Research Topic:Customer Service in Supply Chain Management:

A study of SMEs of Jammu Region

Under the Guidance of Prof. B.C Sharma, The Business School, University of Jammu

Submitted By: Sanjeev Lalhotra, Research Scholar, The Business School, University of Jammu

Abstract Presentation

For

PhD Thesis

Introduction • Supply chain management (SCM)

a) Integration of key business processes from suppliers to end user

b) Help to provide products, services and information that add value for customers and other stakeholders.

• Definition of SCM

According to The Council of Supply Chain Management Professionals (CSCMP) “Supply chain management encompasses the planning and management of all activities involved in sourcing and procurement, conversion, and all logistics management activities.” This includes the coordination and collaboration with suppliers, intermediaries, third parties, and customers.

According to Jones & Riley (1985) in Supply chain management

a) the increase demands have caused businesses to pursue improvement initiatives such as: implementation of just-in-time (JIT) and quick-response (QR), inventory management policies, business process reengineering, and supply chain management.

Whereas, the Forrester (1958) put emphasized that organisation competitiveness improve through

a) Understanding the interactions between the flow of information, material, money, manpower, and capital.

The way these five flow systems interlock to amplify one another and to cause change and fluctuation will form the basis for anticipating the decisions, policies, organisational forms, and investment choices.

Therefore, The Supply chain management is the process that integrates all above stated function that helps to improve the customer service.

The Most Vital Aim of SCM:a) Customer Service Supply chain management is a way of maximizing efficient use of resources in achieving the supply chain customer service goals.

Stevens (1990) and Cooper and Ellram (1993) describes objective of SCM as:

a) Achieve a balance between goals of high customer service, low inventory investment. b) Create a competitive advantage and greater profitability for the channel through coordinated attention to costs, better customer services, and lower inventories

Stevens (1990) also described that:

Customer service has been encompassing all points between customer and supplier (including delivery, pre and post sale service, technical service and financial packages).

Moreover, the term “customer service” in the supply chain is considerably used to describe:

a) Marketing Distribution activities

b) Substantial distribution activities

Since logistics service is a subset of overall customer service, includes elements associated with the handling, warehousing and delivery of products to meet customer’s needs.

Aimed at enhancing the product offering or facilitating the exchange process between the supplier and the customer.

Includes:

i) Product design and maintenance

ii) Training

iii) Salesperson attitude and responsiveness

iv) Ease of customer interface with the firm

v) Guarantees

vi) Price

In addition to logistics service

• Some important dimensions of Logistics service :

Therefore supply chain management help to increase the competitive advantage of the firm through customer service.

Since the customer service aspect of the small firm depends upon the collaboration of the firm with their suppliers and their customers in the business to business chain i.e., first step vertical integration of the firm.

This chain linkage between each element of the manufacturing and supply process from raw materials to the end user in the supply chain management focuses on firm’s utilization of their supplier’s processes, technology and capability to enhance competitive advantage

• a) Delivery reliability• b) Product availability• c) Timeliness or responsiveness• d) Accuracy• e) freedom from damage

By Mentzer et al., (1989), Rinehart, Cooper, & Wagenheim,

(1989)

Vertical Integration

i.e., Raw material (suppliers)Backward Integration

Current transformation i.e., Manufacturingg units ( eg. SMEs)

Forward Integration i.e., Finished Goods (Customers)

Suppliers

and

Customerscollaborated

Manufactures in

SMEs

Improve

their quality of product

Manage lead time

Enhance competitive advantage.

Ten et. a., (2002)

Therefore, this exploit supplier’s strengths and technologies to support new product development in the firms through the process of integrating supply chain management with logistics functions i.e., transportation, inventory, warehousing and partnerships alliance to deliver directly to the point of use (Morgan & Monczka; 1995).

But the logistics process in SMEs meant saturating warehouses with inventory; whereas supply chain management emphasizes the integration of internal and external activities, including inventory management, vendor relationships, transportations, distribution and delivery of services (Farley, 1997).

This integration help to replace inventory with information to provide visibility, so that raw materials and finished goods can be replenished quickly and arrive at the points of use in smaller lot sizes, especially in a just-in-time system (Handfield, 1994).

As a result, with the advent of twenty-first century, supply chain management has become a significant strategic tool for firms striving to improve quality, customer service and competitive success in the small and medium enterprises (Tan et al., 2002).

The supply chain management has been become a broader strategic approach than traditional function of purchasing & logistics. This concept merged into the modern era of holistic and strategic approach to operations, material and logistics management (Tan, 1999, 2000).

