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TRUCK DRIVER DETERMINANTS OF SERVICE QUALITY AS PERCEIVED BYCOMMERCIAL CARGO RECIPIENTS

ByJeffrey W. Kennedy

A DISSERTATION

Submitted toH. Wayne Huizenga School of Business and Entrepreneurship

Nova Southeastern University

in partial fulfillment of the requirementsfor the degree of

DOCTOR OF BUSINESS ADMINISTRATION

2010


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UMI Number: 3404483

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CERTIFICATION STATEMENT

I hereby certify that this paper constitutes my own product, that where the language of others

is set forth, quotation marks so indicate, and that appropriate credit is given where I have used the

language, ideas, expressions or writings of another.


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ABSTRACT

TRUCK DRIVER DETERMINANTS OF SERVICE QUALITY AS PERCEIVED BYCOMMERCIAL CARGO RECIPIENTS

By

Jeffrey W. Kennedy

Trucking firms play a fundamental role in connecting supply chain elements inmany U.S. market channels, and firms of all kinds depend on trucks to pick up anddeliver goods. Even though many products move almost entirely by way of ship, train, orairplane, almost everything is carried by a truck at some point during the delivery process(Statistics, U.S. Department of Labor, 2009). Because of this, it is critical that managers

in trucking firms continually strive to meet and exceed customer and shipper customerservice requirements and expectations (Meixell & Norbis, 2008).While a review of the literature shows that many researchers addressed numerous

aspects of transportation performance quality, few of these investigations addressedtherole and impact that truck drivers have on service-quality perceptions (Vansickle, 2002).The purpose of this research wasto examine whether cargo handling by truck drivers had aneffect on a companys service quality perceptionsas perceived by the recipients ofcommercial cargo. TheSERVQUAL instrument was usedto measure the gap between truckdrivers determinants of service quality as perceived by the recipient of the goods fromthese truck drivers.

The findings from the study suggestthat it becomes necessary formanagers to trainthese truck driversin more than merely following a route or delivering goods. They needreal marketing and customer service skills, and this need should be factored into theirtraining program.


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ACKNOWLEDGEMENTS

I would like to express my sincerest thanks to faculty administrative staff, familyfriends and colleagues who provided support, guidance and encouragement during thepursuit of my doctoral studies. In particular, I want to express my sincerest appreciationto Dr. Candace McKinniss, my dissertation Chair. Her continued support, guidance andencouragement allowed me to make steady progress. She was more than a Chair as shemet with me continuously, even when it was terribly inconvenient.

To my committee members, Dr. Jane Gibson and Dr. Dick Murphy, I give manythanks for your support and encouragement. I especially want to thank Dr. David Smith,the Dean of the Rinker School of Business at Palm Beach Atlantic University, for histhoroughness in reviewing the various revisions of my dissertation, resulting in majorimprovements in the quality of the final product. And lastly, I thank Dr. Terrell Manyak,Professor of Public Administration at Nova Southeastern University for his endless hoursediting the final document.

Above all, I thank Jesus Christ, my Lord and Savior for the successfulcompletion of this journey, which was only possible through his grace and mercy.


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TABLE OF CONTENTS

Page

CHAPTER I ................................................................................................................... 9

INTRODUCTION ......................................................................................................... 9Background of the problem ....................................................................................... 9

Logistics service and competition ........................................................................... 11

Logistics and competitive advantage ...................................................................... 13

Instrument used to test the hypotheses .................................................................... 18CHAPTER II ............................................................................................................... 19

LITERATURE REVIEW .............................................................................................. 19

Introduction ............................................................................................................. 19The Exchange Process ............................................................................................ 19

Customers perception of service exchange ............................................................ 23

Disconfirmation paradigm ...................................................................................... 24Intangibility of services ........................................................................................... 29

Heterogeneity of services ........................................................................................ 30

Perishability ............................................................................................................ 31Traditional marketing mix ....................................................................................... 31

Expanded mix for services....................................................................................... 32

Service quality models ............................................................................................. 33

Dimensions of service quality ................................................................................. 35Difficulties unique to services ................................................................................. 39

Logistics quality service .......................................................................................... 40

Background discussion on the trucking industry .................................................... 41Description of less than truckload operations ........................................................ 43

Quality improvement research in logistics.............................................................. 46

Customer expectations and value-added services ................................................... 52Performance gaps in the logistics and trucking industry ........................................ 55

Logistics service quality .......................................................................................... 55

Transportation performance quality ....................................................................... 62

Employee selection and training ............................................................................. 65Truck drivers and service quality perceptions ........................................................ 67

The instrument SERVQUAL ................................................................................. 68

Critique of SERVQUAL ........................................................................................... 70

CHAPTER III .............................................................................................................. 75METHODOLOGY ....................................................................................................... 75

SERVQUAL questionnaire ...................................................................................... 76Hypotheses .............................................................................................................. 77

Sample Selection ..................................................................................................... 78

Data Collection ....................................................................................................... 80Prescreening............................................................................................................ 81

Adaptation of the SERVQUAL instrument to the trucking industry ........................ 82


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Instrument construction........................................................................................... 84

Measurement ........................................................................................................... 86

Stepwise regression ................................................................................................. 87CHAPTER IV .............................................................................................................. 89

ANALYSIS AND PRESENTATION OF FINDINGS ................................................... 89Introduction ............................................................................................................. 89Survey respondents .................................................................................................. 89

Reliability and validity ............................................................................................ 94

Instrument reliability ............................................................................................... 95Data analysis ........................................................................................................... 97Tangibles expectations ............................................................................................ 98

Summary expectation scores ................................................................................. 103

Tangibles perceptions ........................................................................................... 104Mean gap total ...................................................................................................... 109

Hypotheses testing ................................................................................................. 116

Conclusion ............................................................................................................. 118CHAPTER V.............................................................................................................. 120

SUMMARY AND CONCLUSIONS ........................................................................... 120

Introduction ........................................................................................................... 120Summary of the study ............................................................................................ 120

Practitioner implications....................................................................................... 123

Limitations of the study ......................................................................................... 126

Further considerations and future research ......................................................... 127Conclusion ............................................................................................................. 129


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List of Figures

Figure 1 SERVQUAL Model ............................................................................................ 77Figure 2 SERVQUAL Questionnaire ............................................................................. 133

List of Tables

Table 1 Modifications of the SERVQUAL instrument ..................................................... 82Table 2 Respondent profile/response data ....................................................................... 92

Table 3 Business ownership category .............................................................................. 93

Table 4 Business industry category ................................................................................. 94Table 5 Expectation analysis ........................................................................................... 96

