Supply Chain Management and Customer Loyalty

In the modern business world, supply chain management is a significant aspect of customer loyalty. The logistic department is the one that coordinates all the products that the customer need. They are also involved in the delivery of the pre-ordered good to the customers. The reason for this research was to provide a framework for the evaluation of the actions of the supply chain managers that affects the loyalty of customers. There was the identification of analysis of objectives that the project purposed to answer. After the review of the critical literature, it is right to say that ineffective supply chain management hurts customer’s loyalty to the organization.

Table of Contents

1. Introduction. 4

1.1. Purpose. 4

1.2. Background and Significance. 4

1.3. Elements That Result To the Management Problem.. 4

1.4. Management Decision. 4

1.5. Why It Matters. 4

1.6. Research Questions and Objectives. 5

1.7 Research Boundaries. 5

1.8. Report Outline. 5

2. Literature Review.. 6

2.1 Introduction. 6

2.2 Supply Chain Management and Its Influence. 6

2.3. Ways of Fulfilling Customer Orders. 8

2.4. Implications. 8

3. Methodology. 8

3.1. Introduction. 8

3.2. Sources of Data. 8

3.3. Justification of the Data Sources. 11

3.4. The Techniques Used In Detail 12

4. Result analysis. 12

References. 13

Appendices.....................................................................................................................................15

Customer Loyalty

1. Introduction

1.1. Purpose

This progress report explores the effect on customer loyalty as that result of ineffective supply chain management in Woolworths. It examines how the retail store can improve its customer loyalty to the firm through proper supply chain management.

1.2. Background and Significance

Woolworths is a well-established retail store that deals in quality products. For the past several years, the store has set very high standards for the quality of goods and services that are offered to the customers (Alshenqeeti 2014, p.39). Recently, poor management of the store’s supply chain operations has to lead to a lot of customers losing their loyalty to the store.

1.3. Elements That Result To the Management Problem

Supply chain involves all the necessary activities that a product or service goes through before it can reach the final customer for consumption. It starts with the purchase of raw material, production, processing, marketing and also delivery (Alshenqeeti 2014, p.39). Woolworths is facing some hitches in some of these activities. The main areas are delivery of large quantities at the dock, the tracking system of the orders is not capable and another reason is that there is no warehouse for the storage of bulk products.

1.4. Management Decision

The management should come up with an appropriate method that will allow delivery of products in bulk; they also should determine if the delay of delivery is an internal or an external problem (Goyal 2011). Supply chain managers need to form a committee that will inquire why the tracking system is not functioning as required leading to the loss of order in transit. The supply department should also build more warehouses for storage.

1.5. Why It Matters

Ineffective supply chain management is affecting all operations of Woolworths, so it is very critical to find out the primary reasons behind the customer disloyalty as a result of the supply chain department. Customer loyalty is a significant issue for the organization’s growth (Goyal 2011). My statement is that ineffective supply chain management dramatically reduces the dedication of the customer, especially lack of delivery on time and loss of already paid for inventory due to the inefficient tracking system.

1.6. Research Questions and Objectives

To meet the purpose of the project, the following research question needs to be answered: “does ineffective inventory management in a firm affect the loyalty of a customer?”

The following research objectives will guide me in the development of appropriate response, they include:

RO1: To identify problems regarding control of inventory

RO2: To acknowledge the main issue which is lowering the loyalty of customers?

RO3: To determine the performance that results from weak supply chain

RO4: To come up with ways of filling customer orders

1.7 Research Boundaries

The research will be mainly on the effects of ineffective supply chain management of reduced customer loyalty. There are some factors in the organization that lead to reduced customer loyalty, but they will not be considered in this research. The research is also majorly using secondary data, so there are no boundary limits.

1.8. Report Outline

Following the introduction, the second section will go through the available literature on reduced customer loyalty as a result of weak supply chain management activities. The third section will handle methodology that was used to gather the relevant data to talk about the research objectives, the fourth section will analyse the results of the project, and the final part will be for conclusions and recommendations according to the findings from the research.