Cooper, Lambert, and Pagh (1997) put forward the concept of supply chain management as an extension of logistics needed for some level of coordination of activities and processes within and between organisations, or as an all encompassing approach to business integration. Therefore, the relationship between Business to Business (B2B) firms depends upon mutual sharing of information and it was put forward by the contingency theory “fit” research. This theory emphasized on the information processes investment of the business firms to decrease the demand unpredictability and to improve the supply chain integration and the performance of the firms (Iyer, Germain, Claycomb, 2008, 2009).

Sukati, Hamid, Baharun, Yusoff (2012) also put forward an empirical result based on the classification of job functions of the Supply chain management respondents i.e., corporate executive, purchasing, manufacturing/production, distribution/logistic, SCM, transportation, material, and operation from Malaysia manufacturing industries and found that there is a significant relationship between the supply chain management practice based on the mutual sharing of information, trust and supply chain performance.

Thus, the integrated supply chain management processes have been identified the potential paths for SMEs to improve the procurement practices and it has an impact of customer-supplier relationships on procurement function in formulating supply chain management (SCM) initiatives (Thagurathi, 2007). This integration of information processes with the supply chain management implied of an integrated supply chain strategy, with customer service performance followed by financial performance as performance constructs.

Review of Literature

Vickery, Jayaram, Droge, Calatone (2003) put forwarded the research model using data from a sample (n = 57) of the top 150 independent first tier automotive suppliers to the Big 3 North America which show direct relationship between (1) integrated information processes technologies and supply chain integration, (2) supply chain integration and customer service, (3) customer service and firm performance.

Customer service is a basic prerequisite of service to customers before, during and after a purchase. It includes the series of activity which helps to design a product or service that meet with the customer expectation and enhances the level of customer satisfaction (Turban et al., 2002). Customer service should be included as part of an overall approach to systematic improvement. And it relates to the relationship and understanding of the features and benefits of a product or service, the nature of the organization’s customers—past, present and future, the entire transactional process, from a potential customer’s initial awareness to post-purchase satisfaction. Since customer service in the supply chain considerably different for the large firms from the small firms. In which the Small firms has to play dual role of the supplier and the customer; and first and foremost, should take an active part in creating and implementing a supply chain strategy (Dlogosz, 2010).

Logistics service in SME’s seen, as a subset of products to meet customer service; include elements associated with the delivery of products to meet customer requests or needs. Delivery reliability, product availability, timeliness or responsiveness, accuracy, and freedom from damage are important dimensions of logistics service (Mentzer et al., 1989; Rinehart, Cooper, & Wagenheim, 1989). Langley and Holcomb (1992) defined customer service as “a process of providing significant value-added benefits to the supply chain in a cost effective way”.

La Londe and Zinszer (1976) also define customer service as those activities that occur at the interface between the customer and the corporation which enhance or facilitate the sale and use of the corporation’s product and service. Therefore customer service is all of the things that a manufacturer does for a customer in moving a product from the end of the production line to the customer (Manrodt & Davis,1993).

The relationship between service quality and customer sustainability depends on the basis of business strategy, quality determinants of downstream customer, and quality determinants of upstream customer (Carter and Rogers, 2008). This originates and demonstrates the relationships among social, and economic performance within a supply chain management.

Service quality has been recognised as a key strategic issue for organisations operating in service sector (Guo, Duff, and Hair, 2008). In today’s world of fierce competition, rendering quality service is a key for subsistence and success (Sureshchandar, Rajendran, and Kamalanabhan, 2001), as it allows organisation to differentiate itself from the competitors and thus, gain a competitive advantage (Gounaris, Stathakopoulos, and Athanassopoulos, 2003).

But in supply chain management their logistics triad operation depends on the point of view of the supplier, customer and transport carrier (Rodrigues et al., 2008). Which were extensively defined in both the directions i.e., forward and reverse in the supply chain management that are likely to affect the service quality at different levels (Seth, Deshmukh, & Vrat, 2006). Therefore, the quality of service in supply chain management of SMEs can be improved through the segmentation of customer, suppliers and transport carrier according to their relationship with each other (Lovelly, Saw & Stimson, 2005).

Therefore, the above literature supports the customer service management in supply chain management of SMEs and also its impact on value, relationship, satisfaction & loyalty of customer towards the firms.

RESRARCH GAP

The small scale industrial sector which plays an important role in the Indian economy in terms of employment and it has recorded a high rate of growth since independence inspite of stiff competition from the large sector and so encouraging support.

According to the fourth census of MSME the most of industries registered were of manufacturing, assembling, processing, repairing and maintenance in nature.