Table 6 Perceptions analysis ........................................................................................... 97

Table 7 Mean tangibles expectations frequencies scores ................................................ 98Table 8 Mean reliable expectations ................................................................................. 99

Table 9 Mean responsiveness expectations ................................................................... 100

Table 10 Mean assurance expectations ......................................................................... 101

Table 11 Mean empathy expectations ............................................................................ 102Table 12 Mean tangibles perceptions ............................................................................ 105

Table 13 Mean reliability perceptions ........................................................................... 106

Table 14 Mean responsiveness perceptions ................................................................... 107

Table 15 Mean assurance perceptions .......................................................................... 108Table 16 Mean empathy perceptions ............................................................................. 109

Table 17 Mean gap total -3.50 to +1.00 ........................................................................ 110Table 18 Mean gap score tangibles ............................................................................... 111

Table 19 Mean gap score reliability .............................................................................. 112

Table 20 Mean gap score responsiveness ...................................................................... 113

Table 21 Mean gap score assurance ............................................................................. 113Table 22 Mean gap score empathy ................................................................................ 114

Table 23 mean gap scores.............................................................................................. 115

Table 24 Coefficientsfor tangibles ................................................................................ 116

Table 25 Coefficientsfor reliability ............................................................................... 117

Table 26 Coefficients

for responsiveness ....................................................................... 117Table 27 Coefficientsfor assurance ............................................................................... 118

Table 28 Coefficientsfor empathy ................................................................................. 118

Table 29 Summary of hypotheses testing ....................................................................... 122

Table 30 Final sample size explanation......................................................................... 126

Table 31 Reliability alphas ............................................................................................ 130Table 32 Individual respondent mean score .................................................................. 131


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9

CHAPTER I

Introduction

Background of the Problem

Marketing emerged as a separate discipline when it became concerned with the

process of moving goods from producer to consumer. This goods-centered

manufacturing-based model of economic exchange developed during the Industrial

Revolution, and since then marketing has broadened its perspective to include the

exchange of more than manufactured goods (Vargo & Lusch, 2004). The sub-discipline

of services marketing and its importance to scholars and practitioners emerged to address

this broadened perspective in the 1970s and 1980s. Individual industries mirrored the

growing recognition that America had become a service economy. Driven by supply and

demand, an integrative field focused on the marketing of intangible products (Berry &

Parasuraman, 1993).

The sub-discipline of services marketing did not exist (Berry & Parasuraman,

1993, p. 14) prior to the 1970s (Judd, 1964). Marketing practices until then illustrate how

the emergence of mass production, the need for intermediaries, and the separation of the

producer from the consumer in the industrial era led to a transactional focus on

marketing. The goods-centered manufacturing-based model focused on separating the

producer from the consumer (Lusch, Vargo, & Malter, 2006).


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In todays service economy, the emerging dominant logic focuses on the

interaction of the producer and the consumer and other supply and value network partners

as they co-create value through collaborative processes (Sweeney, 2007). This new logic

is referred to as service-dominant logic with research suggesting we do not just buy

goods and services, but relationships, experiences with brands, dreams, and many other

interacting phenomena. Also recognized by Gummesson (2008) is the co-creation of

value between customers and suppliers, and within this paradigm there is a genuine

customer orientation. Further evidence of the value of providing value to customers

through exceptional service to customers is documented by Rust, Moorman, and Dickson,

(2002), who concluded that firms focusing primarily on customer service will do better

than firms focusing primarily on cost reduction.

The attitude and actions of contact employees can affect customer perceptions of

service quality (Elmadag, Ellinger, & Franke, 2008). Other studies have emphasized the

influence a service employee has on customer perceptions of service quality. Results

indicate that employees positive and negative behaviors are highly correlated to

customer overall satisfaction (Kattara, Weheba, & El-said, 2008). Moreover, research

indicates that many service firms fail in delivering service quality to their customers

because their employees deliver inferior value to the end user (Scheepers, 2006). The

attitude and actions of contact employees can affect customer perceptions of the service.

Because of the importance of the service encounter, service firms must find ways to

manage their customer-contact employees effectively to help ensure that their attitude is

conducive to the delivery of quality service (Elmadag, Ellinger, & Franke, 2008).


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Other studies indicate that consumers desire relatedness, assurance, empathy, and

reliability. They often view service employees as the means by which an organization

conveys these components of service quality (Brady & Cronin, 2001). According to

Parasuraman, Zeithaml, and Berry (1988), capable employees who are committed to

providing service quality increase customer satisfaction. The authors also note that firms

lose customers because of poor or indifferent service.

Firms remain challenged to deliver high quality service to their customers, largely

because the thought process that consumers utilize to purchase and evaluate services is

complex. Nonetheless, service quality remains a key area of interest to practitioners, and

researchers recognize the impact it has on business performance, customer satisfaction,

purchase intentions, and financial outcomes (Seth, Deshmukh, & Vrat, 2005; Greising,

1994; Bienstock, Mentzer, Bird, & Murphy, 1997). Although many studies have

examined general quality management practices, industry-specific studies on quality

management practices and factors that influence their success in the shipping industry are

rather few (Cheng & Choy, 2007).

Logistics Service and Competition

Logistics impact our lives and the economy in a very significant way. For

example, in 2007 there were 9.6 million people working in transportation-related jobs

across all sectors of the U. S. economy, excluding the self-employed. Table 1.1 shows the

breakdown of employees in transportation and materials handling-related jobs by

industry. Nearly 67% of those working in transportation and materials handling-related

jobs are employed in the transportation and warehousing sector, manufacturing sector, or


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the wholesale and retail industries. Data supplied by the US Department of Labor show

that in 2007, approximately one of every nine people working in the U.S. was employed

in a transportation and material moving-related job. The number of people employed in

trucking-related jobs (excluding the self-employed) grew from 7.8 million in 1994 to 8.6

million in 2003, an increase of 9.1%. From 2003 to 2007 the number increased to 9.6

million an increase of 10.4% (U.S. Department of Labor, 2009). An interesting and

significant factor concerning this research is that truck drivers and driver sales workers

hold 45% of all the jobs in the industry.

Corporations and researchers also have become increasingly aware of the strategic

role logistics that services play in a firms overall success (Bienstock, Mentzer, Bird, &

Murphy, 1997; Mentzer, Bienstock, & Kahn, 1995; Mathews, 2006). Anecdotal evidence

from firms such as Dell Computer Corporation, Nabisco, and Federal Express suggest

that logistics excellence has a significant impact on revenue and profitability (Mentzer,

Flint, & Holt, 2001; Flint, Larsson, Gammelgaard, & Mentzer, 2005). We feel 3PLs

have improved in performance and in service offerings, noted Victor Guzman, Director

of Supply Chain and Logistics with Honeywell International Inc. They serve a specific

purpose and outsourcing allows us to avoid significant capital investment in non-core

activities (Richardson, 2005, p.17).

