy, efficient and safe delivery while striving to provide simple documentation needs and cheaper costs. The findings indicated DHL performs more than satisfactory in industrial express service. However, the company also needs to conduct more qualitative research and expand its offer in service differentiation. For long-term, the company should emphasize its “differentiation” image, maintain its high quality service and keep high employee morale. It is clear that DHL will continue to improve their strategies, especially in the presence of their strong competitors. So far, they manage to meet their customer’s needs very well.
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