The census of MSME also shows that 90.08% of enterprises registered were proprietary enterprises, which means they may carry out the concept of supply chain management directly or indirectly in their firms. Hence this sector has been acknowledged as a growing as well as most important one for the local, regional and national economy of the country.

The focus of the study therefore is to find out the customer service measures including service strategy, service interface, service quality and overall size of the firm in supply chain management of SMEs in business to business orientation. Moreover supply chain management in small and medium enterprise helps to improve product quality, timely delivery, and integration with logistics functions to deliver improved customer service.

The present research has been conceived at finding out the relationship among various components of customer service for supply chain management of SMEs of Jammu region by the empirical evidence specific to the state of Jammu and Kashmir. Moreover study should be able to develop a holistic understanding about customer service aspect in supply chain management.

RESEARCH DESIGN

• The research design comprises of formulation scope of the study, objective and hypotheses for the study, survey instrument design, sampling design, and method applied for the final analysis of the study.

OBJECTIVES

Keeping in view scope and the expected contribution of the proposed study the broad objectives of the study are:

1: To study customer service strategy for supply chain management in SMEs of Jammu region.

2: To study the role of service quality in enhancing the customer service in supply chain management

3: To evaluate effectiveness of relationship marketing in providing customer service in supply chain management

4: To find out the impact of overall size of firms on the customer service strategy.

5: To suggest a model for improving customer service in supply chain management for select SMEs of Jammu region.

HYPOTHESES

The study has the following hypotheses:

H1: Customer service strategy has a positive relationship with supply chain management

H2: Customer Service Interface has a positive impact on supply chain management.

H3: There is significance relationship between size of the firm and customer service strategy in supply chain management.

SCOPE

The scope of the study covers SMEs of Jammu region. The Jammu region consisted of only six areas

where the maximum numbers of actual firms were registered with DIC (Directorate of Industrial

Commission). In which the total number of industries registered in whole of Jammu region were

approximately (8735 units approx.) up to 2007. These SMEs region attract the outsider state investors and

have continued need for foreign as well as government assistance for improvement of their industrial base.

In a market oriented economy, private enterprises are now encouraged and investments laws have changed

to attract institution investor in SMEs of these regions.

The traditional industry of the state has been receiving priority attention due to its large employment base

and export potential. The chief handicraft of the Jammu and Kashmir includes paper-machie, woodcarving,

carpets, shawl making, embroidery, etc. These industries particularly the carpets have huge market abroad

(Source; Socio-Economic profile of Jammu and Kashmir 2008). The handicrafts sector employs about 3.40

lakh artisans. But the growth is still less because 80% of people’s occupation is still agriculture and its

allied sector. The major SME clusters in Jammu and Kashmir are; Cricket Bats (Anantnag), Steel Re-

rolling (Jammu), Oil Mills, Rice Mills (Jammu/ Kathua), Timber Joinery/ Furniture (Srinagar) (source;

www.Thomex.com).

RESEARCH METHODOLOGYInstrument Design:

The instrument design was based on the regressive literature review in which the items of the customer service identified. The study was based on the customer service construct in the supply chain management of the SMEs, so single instrument was constructed with business to business orientation in supply chain management. In the supply chain management of the small firm which has only single owner/manager who carried out the function of the customer for their different supplier and supplier for their customer in business to business orientation had been consulted for the response through convenient sampling technique.

The construct used in the supply chain management were based on these study which are as under:

Authors Name Year of Study

Study emphasized Construct Used

Aviv 2002 Supply chain inventory management Demand realization, forecasting adaptive inventory policy, replenishment policy, cost assessment

Holmberg 2000 System perspective on supply chain measurement

On time delivery, customer loyality, roce, process quality, process cycle time, employee skills

Closs and Xu 2000 Logistics info. tech. practice in manuf. firms

Logistics info. System capability, Log. info. Sys., EDI, industries standard.

Goh and Ang 2000 Logistics realities Motor transport, rail transport, air transport, state of development, constrains

Mortensen et. al.

2008 Attractiveness in supply chain Customer business focus, financial and economic factor, technological factor, competition factor, standard relationship, simple relationship, evolving relationship, developing strategy, partnership based relationship

Authors Name Year of Study Study emphasized Construct Used

Bhatnagar and Teo 2009 Logistics in enhancing competitive advantage

Logistics drivers tradeoff, transportation, inventory, information sharing, facilities, financial, operational indicators

Gilmour 1999 Strategic audit framework to improve SC performance

Functional process capabilities, technological capabilities, and organisation capabilities,

Clarke and Freytag 2008 Inter and intra organisational perspective on industrial segmentation

Strategic level, operation level, creating new offers and adjusting offers

Defee and Stark 2005 Strategy structure performance paradigm to the SC

Strategy, external environment, structure and financial performance

Canever, Trijp and desLans

2007 Benefit feature segmentation in SC strategy

Benefit based segmentation, feature based segmentation, segmentation profiling, supply chain implication

Eckert and Goldsby

1997 Likely hood model to guide customer service based segmentation

Bonoma and Shapiro’s nested model of segmentation, that includes, personal characteristics, situational factor, purchasing app., operating variable and demographic.