2. Literature Review

2.1 Introduction

This is the second section of the project. It reviews the relevant literature on the following topics: supply chain management and its influence [section 2.2], giving an insight into the history of supply chain management, the components of supply chain and its role. Reduction of customer loyalty as a result of poor supply chain management [section 2.3] it is then followed by ways of filling customer orders [section 2.4]. The last section [section 2.5] highlights the gaps left by the literature review, and it also justifies the study.

2.2 Supply Chain Management and Its Influence

Central of improving customer loyalty is to understand the concept of supply chain management; it is also essential to understand who the target market is to tailor the supply chain process according to the needs and preferences of the customer (Keith 2012, p. 47). Supply chain management is one of the vital elements in an organization. Woolworth’s management needs to understand the underlying concepts behind supply chain management to use it to improve the customer loyalty. Many managers do think that the marketing department is the only department tasked with maintaining the dedication of the clients, but this is not the case, all the organs of the organization, including the supply chain has a role to play in the case (Goyal 2011). Over the years, the supply chain has been evolving, and all these were to maintain the loyalty of the customers. In the early 50s companies were focused on how to introduce mechanization in their production process and to take advantage of space to meet customers demand in time (Keith 2012, p. 48). According to Porter’s five forces model, many companies feared the risk of entry by potential competitors, so they had to adjust their supply chain methods that will produce products that customers want to maintain their loyalty.

Given the importance of supply chain to customer loyalty, Woolworths has to employ the second model of Porter’s model, which is the bargaining power of the customers (Mafini 2016, p 256). If the customer has the upper hand in bargaining, the firm should consider using the supply chain method that the client needs, having a rigid process of supply will make the customer lose loyalty to the organization (Mafini 2016, p 258). This confirms my claim that indeed poor supply chain practices like having a strict method of delivery makes the clients lose loyalty in a firm.

Addressing the choices of a customer is one of the significant influences of the customer loyalty to the business. When a customer orders a product to be delivered in bulk, he or she may need it only in volume (Mack 2012). So when there is a problem, and only small batches can be given, the delivered amount may not be of help to the client hence the loss of loyalty. As Porter put it, there may be rivalry among the existing firms in the industry (Salazar 2012, 16). This is because the customers may shift to the rivals who have better supply chain management.

2.3 Reduction of Customer Loyalty As A Result Of Unfortunate Supply Chain

Chain management has a significant role in maintaining and reducing client’s commitment. For the organization to keep their customer loyalty, they need to rethink their strategies of supply (Tayur, Ganeshan, and Magazine 2012). They need to deliver the right quantity of the products wherever and whenever required by the clients. Shortage of the products in stores – due to the lack of raw materials- is never an excuse to give customers; the retail chain needs to allocate a lot of space for the raw materials (Goyal 2011). This will guarantee the production department availability of products whenever they want and produce enough for the customers (Tayur, Ganeshan, and Magazine2012). An agile supply chain should be able to detect potentials hiccups and correct before they affect the operations of the business, like for example, the supply chain department of Woolworths should have been able to identify than lack of enough storage for bulk supply was costing them regarding customer loyalty (Tayur, Ganeshan, and Magazine2012). This would have been solved by applying Porter’s model of supplier’s bargaining power; if they had many suppliers to choose from, they could order the supplier to deliver the products just in time to cover the extra demand. Shortage of products leads to customers missing on their utility, and this makes them shift their loyalty elsewhere in the industry.

2.3. Ways of Fulfilling Customer Orders

Understanding what the customer wants is a vice that supply chain department must realize to maintain loyalty, it is simple, consider what the client ordered and did not deliver less quantity (Mack 2012). Failing to provide what is needed due to lousy inventory management or misquoting an order may result in loss of loyalty. Reverse logistics also play a significant role in meeting customer requirements (Ritchie, Lewis, Nicholls, and Ormston2013). The feedback given by customers through reverse supply chain helps the firm to have an idea of what the customer’s want. Lack of proper backward logistics leaves the company in the dark hence disloyalty from the customers.