Despite its growing importance in corporate strategy and the global economy, the

logistics discipline does not have as rich a heritage in theory development and empirical

research as older more established disciplines such as anthropology, philosophy,

psychology, and sociology (Stock, 1997). In fact, much of logistics literature and research


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has been considered managerial in nature and lacking a rigorous orientation toward

theory development, testing, and application (Mentzer, Bienstock, & Kahn, 1995).

Competition among transportation companies has dramatically increased in recent

years (Kirkeby, 2008). The reasons contributing to additional competition include

deregulation of the industry, growing demands among shippers for better levels of

service, and the relatively recent trend in the creation of third party logistics carriers. As

common carriers increasingly compete in each others territories, more trucking firms are

offering higher quality service offerings to customers (Kirkeby, 2008, p. 4). A carrier

or common carrier is defined as: A for-hire carrier that holds itself out to serve the

general public at reasonable rates and without discrimination. To operate, the carrier must

secure a certificate of public convenience and necessity (Ability Tri-Modal, 2010, p.1).

In this study, carriers or common carriers will be limited to commercial trucking

companies which transport goods between vendors and shippers. A commercial trucking

company is defined as: A for-hire carrier that holds itself out to serve the general public

at reasonable rates and without discrimination (Ability Tri-Modal, 2010, p.1). In this

study, shippers prepare goods for shipment and carriers deliver the cargo via commercial

trucks to the end user.

Logistics and competitive advantage

Firms no longer view logistics as simply an area for cost improvements, but they

perceive logistics as a key source of competitive advantage within a firm's total

marketing efforts (Ha, Li, & Ng, 2003). Logistics service competence can be leveraged to

create customer and market share by improving service performance, (Ha et al., 2003),


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increasing market share, (Daugherty, Stank, & Ellinger, 1998), enabling mass

customization (Bradley, Gooley, & Cooke, 1998), creating effective customer-based

systems (Closs, Swank, & Nair, 2005), effecting customer satisfaction, (Dresner &

Kefung, 1995), providing a competitive advantage, (Rodrigues, Bowersox, & Calantone,

2005), and segmenting customers (Gilmour, Duffy, & Johnson, 1994).

Tom Mentzer, Executive Director of the University of Tennessees Integrated

Value Chain Forums, has seen an evolution in the transportation industry. Transportation

companies are moving away from being just trucking firms moving products from point

to point. They are growing into complete supply service chain organizations. Supply

chain services have continued into the areas of distribution and warehousing. In the past,

cargo had been simply shipped to a warehouse, stored for a period of time, and shipped

out; now there is a demand for more complex, value-added services. In other words,

customers are demanding more from their primary service providers (Cheng & Choy,

2007).

While a review of the literature shows that many researchers examined numerous

aspects of transportation performance quality, few of these investigations addressed the

role and impact that truck drivers have on service-quality perceptions (Vansickle, 2002).

This is the reason, that this study was conducted. The purpose of this study is to examine

whether cargo handling by truck drivers has a far-reaching effect on customer perceptions

of a companys service quality.

A growing body of literature supports the notion that suppliers gain far more

lifetime value from the retention of customers than from the acquisition of new ones. A


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primary goal of logistics managers, therefore, has been to enhance operational

responsiveness to customers. In many cases truck drivers serve as front-line staff for the

organization and are frequently the customers only contact in the service encounter.

These drivers can impact customer perceptions of the service experience (Richey,

Genchev, & Daugherty, 2005; Kimberley & Hartel, 2008).

Additionally, firms in a competitive industry are always under pressure to develop

comparative advantages in resources that will give them an edge in some market segment

or segments (Hunt, 2000). Providing the right level of service delivery to the right

customer in the right market segment may serve as a comparative advantage for firms

delivering cargo door to door.

It is documented that mishandling cattle and livestock in transit has forced the

National Pork Board in Des Moines, Iowa to launch a quality assurance program. This

action was taken because truckers were not handling animals to the satisfaction of the

cattle industry. According to David Meisinger, the Pork Boards Trucker Quality

Assurance Coordinator, mishandling of live cargo by truck drivers costs the industry

approximately $59 million in lost revenue per year (Vansickle, 2002). This example

should lead other industries involved in shipping merchandise to consider the impact of

truck driver contact and interaction with vendors in their respective industries.

This researcher will examine the influence of truck driver determinants on service

quality perceptions as experienced from the receivers of trucking services. Firms

receiving goods via truck are concerned with driver reliability, personal communication

skills, driver appearance and responsiveness. This contact impacts a companys


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performance and delivery of service quality. Therefore, this study will examine the

implication of truck driver contact on service-quality as it is perceived by the receiver of

the shipped cargo.

The significance of this study and the role that truck drivers play in delivering

service quality to end users is determined in part by the convergence of many economic

factors. These factors include a firms ongoing effort to remain competitive by delivering

high quality service to its customers in a competitive global environment. Moreover,

excellent quality service can provide firms with a competitive advantage (Porter, 1985).

Another significant reason for this study grows out of the fact that trucking

operated in a regulated industry until 1980. Government regulation impacts competition

in general and the operating performance of trucking firms. To ensure their survival,

firms are now forced to add a range of customer-oriented services to complement

trucking delivery services. This change is evidenced by the phenomenal growth of third

party logistics providers. These providers offer value added services to firms engaged in

delivering cargo throughout the supply chain.

Also, there is growing evidence of the impact that front line service employees

have on overall customer satisfaction and relationship quality. Organizations must

develop information systems that enable front-line employees to build relationships

effectively and to coordinate delivery of benefits to individual customers (Mandrodt &

Davis, 1992, p. 3).

Finally, service firms must adapt to the current services dominant logic to

compete. Although little empirical research exists, practitioners and researchers agree that


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drivers play a significant role in the transportation industry. Supply chain partners all

converge and operational outcomes, relational outcomes, and overall business

performance are affected by efficient pick-up and delivery of customer cargo (Zacharia,

Nix, & Lusch, 2009). This researcher posits that many variables impact the commercial

truck drivers efficiency and effectiveness in delivering superior service quality to the end

user. In short, the data support a need for firms to continue finding ways of providing

better customer service.