The construct of customer service in supply chain management consist of total number of retain items after pre-testing were 67 both in terms of suppliers, customer and overall size of the firm. After the design of the instrument the data were collected. It was based on the standard deviation and precession of pre testing data.

Data Collection

The data were collected from the owner/managers of the small and medium enterprises through the non probability sampling technique i.e., convenient sampling technique (through references). The total sample of 400 was selected on the basis of the level of precision, standard deviation and confidence level obtained from the pre-testing of the data (Malhotra, 2007, pp. 400-402).

n = (σ) 2 (z) 2 / D2

where, D= level of precision

σ = sample standard deviation

z= 1.96, where confidence level is 95%

After the collection of the data, the data were tabulated in the excel file with seven point likert scale response code which were chosen by the respondent. Whereas, the seven point likert scale were defined as; 1=completely disagree, 2=strongly disagree, 3=somewhat disagree, 4=neither agree nor disagree, 5=somewhat agree, 6=strongly agree and 7=completely agree.

Factor Analysis Result of Customer Service

Customer Service Dimensions

FLV MV SD CV KMO %of V

Service Strategy (F1)

0.534

Supplier are willing to participate in new product development (SS1)

.878 5.25 1.266 ..777

69.445

Firm always audit the supplier capability(SS2)

.816 4.81 1.728 .721

Firm supplier emphasize on the product quality(SS3)

.837 4.72 1.667 .734

Firm supplier work on the product standardisation (SS4)

..781 5.01 1.362 .684

Firm and supplier use the integrated information system(SS5)

.797 4.83 1.693 .643

Firm and supplier use the integrated supply chain management (SS6)

.671 3.39 1.14 .620

Service Interface (a) Segmentation

0.557 55.164

Cost, Proximity and Easily Served Distribution (F1)

Firm Segment supplier on the basis of proximity of location.

.789 5.18 1.475 .623

Firm segment supplier on the basis of purchasing power.

.720 4.78 1.598 .530 27.758

Firm segment supplier whose distribution process is easily served.

.709 5.23 1.372 .537

ISO Certification, Stability and Personal Characteristics(F2)

Firm segment supplier on the basis of ISO certificate

.851 4.73 1.704 .730

27.406Firm segment suppler on the basis of personal characteristics.

.802 5.02 1.588 .644

Firm segment on the basis of stability to your firm.

.482 4.98 1.449 .472

Service Interface (b) Relationship Marketing

.532 50.566

Loyalty and Shipment tracking Ability (F1)Loyalty helps to maintain long term relationship with supplier.

.767 4.97 1.531 .558

26.09Firm enjoy a long term relationship with the suppliers.

.693 5.03 1.649 .559

Firm require shipment tracking ability.

.663 4.88 1.573 .560

Performance Evaluation & Risk Share (F2)Firm share risk with supplier.

.780 5.04 1.544 .680

Firm study the regular suppliers operation for planning.

.587 5.14 1.595 .379

24.47

Firm have on time performance report from the suppliers.

.563 5.14 1.435 .339

Service Quality .730

Firm suppliers are consistent to delivery of service.

.825 5.21 1.523 .694

Firm suppliers are highly reliable in delivery of service

.768 5.26 1.338 .636

64.877

Firm suppliers place raw material at the point of use.

.811 4.72 1.700 .594

Supplier always sends the correct quantity of raw material.

.742 5.05 1.542 .671

Note: FLV= Factor Loading, CV= Communalities, MV= Mean Value, % of V = Percentage of Variance explained

Exploratory Factor Analysis for Customers

Customer Service

Dimensions

FLV MV SD CV KMO %of V

Service Strategy 0.782

Firm planning is based on demand driven by customers(SS1)

.836 5.35 1.359 .699

Firm use differentiation strategy for customers(SS2)

.833 5.18 1.501 .698

Firm use third party logistics to provide best service to customers.(SS3)

.811 5.02 1.437 .657 67.810

Firm use e-commerce process for customers business relation(SS4)

.810 5.02 1.447 .659

Service Interface (a) Segmentation

0.620 42.473

Trust, Lifecycle, Usage rate & firm size (F1)

Firm segment customers on the basis of lifecycle of the product.