2.4. Implications

It looks that a lot of research has been done on impacts of ineffective supply chain and how it influences the loyalty of customers (Alshenqeeti 2014, p.39). It is critical to identify which activities in the supply chain department that make the reliability of clients reduce and get rid of them, this research is beneficial in determining such like factors.

3. Methodology

3.1. Introduction

To enormously understand the relevant data required by the research objectives, both the quantitative and the qualitative data will be collected. This section will also justify the source of all the data used and on top of that, give a detailed report of the techniques used in completing the project (Janvier-James2012).

3.2. Sources of Data

Table 1 below highlights all the sources of data and also gives an insight into the critical gaps the research is trying to fulfil.

Research

objectives

Secondary data collection(techniques)

Primary data collection(techniques)

Data analysis method

RO1: To identify problems regarding control of inventory

Analysis of the company data available

Surveys

– employees of Woolworths answered simple survey questions about supply chain department

Interviews-

this is the one to one talking within the customers to with the aim of getting their feedback.

Qualitative method of data analysis

RO2: To acknowledge main issue which are lowering the loyalty of customers?

Analysis of government data available

Surveys- questions were asked from the respondents having the relevant information. In this case, supply chain Managers were surveyed

Descriptive method of analysing data

RO3: To determine the performance that result from poor supply chain

journals

Opinion poll- standard questions were drafted and relevant respondents given to answer. They included customers and employees of the firm

Qualitative method of data analysis

RO4: To come up with ways of filling customer orders

Articles and books

Customer interviews.- customers were interviewed on the best way for the firm to fill their orders

Qualitative

Table 1: sources of data

3.3. Justification of the Data Sources

Primary Data

Observation will be conducted to see how the activities of the supply chain departments are negatively affecting customers. This will help in addressing the research objectives (Goyal 2011). Customers that are located in far places will be sent questionnaires through their emails to fill and mail it back. Coordinated interviews with the customers will also be conducted to get their feedback at a personal level.

Secondary Data

A lot of books and journals will be reviewed to understand why ineffective supply chain methods lead to reduced customer loyalty. Three secondary practitioner sources of data will also be incorporated in the research. All the listed secondary data will be examined for information why ineffective chain management methods result in reduced customer loyalty (Yap and Tan 2012).

3.4. The Techniques Used In Detail

As a rule of thumb, the opinion poll questions will be standardized, and all the respondents will be given the same issues without bias. All of them will be given a chance to understand the problems, any respondent that will not be able to comprehend what the server wants; he or she will be assigned a person to help her or him go through the questions (Goyal 2011). All the staff in the firm will be trained on how to administer oral interviews.

4. Result Analysis

The analysis will major mostly in responding to the objectives of the research and other components. All the qualitative information will be organized in tables. Descriptive data will be analysed and summaries made. Means of the people that feel that the supply chain of the organization reduces their loyalty will be calculated.

References

Alshenqeeti, H., 2014. Interviewing as a data collection method: A critical review. English Linguistics Research, 3(1), p.39.

Goyal, P., 2011. • Issues in Supply Chain Management. International Journal of Mathematical Archive ISSN 2229-5046 [A UGC Approved Journal], 2(11).

Janvier-James, A.M., 2012. A new introduction to supply chains and supply chain management: Definitions and theories perspective. International Business Research, 5(1), p.194.

Keith, S., 2012.Coles, Woolworths and the local. Locale: The Australasian-Pacific Journal of Regional Food Studies, 2, pp.47-81.

Mack, M., 2012.The supply chain evolution [Online].The supply chain evolution. Available at: https://www.supermarket.co.za/SR_Downloads/S&R%20April%202012%20Supply%20chain.pdf. [Accessed on 4 April 2018].