Domestic firms must become accustomed to the increased competition from

global companies as well as increased competition from local firms. In addition, industry

deregulation predestined firms to adjust their service offerings to upgrade their service

delivery in an ever increasing business environment in a non regulated environment.

Furthermore, customers increasingly require firms to add value to their service offering.

In addition, little empirical research exists in this area of logistics (Ashenbaum, Maltz, &

Rabinovich, 2005). Finally, current research is being done in the area of front line service

employees and their impact on service quality. Research shows that customers make

evaluative judgments of the service quality delivered by these front line employees.

Consequently, the behaviors and attitudes of front-line employees that provide services

are crucial for the positive evaluation of services by customers (Bienstock, DeMoranville,

& Smith, 2003). In the end, firms must provide better ways of delivering excellent

service. Their very survival depends on it.


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Instrument Used to Test the Hypotheses

Hypothesis testing was done using the SERVQUAL instrument developed by

Parasuraman, Zeithaml, and Berry (1985). The Extended Service-quality Model, also

developed by Parasuraman, Zeithaml, and Berry (1988), specifies a set of factors that are

theorized to contribute to a series of four organizational gaps that may contribute to the

size of the service-quality gap perceived by customers.

The dominant conceptualization of service quality in the service management

literature is that service-quality can be measured by assessing the gap between the

customer's expectations for service (what a customer feels a service firm should offer)

versus the customer's perception of the service performance that was delivered by a firm.

This gap between expectations and perceptions is often referred to as the disconfirmation

construct of service-quality and is frequently measured by the 22-item SERVQUAL

instrument (1988).

The SERVQUAL instrument provides management and key players with

feedback about the organizations ability to provide quality service. The results of a

service-quality audit assist management in identifying service strengths and weaknesses

(e.g., gaps). The benefit to the organization is that specialized departments, such as

marketing and human resources, are able to support the business plan's focus on

customers by continuously listening to the customer-using a service-quality information

system-and making needed changes to the five key dimensions that influence customers'

perceptions of service-quality.


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CHAPTER II

Literature Review

Introduction

This literature review describes prior research from the marketing exchange

process, service quality and logistics literature and seeks to extend these concepts to the

field of commercial trucking and the truck drivers role in delivering quality service to

the customer. Because of its strong impact on business performance, customer

satisfaction, and profitability, the topic of service quality has been an important research

subject in the marketing literature for some time beginning with the conceptual of

Parasuraman et al. (1985) (Chang & Chen, 1998; Cronin & Taylor, 1992; Gummesson,

1998; Silvestro & Cross, 2000; Guru, 2003).

Producing quality products and services to customers remain vital for business

success. In fact, quality may be the most significant element in satisfying business

customers. High performance can only be sustained if strategies are directed at

satisfying the needs of all stakeholders. Achieving high customer satisfaction leads to

fewer customer defections and higher profits and growth (Erickson, 1992, p. 56).

The Exchange Process

Marketing scholars from various theoretical perspectives have acknowledged that

the fundamental purpose of marketing is to facilitate exchanges between buyers and


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sellers. Hunt (1983, p. 9) notes the primary focus of marketing is the exchange

relationship. Other authors including Bagozzi, (1978); Ferber, (1970; Frazier, (1983);

Kotler, (1972; Luck, (1969) and others agree the notion of exchange between two parties

is central to the understanding of the domain of marketing (Blois, 2004). At the heart of

every marketing act- big or small- is the exchange relationship. An exchange occurs

when a person gives something and gets something else in return (Solomon, Marshal, &

Stuart, 2009, p. 9). Whereas exchange is the core concept of marketing, a transaction, in

turn, is marketings unit of measurement. A transaction consists of a trade of values

between two parties: One party gives X to another party and gets Y in return. For

instance, in exchange for giving Apple Computer $500, a customer receives an iPod.

McInnes (1964) and Alderson (1965) are largely credited with launching this

exchange perspective in marketing. McInness (1964) remarked that marketing is any

motion or activity that actualizes the potential relation of producer and consumer. A

concept of marketing in its wildest sense, therefore, is any activity which actualizes the

potential market relationship between the makers and users of economic goods and

services ( p. 57). Alderson and Miles (1965) proposed Laws of Exchange to explain

why two parties decide to enter into a transaction.

The Law of Exchange was stated as: Given that x is an element of assortment

A1 and y is an element of the assortment A2, x is exchangeable for y if an only if these

three conditions hold:

(a)X is different than y.(b)The potency of the assortment A1 is increased by dropping x and adding y.


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(c)The potency of the assortment A2 is increased by adding x and dropping y.(Alderson & Miles, 1965, p. 121).

What is important to note here in the authors concept of exchange is the pivotal

role played by the perceptions and preferences of the exchange actors in determining the

optimality of the exchange transaction. Alderson and Miles (1965, p.122) continued their

discussion on exchange relationships:

Viewing exchange from the standpoint of one of the decisionmakers, we can say that exchange is optimal if he prefers it to any

available alternative. Similarly, for the decision maker on the otherside of the transaction, it will be optimal for him if he prefers it toany available alternative. It is assumed that if a concrete situationoffers an exchange opportunity, the number of alternativesrealistically available to either side is not infinite in number butlimited to only a few. Faced with a decision, an individual must beguided by his present knowledge of alternatives and the orderingaccording to his preferences within that set.

Philip Kotler (1972) followed up on Alderson and Miles (1965) work by

presenting the generic concept of marketing. He clarified his perception of the basic

focus of marketing by stating, The core concept of marketing is the transaction. A

transaction is the exchange of values between two parties. The things-of-value need not

be limited to goods, services, and money; they can include other resources such as time,

energy, and feelings ( p. 48).

Kotler (1972) continued in his writings to reinforce his view that transaction or

exchange is the core concept of marketing. He talked about how marketers look to

facilitate and shape exchange relationships:

Marketing is a particular way of looking at the problem ofachieving a value response from a target market. It essentially holdsthat exchange values must be identified and the marketing program


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must be based on these exchange values. The marketer attempts tofind ways to increase the persons perceived rate of exchangebetween what he would receive and what he would give up in freely

adopting that behavior. The marketer is a specialist at understandinghuman wants and values and knows what it takes for someone to act.( p. 53)

Other authors during the 1970s also contributed to this idea of the exchange being

the focal point of marketing. Richard Bagozzi (1974) defined the exchange system as a

set of social actors, their relationships to each other, and the endogenous and exogenous

variables affecting the behavior of the social actors in those relationships (p. 78).