.751 4.75 1.675 .672

Firm segment customers on the basis of product usage rate.

.676 5.11 1.381 .646

23.595

Firm segment customers on the basis of the firm size.

.641 5.13 1.518 .673

Firm segment customers on the basis of trust between

.591 5.16 1.384 .595

Viability and Suitability(F2)

Firm segment customer on the basis of customs duties.

.819 4.97 1.636 .700

18.878

Firm segment customer on the basis of existing infrastructures of the customer

.671 5.11 1.479 .619

Firm segment on the basis of the suitability.

.317 5.05 1.457 .880

Firm segment customers on the basis of viability.

.238 4.94 1.572 .726

Service Interface (b) Relationship Marketing

.688 56.028

Transparency and Association (F1)

TA1 .834 5.19 1.457 .699

28.027TA2 .808 5.13 1.493 .657

TA3 .676 5.10 1.472 .468

TA4 .648 5.10 1.48 .485

Problem Rectifying

and Customer Feedback(F2)

PRCF1 .773 5.02 1.519 .599

PRCF2 .747 4.80 1.731 .565

PRCF3 .743 5.63 1.466 .556 28.001

PRCF4 .669 4.88 1.687 .453

Service Quality .500

Service factor (F1) Firm always provide all types of facilities to customers at their door step.

.980 4.84 1.683 .984

67.345

Firm suppliers use a third party supply chain management specialist.

.984 5.02 1.475 .994

Note: FLV= Factor Loading, CV= Communalities, MV= Mean Value, % of V = Percentage of Variance

Overall Size of the Firm

FLV MV SD CV KMO %of V

Overall Size of the Firm

0.589

Return on Assets .769 5.00 1.485 .658

62.416

Return on investment

.761 5.16 1.531 .681

Sales growth .742 4.89 1.668 .669

Overall competitive position

.591 5.28 1.395 .713

INTER-ITEM ANALYSIS OF CUSTOMER SERVICE DIMENSIONS BOTH IN TERMS OF SUPPLIERS AND CUSTOMERS AND OVERALL SIZE OF THE

FIRM Service Strategy

SMID CITC AIID

Supplier are willing to participate in new product development

24.5000 .282 .042

Firm always audit the supplier capability

24.9429 .153 .031

Firm supplier emphasize on the product quality

25.0310 .054 .139

Firm supplier work on the product standardisation

24.6857 .226 .007

Firm and supplier use the integrated information system

24.9238 .115 .300

Firm and supplier use the integrated supply chain management

24.7024 .122 .281

Service Interface (a) SegmentationCost, Proximity and Easily Served Distribution (F1)Firm Segment supplier on the basis of proximity of location.

25.1667 18.736 .476

Firm segment supplier on the basis of purchasing power.

24.7667 18.098 .422

Firm segment supplier whose distribution process is easily served.

24.7214 17.968 .396

ISO Certification, Stability and Personal Characteristics(F2)Firm segment supplier on the basis of ISO certificate

24.9690 19.090 .460

Firm segment suppler on the basis of personal characteristics.

25.2238 17.033 .425

Firm segment on the basis of stability to your firm.

24.9262 17.348 .411

Service Interface (b) Relationship MarketingLoyalty and Shipment tracking Ability (F1)Loyalty helps to maintain long term relationship with supplier.

25.2500 .254 .298

Firm enjoy a long term relationship with the suppliers.

25.1905 .094 .404

Firm require shipment tracking ability.

25.3429 .336 .239

Performance Evaluation & Risk Share (F2)Firm share risk with supplier.

25.1762 .208 .328

Firm study the regular suppliers operation for planning.

25.0786 .064 .420

Firm have on time performance report from the suppliers.

25.0810 .159 .359

Service Quality

Firm suppliers are consistent to delivery of service.

15.0500 .146 .378

Firm suppliers are highly reliable in delivery of service

14.9929 .294 .232

Firm suppliers place raw material at the point of use.

15.5381 .255 .253

Supplier always sends the correct quantity of raw material.

15.2048 .142 .383

In terms of CustomersService Strategy SMID CITC AIID

Firm planning is based on demand driven by customers

15.2667 .193 .175

Firm use differentiation strategy for customers

15.4405 .138 .242

Firm use third party logistics to provide best service to customers.

15.5595 .140 .238

Firm use e-commerce process for customers business relation

15.5976 .114 .270

Service Interface (a) Segmentation

Trust, Lifecycle, Usage rate & firm size (F1)Firm segment customers on the basis of lifecycle of the product.