Mafini, C., 2016. Barriers to public supply chain management strategy implementation: an exploratory diagnosis. Problems and Perspectives in Management, 14(3), pp.256-265.

Public Sector Supply chain management review.2015 [Online].Public Sector Supply chain management review. Available at: http://www.treasury.gov.za/publications/other/SCMR%20REPORT%202015.pdf. [Accessed on 4 April 2018].

Ritchie, J., Lewis, J., Nicholls, C.M. and Ormston, R. eds., 2013. Qualitative research practice: A guide for social science students and researchers. Sage.

Salazar, R.M., 2012. The effect of supply chain management processes on competitive advantage and organizational performance (No. Afit-Lscm-Ens-12-16). Air Force Inst Of Tech Wright-Patterson Afb Oh Graduate School Of Engineering And Management.

Tayur, S., Ganeshan, R. and Magazine, M. eds., 2012. Quantitative models for supply chain management (Vol. 17). Springer Science & Business Media.

Yap, L.L. and Tan, C.L., 2012. The effect of service supply chain management practices on the public health care organizational performance. International Journal of Business and Social Science, 3(16).

APPENDICES

Qualitative data analysis: table one male

Customer Behavior Attitudes

100%

80%

60%

40%

30%

29% and below

likes for delayed delivery

Dislikes for delayed delivery

Time duration for regarding delivery as delayed

Qualitative data analysis: table two female

Customer Behavior Attitudes

100%

80%

60%

40%

30%

29% and below

likes for delayed delivery

Dislikes for delayed delivery

Time duration for regarding delivery as delayed

Quantitative table analysis example

Learning of the supply chain management problem: frequencies

How did you learn of ineffective supply chain management in Woolworths

volume

male

female

Through your own experience

Through the experience of your family member

Through the experience of a friend

Percentages %

How did you learn of ineffective supply chain management in Woolworths

volume

male

female

Through your own experience

Through the experience of your family member

Through the experience of a friend

Survey questions for the employees

1. Your department in Woolworths?

I. Finance

II. Human resource

III. Supply chain management

IV. Accounting

V. Others (mention which department)

1. For how long have you worked in Woolworths?

Less than 1 year

2- 5 years

6-10 years

Others (mention how long)

2. Overall, how would you rate the efficiency of the supply chain department?

Poor

Average

Above average

Very good

3. Do you think the current supply chain managers are doing their job in the right manner?

Yes

No

Survey questions for customers

1. What is your age?

18- 25

26-35

36-50

50 and above

2. What is your gender?

Male

Female

3. For how long have you been a customer of the firm

Less than 1 year 2-5 years

6-10 years 11-20 years

More than 20 years

4. How would rate the supply chain management of the firm

One of the best

Above average

Below average

One of the worst

Customer interview questions

I. Have you ever ordered anything from Woolworths?

II. Did you order in bulk or small quantity?

III. How was the delivery done?

IV. Did the delivery delay?

V. How do you feel about the supply chain management of the firm?

What is the best way for the company to understand what you as a customer want?

Employees interview questions

a. For how long have you worked at Woolworths?

b. Tell us about your supply chain management

c. Do you feel there is something that needs to be improved on in the supply chain management of the firm?

Set dates for the activities

undertaking

start

finish

% complete

Time in weeks 1

2

3

4

5

6

7

8

9

10

11

12

Task 1: background

Wk1

plan

Wk1

1

Topic taking

Wk2

2

proposal

Wk3

3

Gathering information

Wk4

4

objectives

Wk5

5

Research questions

Wk6

6

Task 2: progress report

Reporting the advancements

Wk7

7

Literature analysis

Wk8

8

Data gathering

Wk9

9

Task 3: submitting final report

Data analysis

Wk10

10

conclusions

Wk11

Wk11

Submission of report

Wk12

Wk12