Bagozzi also identified the cause and effect relationship of exchange and stated that the

traditional notion of exchange says little about the theoretical cause and effect

relationship determining the exchange. To say that X will be exchanged for Y when both

actors perceive their assortment to be improved is not sufficient for a theory (Nooteboom,

1992).

Marketers want to know why and when an individual will take a particular action

(Bagozzi, 1974,). Bagozzi later proposed that a general theory of marketing exchange

could be established on the exchange concept: Although marketing seems to defy

simple definition and circumscription, it is essential that marketers locate the distinctive

focus (or foci) of the discipline. Failure to do so impedes both growth of the discipline

and the character of its performance. Exchange is a central concept in marketing, and it

may well serve as the foundation for that elusive general theory of marketing ( p. 39).

Bagozzi (1978) later advanced the exchange concept by stating that the exchange

process should be viewed as a social activity rather than as insulated individuals making

solitary decisions:


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No longer are buyers and sellers treated solely as isolated actorsemitting or responding to stimuli. Rather, marketing behavior is nowregarded as an inherently social activity where the outcomes of exchange

depend on bargaining, negotiations, power, conflict, and the shared meaningexisting between buyer and seller. (Bagozzi, 1978, p. 536)

Bagozzi (1979) also presented a category for evaluating exchanges:

If the concept of exchanges is to be used in an explanatory-as opposed to apurely descriptive-sense, then it will have to be conceptualized as a phenomenoncapable of variation in one or more ways. This author believes that exchangesmight be fruitfully conceived as a threefold categorization of outcomes,experiences, and actions, each varying in degree and occurring to the actors as

individuals, jointly or shared, or both. Outcomes in an exchange refer to physical,social or symbolic objects accruing to the actors as a consequence of theirrelationshipExperiences are psychological states and consist of affective,cognitive, or moral dimensions. They typically are conveyed symbolicallythrough the objects exchanged, the functions performed by the exchange, or themeaning attributed to the exchange The final variable with which to representan exchange are the actions performed by the actors as a product of theirinterchange. Actions might represent individual choices and responses or joiningcommitments (pp. 435-436).

Customers Perceptions of Service Exchange

Customers usually face a broad array of goods and services that might satisfy a

given need. Gronroos (1984) argued that in order for a firm to compete successfully it

must have a general understanding of the customers perceptions and then determine how

the service can be influenced. Consumers make choices based on their perceptions of the

value and satisfaction that various products and services deliver (Legcecic, 2008;

Mollenkopf, Rabinovich, Laseter, & Boyer, 2007). Customers form expectations about

the value of various marketing offers and buy accordingly. These expectations are

standards or reference points that customers bring into the service experience, whereas


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customer perceptions are subjective assessments of actual service experiences.

(Zeithaml, Bitner, & Gremler, 2006, pp. 33-34).

The difference between customer expectations and customer perception is often

referred to as the customer gap. This gap refers to the difference between customer

expectations and customer perceptions of the service provided (Zeithaml, Bitner, &

Gremler, 2006). Stated another way, the quality of service a customer receives relies

primarily on expected quality of service and perceived quality of service (Zhen, Yizheg,

& Da-Hai, 2008). This conceptualization of quality of service received has its roots in

expectancy disconfirmation theory. Many early marketing researchers adopted this theory

as the foundation for measuring service quality (Gronroos, 1984; Parasuraman, Zeithaml,

& Berry 1985, 1988). According to Gronroos (1984), the quality of service that a

customer receives is essentially dependent on two variables: expected service and

perceived service. This phenomenon has been studied by several authors and is generally

regarded as the disconfirmation paradigm. (Bearden & Teel, 1983; Oliver, 1981; Oliver

& Bearden, 1985; Oliver & Burke, 1999; Swan & Trawick, 1981; Ueltschy, Larache,

Eggert, & Bindl, 2007; Webb, 2000).

Disconfirmation Paradigm

The disconfirmation paradigm asserts that customers compare perceived product

performance to perceived expectations. The disconfirmation paradigm is the widely

accepted view of the process by which customers develop feelings of satisfaction or

dissatisfaction (Cadotte, Woodruff, & Jenkins, 1987; Sheetal & Verma, 2004).

Expectations are the reference points that customers have before experiencing the service


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whereas perceptions reflect their subjective experience assessments of the service that

they have actually received (Aga & Safakli, 2007; Gronroos, 1984). The expected service

consists of what a customer believes should or will happen. For example, a customer

expects a much higher level of service when traveling first class as opposed to traveling

coach. Because customer satisfaction is critical to firm competitiveness, organizations

will strive to close or narrow this gap, i.e., between what is expected and what is received

to satisfy their customers, and to build long-term relationships with them (Ching-Chow,

2003).

Churchill and Surprenant (1982) state, Disconfirmation arises from discrepancies

between prior expectations and actual performance. It is presumably the magnitude of the

disconfirmation effect that generates satisfaction and dissatisfaction (p. 492). The

disconfirmation-expectation model assumes that a customers degree of satisfaction is an

outcome of a four-step process (Anderson, Rungfusanatham, Schroeder, & Devaraj,

1995). In a perfect world, expectations and perceptions would be identical: Customers

would receive what they thought they would and should receive. In practice, these

concepts are often, even usually, separated by some distance. Broadly speaking, it is the

goal of services marketing to bridge this distance or close the gap between customer

expectations and customer perceptions of service quality (Muslim & Zaidi, 2008).

Addressing and closing the gap between customer service expectation and

perceptions is challenging because services are performances, and most of the time it is

people who render these performances (Berry, Zeithaml, & Parasuraman, 1990). For this

reason, managers of many service firms recognize the importance of service employees


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to communicate with and satisfy their customers (Bebko & Sciulli, 2009). Parasuraman,

Zeithaml and Berry (1985) found from their interviews that a set of key discrepancies or

gaps exists regarding executive perception of service quality and the tasks associated with

service delivery to customers. These gaps can be major hurdles in attempting to deliver a

service which the customer would perceive as being of high quality (Berry, Zeithaml, &

Parasuraman, 1990).

The gaps model (Parasuraman, Zeithaml, & Berry, 1985) further suggests that

four other gaps called the provider gaps need to be closed. These gaps occur within the

organization providing the service (hence the term the provider gaps) and include the

following:

Gap 1: Not knowing what customers expect.

Gap 2: Not selecting the right service design and standards.

Gap 3: Not delivering to service design and standards.

Gap 4: Not matching performance to promises.