35.4976 .105 .341

Firm segment customers on the basis of product usage rate.

35.1357 .335 .257

Firm segment customers on the basis of the firm size.

35.1214 .579 .216

Firm segment customers on the basis of trust between

35.0881 .391 .111

Service Interface (b) Relationship MarketingTransparency and Association (F1)

TA1 35.1000 .312 .532

TA2 35.1643 .372 .513

TA3 35.1905 .312 .532

TA4 35.1929 .093 .597

Problem Rectifying and Customer Feedback(F2)PRCF1 35.2643 .366 .514

PRCF2 35.4929 .245 .555

PRCF3 35.2667 .375 .513

PRCF4 35.4119 .202 .569

Viability and Suitability(F2)

Firm segment customer on the basis of customs duties.

35.2810 .250 .189

Firm segment customer on the basis of existing infrastructures of the customer

35.1357 .218 .139

Firm segment customer on the basis of the suitability.

35.1976 .324 .101

Firm segment customers on the basis of viability.

35.3095 .033 .091

NOTES: Scale mean if item deleted (SMID), Construct item-to-total correlation (CITC), and Alpha value if item deleted (AIID),

Service Quality

Service factor (F1)

Firm always provide all types of facilities to customers at their door step.

5.0286 .347 -

Firm suppliers use a third party supply chain management specialist.

4.8452 .347 -

Overall Size of the FirmReturn on Assets 15.3548 .529 .585

Return on investment 15.1929 .506 .599

Sales growth 15.4643 .501 .603

Overall competitive position 15.0738 .353 .690

OVERALL ALPHA, COMPOSITE RELIABILITY AND AVERAGE VARIANCE EXTRACTED OF THE CONSTRUCT

Respondent

s

Variables Alpha C R AVE SMC

Suppliers

Customer

Service

Overall

Alpha

(0.633)

Split-half Min. Max.

Sample I Sample II

Service

Strategy

0.534 0.780 0.573 0.730 0.503 0.215 0.584

Service

Segmentatio

n

0.748 0.691 0.761 0.699 0.623 0.254 0.506

Service

Relationship

0.532 0.620 0.593 0.747 0.543 0.173 0.521

Service

Quality

0.730 0.718 0.702 0.705 0.545 0.402 0.754

NOTE: CR= Composite Reliability, AVE= Average Variance Extracted, SMC= Square Multiple Correlation

OVERALL ALPHA, COMPOSITE RELIABILITY AND AVERAGE VARIANCE EXTRACTED

Note: CR= Composite Reliability, AVE= Average Variance Extracted, SMC= Square Multiple Correlation

Split-half Min. Max.

Customers

Customer

Service

0.754

(overall

Alpha)

Sample I Sample II

Service

Strategy

0.782 0.563 0.749 0.706 0.540 0.431 0.681

Service

Segmentatio

n

0.680 0.584 0.784 0.658 0.579 0.391 0.436

Service

Relationship

0.580 0.731 0.716 0.861 0.676 0.244 0.637

Overall Size of the Firm

OSF 0.589 0.854 0.650 0.700 0.542 0.290 0.609

Respondent

s

Variables Alpha C R AVESMC

Confirmatory Factor Analysis

First of all the convergent validity of the customer service construct both in terms of suppliers and customer obtained differently through CFA. The result obtained for these construct are as under:

Convergent validity of Customer Service in terms of Suppliers:

Dimensions Factor

Loading

(FL)

Communality

value (CV)

Average Variance

Explained (AVE)

Service Strategy 0.779 0.606 0.503

Service Segmentation 0.722 0.521 0.623

Service Relationship 0.638 0.632 0.543

Service Quality 0.868 0.753 0.545

Convergent Validity of Customer Service in terms of Customers:

Dimensions Factor Loading

(FL)

Communality

value (CV)

Average Variance

Explained (AVE)

Service Strategy 0.738 0.544 0.540

Service

Segmentation

0.660 0.534 0.579

Service

Relationship

0.807 0.651 0.676

Since all the value of customer

service construct both in terms of

suppliers and customers for the FL, CV, and AVE

were above the threshold value of greater than 0.5

which validate the construct for the

further analysis of CFA and structure

equation modeling. And the

discriminant validity also

established which validate the construct.