Provider gap 1 is the difference between customer expectations of service and the

companys understanding of those expectations. A primary cause in many firms for not

meeting customers expectations is that the firm lacks an accurate understanding of

exactly what those expectations are (Chowdhury, 2009). There are many reasons that

managers may not be aware of what customers expect: they may not interact directly with

customers, they may be unwilling to ask about expectations, or they may be unprepared

to address them (Warden, Tsung-Chi, Chi-Tsun, & Chi-Hsun, 2003). Further, because

there are few clearly defined and tangible cues for services, this gap may be considerably


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larger than it is in firms that produce tangible goods (Gronroos, 1982; Hamer, 2006;

Webster, 1992).

A number of factors have been shown to be responsible for provider gap 1. First,

because marketing research is a key vehicle for understanding consumer expectations and

perceptions of services, the size of gap 1 depends greatly on the amount of marketing

research conducted (Zeithaml, Berry, & Parsuraman, 1988). A second factor is lack of

upward communication. Frontline employees often know a great deal about customers

(Schneider & Bowen, 1985), but management may not be in contact with frontline

employees and may not understand what they know. A third factor is a lack of a company

strategy for retaining customers and strenghtening relationships with them (Gwinner,

Gremler, & Bitner, 1998). A fourth factor is inadequate attention to service recovery,

understanding why people complain and what they expect when they complain, and how

to develop effective strategies for dealing with inevitable service failures (Walker,

Johnson, & Leonard, 2006).

A recurring theme in service companies is the difficulty experienced in translating

customer expectations into service quality specifications that employees can understand

and execute (Niranjan & Metri, 2008). Provider gap 2 is the difference between company

understanding of customer expectations and the development of customer-driven service

designs and standards. Customer-driven standards differ from the conventional

performance standards in that they are based on pivotal customer requirements that are

visible to and measured by customers (Zeithaml & Bitner, 2003).


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Provider gap 3 is the discrepency between the development of customer-driven

service standards and actual service performance by company employees (Narasimhan,

2004). Even when guidelines exist for performing services well and treating customers

correctly, high-quality service performance is not a certainty. Standards must be backed

by appropriate resources (people, sytems, and technology) and must be enforced to be

effective, i.e., employees must be measured and compensated on the basis of performance

along those standards (Zeithaml, Berry, & Parsuraman, 1988). When the level of service

delivery falls short of the standards, it falls short of what customers expect as well.

Narrowing gap 3-by ensuring that all resources needed to achieve the standards are in

place-reduces the customer gap.

Provider gap 4 illustrates the difference between service delivery and the service

providers external communications (Lafferty & Colgate, 2001). Promises made by a

service company through its media advertising, sales force, and other communications

may potentially raise customer expectations and the standards against which customers

assess service quality (Duffy & Ketchand, 1998). The discrepency between actual and

promised service, therefore, has an adverse effect on the customer gap. Broken promises

can occur for many reasons: overpromising in advertising or personal selling, inadequate

coordination between operations and marketing, and differences in policies and

procedures across service outlets (Ahmet, Subhash, Mehves, & Selim, 2005). Because

service advertising promises what people do, and because what people do cannot be

controlled like machines that produce physical goods can be controlled, this type of


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communcation involves functions other than the marketing department. This kind of

interaction between contact people and customers must be examined (Potocan, 2008).

Intangibility of Services

Few transactions can be identified as purely product (no service involved) or

purely service (no physical product involved). To a certain extent, most transactions

provide a combination of product with accompanying service or service with some

product (Evans & Lindsay, 2002). Unlike quality of goods, that can be measured

objectively by such indicators as durability and number of defects, service quality is an

abstract and elusive construct because of the unique features of services: intangibility,

heterogeneity, and inseparability of production and consumption (Blankson & Kalafatis,

1999). In the absence of an objective measure, an appropriate approach is for assessing

quality of the firm's service is to measure its consumers' perceptions of quality (Berry &

Parasuraman, 1993). Thus far, no quantitative measure is available for determining

perceptions.

Services are performances that cannot be seen, felt, tasted or touched in the same

manner as tangible goods (Gill & Flaschner, 2006). For instance, healthcare services are

actions (such as surgery, diagnosis, examination, and treatment) performed by providers

and directed toward patients and their families. These services cannot actually be seen or

touched by the patient although the patient may be able to see and touch certain tangible

components of the service (like the equipment or hospital room) (France & Grover,

1992). This intangibility presents challenges to the marketer. Services cannot be


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inventoried, patented, displayed, or easily communicated to the customer so quality may

be difficult for consumers to assess (Ojasalo, 2008).

Heterogeneity of Services

The employees delivering the service frequently are the service in the customers

eyes, and people may differ in their performance from day to day or even hour to hour

(Lovelock & Gummesson, 2004). Heterogeneity also results because no two customers

are precisely alike; each will have unique demands or experience the service in a unique

way. For instance, a truck driver may provide a different service experience to two

different customers on the same day depending on their individual needs and

personalities and on whether the driver is delivering the products first thing in the

morning when he or she is fresh or later in the evening when the same driver is tired

(Lovelock & Gummesson, 2004).

Additionally, services are produced and consumed simultaneously. For example,

restaurant services cannot be provided until they have been sold, and the dining

experience is essentially produced and consumed at the same time. This means that the

customer is present while the service is being provided and utilized and the customer may

even take part in the production process (Iglesias & Guillen, 2004). This interaction

between customer and service provider implies that each affects the service experience of

the other. Another outcome of simultaneous production and consumption is that service

producers find themselves playing a role as part of the product itself as an essential

ingredient in the service experience for the consumer (Yoo & Park, 2007).


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Because services often are produced and consumed at the same time, mass

production is difficult. The quality of service and customer satisfaction will be highly

dependent on what happens in real time (Sampson & Froehle, 2006). Therefore, it is

difficult to gain economies of scale through centralization. Also because of simultaneous

production and consumption, the customer is involved in and observes the production

process and thus may affect (positively or negatively) the outcomes of the service

transactions (Mels, Boshoff, & Deon, 1997).

Perishability

Perishability refers to the fact that services cannot be saved, stored, resold, or

returned. A seat on an airplane or in a restaurant, an hour of a lawyers time, or a

telephone line capacity not used cannot be reclaimed and used or resold at a later time

(Rhoades & Waguespack, 2008). Perishability is in contrast to goods that can be stored in

inventory resold another day, or even returned if a customer is not happy. The fact that

services cannot be returned or resold also implies a need for strong recovery strategies

when things go wrong. For example, although a bad haircut cannot be returned, the

hairdresser can and should have strategies for recovering the customers goodwill if and

when such a problem occurs (Parasuraman, 1998).

Traditional Marketing Mix

One of the most basic concepts in marketing is marketing mix which is defined as

the elements an organization controls that can be used to satisfy, or communicate with

customers. The traditional marketing mix is composed of the four Ps: product, price,


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place (distribution), and promotion (Borden, 1964). However, the strategies for the four

Ps require some modification when applied to services. Traditionally, promotion is

thought of as involving decisions related to sales, advertising, sales promotion, and

publicity. In services these factors are also important, but because services are produced

and consumed simultaneously, service delivery people (such as clerks, ticket takers,

nurses, and truck drivers) are involved in real-time promotion of the service even if their

jobs are defined in terms of the operational function they perform (Rhoades &

Waguespack, 2008).

Expanded Mix for Services

Because services are usually produced and consumed simultaneously, customers

are often present in the firms facility, interact directly with the firms personnel, and are

actually part of the production process. In fact, some clients expect involvement.

Suppliers demand the complete involvement of front-line personnel when they have a

non-routine problem requiring specialized knowledge or skills (Manrodt & Davis, 1992,

p. 3). Also because services are intangible, customers will often be looking for any

tangible cue to help them understand the nature of the service experience. For example, in

the hotel industry the design and dcor of the hotel as well as the appearance and attitudes

of its employees will influence customer perceptions and experiences (Lewis & McCann,

2004).

Acknowledgment of the importance of these variables has led services marketers

to adopt the concept of an expanded marketing mix for services (Boons & Bitner, 1981).


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1. People all human actors who play a part in service delivery and thus influencethe buyers perceptions, namely the firms personnel, the customer, and other

customers in the service environment. All human actors participating in the

delivery of a service provide clues to the customer regarding the nature of the

delivery itself. How these people are dressed, their personal appearance, and their

attitudes and behaviors all influence the customers perception of the service.

(Zeithaml & Parasuraman, 2004)

2. Physical evidence the environment in which the service is delivered and wherethe firm and customers interact and any tangible component that facilitates

performance or communication of the service. In telecommunications services,

the physical facility may be irrelevant, but other tangibles such as billing

statements or the appearance of the truck may be important indicators of quality.

3. Process the actual procedures, mechanisms, and flow of activities by which theservice is delivered the service delivery, and operating systems. The actual

delivery steps that the customer experiences, or the operational flow of the

service, also gives customers evidence on which to judge the service (Zeithaml,

Bitner, & Gremler, 2006).

Service Quality Models

Researchers have proposed and evaluated both alternative service quality models

and the instruments for measuring service quality for the past two decades (Asubonteng,

McCleary, & Swan, 1996; Seth, Deshmukh, & Vrat, 2005). Service quality models help

management recognize quality concerns and aid in planning quality improvement


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programs that help to improve efficiency, profitability and, in particular, firm

performance. The most important aim of these models is to allow management to be

aware of and improve the quality of the business and its service offering (Seth,

Deshmukh, & Vrat, 2005). Among these models, SERVQUAL (Parasuraman, 1985;

1988) is the most prominent and the most widely used (Parikh, 2005).

Quality may be the most critical component in satisfying an organization's

customers (Barrier, 1991). The elevation of quality as a component of customer

satisfaction started with Juran (1974) and Crosby (1979); Deming; 1982; and

Feigenbaum (1992) and continued with the development of programs such as Total

Quality, Continuous Quality Improvement, and Total Quality Management (Tobin,

1990). Total Quality Management positioned quality as the "meeting or exceeding of a

customers expectations (Heller, 1991, p. 32). Further, Garvin (1984) and Parasuraman,

Zeithaml, and Berry (1988) put forth the proposition that while quality was

multidimensional in nature, it could be enhanced or lost with the variant of one construct.

This continued focus on quality contributed to a general improvement in products and

services. Quality programs helped define which dimensions contributed to a customer's

initial perception of quality (Garvin, 1987; Parasuraman, Zeithaml, & Berry, 1988).

Generally, a user of services has a set of attributes or characteristics in mind when

judging service quality. Quality has traditionally been viewed as conformance to

requirements (Crosby, 1979), fitness for use (Juran, 1974), and innate excellence

(Parasuraman, Zeithaml, & Berry, 1988). In 1984, Garvin suggested that product quality

is not a single recognizable characteristic; rather, it is a multifaceted characteristic that


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appears in many forms. He observed eight dimensions of product quality: performance,

features, reliability, conformance, durability, serviceability, aesthetics and perceived

quality. He also maintained that different users would require different mixes

(combinations of varied amounts) of the quality dimensions. In other words, quality is in

the eye of the beholder (Garvin, 1984).

Using extensive in-depth interviews with 12 consumer focus groups,

Parasuraman, Zeithaml, and Berry (1985) found that customers assess service quality

using the following ten dimensions.

1. Reliability- dependable and accurate performance of promised service2. Responsiveness-willingness/readiness to provide prompt service3. Competence-knowledge and skill to perform the service4. Access-approachability and ease of contact of service personnel5. Courtesy-politeness, consideration, and friendliness of service personnel6. Communication-keeping customers informed and listening to customers7. Credibility-trustworthiness, believability, and honesty8. Security-freedom from danger, risk, or doubt9. Understanding/knowing customer-knowing customers needs10.Tangibles-physical evidence of service

Dimensions of Service Quality

Service quality was initially designed based on the traditional product

manufacturing model of quality of materials utilized in the manufacture of goods, the


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workmanship resulting in a quality product, and the sales personnel (Parasuraman,

Zeithaml, & Berry, 1985). Gronroos (1984) proposed three essential points of service

quality: technical quality (what), functional (how), and overall perceptions of service.

The technical quality means the result of interaction with an actual service that is

received from the service providers. The functional quality represents the expressive

manner of service delivery that the service receiver takes from the service provider. The

overall perception of service is a customers evaluation of service between perception and

expectation of the service. Lehtinen and Lehtinen (1982) proposed three dimensions of

service quality: physical quality, corporate quality, and interactive quality. Physical

quality indicates facilities, equipment, or buildings. Corporate quality represents the

service firms image and reputation. Interactive quality means the interaction between

guests and service providers (Zeithaml & Parsuraman, 2004).

Parasuraman, Zeithaml, and Berry (1985) developed 10 dimensions of service

after conducting numerous focus group research studies with a variety of industries.

These 10 dimensions of service quality, regardless of service sector include the tangibles

(appearance of physical facilities, equipment, personnel, and communication materials),

reliability (ability to perform the promised service dependably and accurately),

responsiveness (willingness to help customers and provide prompt service), competence

(possession of the required skills and knowledge to perform the service), courtesy

(politeness, respect, consideration, and friendliness of the contact personnel), credibility

(trustworthiness, believability, and honesty), security (freedom from danger, risk, or

doubt), access (approachability and ease of contact), communication (keeping customers


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informed in language they can understand and listening to them), and understanding the

customer (making the effort to know customers and their needs) (Berry, Zeithaml, &

Parasuraman, 1990).