The Dimension Wise Confirmatory Factor Analysis (CFA) was as under:

Dimensions of Customer Service in terms of Suppliers:

According to Boolen and Long (1990) basic threshold criteria in the CFA run and the structure fit indices namely ratio of Chi square and degree of freedom (χ2/df<3), goodness of fit index (GFI) (near to 0.9 to 1), adjusted goodness of fit index (AGFI) (below 0 to 1), comparative fit index (CFI) (below 0.9 to 1), NRI (near 0.9 to 1) and root mean square error of approximation (RMSEA) (less than 0.8) were examined for overall fitness of the construct while squared regression weight (SRW) greater than 0.50 and critical ratios (CR) greater than 1.96 were considered for retaining items in the construct. Therefore the values of the customer service dimensions in supply chain management were analyised and their accepted values were as under:

Dimensio

n

Overall

Mean

Value

(MV)

Chi-

square/

Degree of

Freedom

(χ2 /df)

GFI AGFI NFI CFI REMSE

A

Service

Strategy

4.99 0.00 0.972 0.897 1 1 0.121

Service

Segmenta

tion

5.06 0.203 0.999 0.997 0.994 1 0.164

Service

Relations

hip

4.96 0.00 0.961 0.885 1 1 0.021

Service

Quality

5.06 0.00 0.926 0.859 1 1 0.08

Dimensions of Customer Service in terms of Customers:

Dimensio

n

Overall

Mean

Value

(MV)

Chi-

square/

Degree of

Freedom

(χ2 /df)

GFI AGFI NFI CFI REMSE

A

Service

Strategy

5.13 0.00 0.939 0.878 1 1 0.067

Service

Segmenta

tion

5.003 1.75 0.990 0.956 0.961 0.970 0.081

Service

Relations

hip

5.13 2.206 0.980 0.957 0.887 0.993 0.053

Overall Size of the Firm:

Overall

Size of

firm

5.02 χ2/

df=0.00

0.993 0.966 1 1 0.09

According to Boolen and Long (1990) basic threshold criteria in the CFA run and the structure fit indices namely ratio of Chi square and degree of freedom (χ2/df<3), goodness of fit index (GFI) (near to 0.9 to 1), adjusted goodness of fit index (AGFI) (below 0 to 1), comparative fit index (CFI) (below 0.9 to 1), NRI (near 0.9 to 1) and root mean square error of approximation (RMSEA) (less than 0.8) were examined for overall fitness of the construct while squared regression weight (SRW) greater than 0.50 and critical ratios (CR) greater than 1.96 were considered for retaining items in the construct. Therefore the values of the customer service dimensions in supply chain management were analyised and their accepted values were as under:

Hypothesis Testing Using Structure Equation ModelingSince the overall structure models of customer service dimensions in terms of suppliers and customers with dimensions of customer service interface which include supplier segmentation and supplier relationship, supplier strategy, supplier quality in terms of suppliers and customer service interface in terms of customer include customer segmentation and customer relationship, customer strategy respectively.

Since these dimensions came out to be quite complex using SEM, therefore average approach was followed for hypotheses testing in which the average of all the latent items of these dimensions taken for simplifying the SEM model.

First Hypothesis

H1: Customer service strategy has a positive relationship with supply chain managementThe overall model of customer service strategy which consisted of service strategy in terms of suppliers and service strategy in terms of customers impacted the firm supply chain management. Thus the model fit indices value come out to be χ2/df=0.00, GFI=0.999, AGFI=0.999, NFI=1, CFI=1 and RMSEA=0.00. All the value has been above the threshold value of the good to fit indices and become the perfect fit for this scale of the model. This accepted the hypotheses that customer service strategy has a positive relationship with supply chain management. This study results thus support the findings in which the customer service strategy has a good relationship with supply chain management (Gilmour, 1999). Defee and Stauk (2005) put emphasis on the strategic structure which interact with the external environment and structure of the firm and impacted the supply chain performance of the firm. Moreover the firm’s marketing efforts can be reviled through the appropriate customer service strategy (Lambert and Stock , 1993).

Supply Chain

Management

Supplier

Strategy

Customer

Strategy

e1

e3

Second Hypothesis:

H2: Customer service interface has a positive impact on supply chain management.Since the customer service interface consist of customer service segmentation, customer service relationship and customer service quality. This hypothesis has been tested through the SEM modelling in which the value of squared regression weight and critical value all obtained the higher level of threshold value. The overall model value of good to fit indices came to be χ2/df=1.55, GFI=0.993, AGFI=0.974, NFI=0.752, CFI=0.830 and RMSEA=0.036. These are accepted value of the model. Hence, the hypothesis has been accepted that customer service interface has a positive impact on supply chain management. The study has been further supported by the Holmberg (2000), Bhatnagar and Teo (2009) and they noted the role of supply chain in enhancing the competitive advantage through information sharing, trust, facilities providing and compared the result with the financial performance of the firm.

Customer

Segmentation

Customer

Relationship

Supplier

SegmentationSupplierRelationship

Customer

Service

Supplier

Customer Service

e4e5

e1 e2

Overall Size

of the firme6

Third Hypothesis:

H3: There is significant relationship between the size of the firm and customer service strategy in supply chain management

The overall model value for this model came to be χ2/df=0.00, GFI=0.991, AGFI=0.982, NFI=1, CFI=1 and RMSEA=0.044 and all of them are above the threshold value so accepted the model. So, there is significant relationship between size of the firm and customer service strategy in supply chain management.

SupplierStrategy

CustomerStrategy

SupplyChain

Management

e1

e2

Overall Sizeof the Firm

e3

Overall Model of the Study:

Since the overall study of the model is same as the second hypothesis because it includes all the construct of the study

CustomerSegmentation

CustomerRelationship

SupplierSegmentation

SupplierRelationship

ServiceQuality

CustomerService

SupplierCustomer Service

e3e4e5

e1 e2

Overall Sizeof the firm

e6

Summary and Conclusion

1) The present study highlighted one of the major aspects of supply chain management in business to business chain. The study focused on the improvement of customer service in supply chain management of small and medium enterprises of India in general and Jammu and Kashmir in particular. Despite having seen the effective improvement of manufacturing growth and development after 1990s but not much has been done to improve the supply chain management of India in general and Jammu and Kashmir in Particular.

2) The present study also focused on the improvement of the whole aspect of customer service in supply chain management of SMEs which was based on customer service strategy (Lambert & Stock, 1993), customer segmentation (Christopher and Towill, 2002), service quality contribution (Boulding, Kalra, Staelin, & Zeithaml, 1993; Cronin & Taylor, 1992; Parasuraman, Berry, & Zeithaml, 1991), relationship marketing (Lambert & Stock, 1993), overall size of the firm (Ballou, 1993). Further Bienstock et at., 1997 found impact of customer service strategy, customer segmentation, service quality on the customer service management in supply chain management. Above all, composite research on customer service management and its impact on value, satisfaction & loyalty in supply chain management of SMEs more particularly in developing countries like India. This study is conducted till date new for customer service dimension in supply chain in context of SMEs. The present research finds out the way to take into account value, satisfaction, loyalty service to fill the research gap.

3) We have shown that SCM practice forms a second-order construct composed of the first-order constructs of service strategies, customer service interface (i.e., customer relationship and customer segmentation), service quality, are the major components of SCM practice. Through the analysis of the relationship of SCM practice construct with competitive advantage (Hypothesis 2), it was demonstrated that SCM practice may directly impact competitive advantage. The findings of this research thus point to the importance of SCM practices to the organization.

3) The present study result revealed that the SME firms are participating in customer service aspect of supply chain management. The relation building process according to the study was based on the mutual trust, loyalty and information provided by the firms to track the order placed by the supplier due to higher factor loading value and average variance explained and the good to fit model indices in terms of suppliers.

4) Whereas the relationship with customer with their overall average mean value are approaching the high value of the scale with high factor loading value and good to fit model indices value were above threshold. Which showed that relationship were more focused on the updating customer about the product, transparency, close associating and collaboration, by make customer feel safe and secure, design the product according to the customer demand and expectation, and solving problem of the customer.

5) Since the customer service index consist of the service segmentation in terms of suppliers and customers both differently. And both the model good to fitness value are above threshold which means that segmentation in supply chain management had been important aspect of the customer service interface which consisted of segmentation and relationship.

6) The service quality is also one of the most important aspect in supply chain management but according to the study this aspect special attention towards the supplies of the firms and very little about their customers. This is done because the firms need their supplier would be more consistent and reliable and place order at the point of use.

7) But the same thing they won’t expect from their customer in business to business chain. Even they were more focused on the customer driven demand and manufacturing their product according to the expectation and demand of customers.

Limitations of the Study

• The owner/ manager of the SMEs do not know exactly what to implement, due to a lack of understanding of what constitutes a comprehensive set of SCM practices.

• By proposing, developing, and validating a multi-dimensional, operational measure of the construct of SCM practice, and by demonstrating its efficacy in enhancing organizational performance and competitive advantage, the present study provides SCM managers with a useful tool for evaluating the comprehensiveness of their current SCM practices.

• The sampling technique adopted for the study. Since convenient sampling technique is non probability sampling technique so representation of the people may be biased.

• The business to business orientation was taken which also show the biasness of the respondent towards their customers but critical towards their suppliers.

Thank u…