Services are performances, and most of the time it is people who render these

performances (Berry, Zeithaml, and Parasuraman, 1990). For this reason, many service

firm managers recognize the importance of service employees in communicating with

and satisfying their customers. Berry, Zeithaml, & Parasuraman (1990) found that

managers of service businesses pay particular attention to employee training. A set of key

discrepancies or gaps exist regarding executive perceptions of service quality and the

tasks associated with service delivery to customers. These gaps can be major hurdles in

attempting to deliver a service that consumers would perceive as being of high quality

(Panayides, 2007). These challenges help researchers better appreciate the challenges in

measuring service quality.

The principal concepts addressed in service quality delivery include satisfaction,

attitude, expectations, disconfirmation, evaluations, and performance (Gupta, McDaniel,

& Herath, 2005). For the purposes of this study, satisfaction is defined as both the

cognitive and affective response to an experience (Shipley, Johnson, & Hashemi, 2009).

Therefore, satisfaction (or dissatisfaction) is the result of a customers response to a

service encounter.

Attitude, then, is a predisposition to a service encounter (Iglesias, 2004). Attitude

is associated with the long-term relationship between service provider and receiver

(Oliver, 1981). As a result, attitude directly develops as the outcome of previous


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experience and satisfaction and becomes part of the customers frame of reference

regarding the service provider (Olson & Dover, 1979). Expectations represent, according

to Olson and Dover (1979), pre-usage beliefs held about a service. In other words,

expectations anticipate results or the service experience and so reflect experience norms

(Cadotte, Woodruff, & Jenkins, 1987).

Churchill and Surprenant (1982) addressed the concept of disconfirmation which

is defined as the differences between a customers prior expectations and perceptions of

actual performance. The result leads to overall satisfaction or dissatisfaction with a

service provider. The construct of evaluations involves a customers perception of

quality, satisfaction, and resulting attitude (Iacobucci, Grayson, & Ostrom, 1994).

Generally, using preconceived standards, customers make evaluative judgments about

services to be purchased or a service provider. For example, if their perceptions exceed

their standards, then their evaluation is favorable.

Performance is the final construct of customer satisfaction of service quality.

Oliver, Rust, and Varki (1997) defined performance as consumer judgment about the

quality of service received, generally categorized as good or bad. The concept of

performance is extremely important in the literature on customer satisfaction because a

performance level becomes the standard by which customers evaluate their experience

(Caceres & Paparoidamis, 2007).

The challenge of assessing customer satisfaction with a service involves more

than merely addressing opinion regarding service quality. In order for a customer to be

satisfied with the outcome of purchasing a service, perceived service quality involves a


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positive evaluation of the end result and experience with the delivery of that result. To

that end, employee selection and training becomes an important component of perceived

service quality (Oakland & Oakland, 1998). Unlike the quality of goods which can be

measured objectively by such indicators as durability and number of defects, measuring

services is challenging for many reasons.

Difficulties Unique to Services

1. Services cannot be stored

2. Services cannot be mass produced

3. Patents cannot be protected

4. Service quality is difficult to control

5. Service costs are difficult to calculate

6. Demand for services fluctuates and,

7. Consumers themselves are involved during the service production process

(Parasuraman, Zeithaml, & Berry, 1985).

The GAP model was developed by Parasuram, Zeithaml, and Berry (1985) to

show the most important activities of the service organization that influences perceptions

of quality. Their model is based on an interpretation of qualitative data generated through

in-depth executive interviews and consumer focus groups. The model shows the

interaction between key activities and identifies the linkages between these activities of

the service organization which are pertinent to the delivery of a satisfactory level of

service quality.


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Logistics Quality Service

Little has been written about the trucking industry despite the growing importance

of logistics in corporate strategy and the global economy (Brooks & Ritchie, 2005). The

logistics discipline does not have as rich a heritage of theory development and empirical

research as older more established disciplines such as anthropology, philosophy,

psychology, and sociology (Stock, 1997). In fact, much of the logistics literature and

research is considered largely anecdotal in nature and lacks a rigorous orientation toward

theory development, testing, and application (Mentzer, Bienstock, & Kahn, 1995).

One of the biggest challenges logistics providers face as they provide service from

the supplier to the customer is to assess the value and impact these activities have on

overall business performance. In fact, definitive empirical results that link improvements

to logistics performance to overall firm performance have been difficult to achieve.

Although progress has been made, Bowersox noted that establishing a link between

functional logistics performance and overall firm performance in the logistics industry is

the equivalent to the medical fields dilemma of finding a cure for cancer. In other words,

there is much empirical research to be done (Bowersox, Closs, & Stank, 2000). This

research hopes to add to the body of knowledge by positing that truck drivers play a

central role in a companys assessment of service quality as these drivers deliver cargo to

the end user. Research already indicates that the attitude and actions of contact employees

can affect customers perceptions of the service. Other studies have emphasized the

influence that a service employee has on customer perceptions of service quality. Other

research indicates that employees positive and negative behaviors are highly correlated


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to the customers overall satisfaction (Kattara, Weheba, & El-said, 2008). Moreover,

research indicates that many service firms fail to deliver service quality to their customers

because their employees deliver inferior value to the end user (Scheepers, 2006).

Sheffi (1990) argued, for example, that a combination of economic, regulatory,

and technological changes would cause Third Party Logistics (3PL) services in the

United States "to experience explosive growth during the 1990s (p.28). Sheffi was

correct. Follow-up work done by Ashenbaum, Maltz, and Rabinovich (2005) showed that

annual U.S. 3PL expenditures exceeded $80 billion in 2005. Third Party Logistics

services refer to a for-hire provider performing logistics activities for the buyer or seller

of raw materials, processed foods, or finished products. The third party performs services

that might be done by the buyer or seller, and is actively engaged in the movement of

goods and information relevant to the transaction, but the third party does not take title.

As business processes become more complex and are integrated into the entire supply

chain management process, 3PLs turn out to be essential. Barks (1994) followed up on

Sheffis work by illustrating that annual expenditures for 3PL services in the United

States did not exceed $10 billion until 1993 ( p. 36). Today, by contrast, annual U.S.

3PL expenditures exceed $80 billion (Ashenbaum, Maltz, & Rabinovich, 2005).

Background Discussion on the Trucking Industry

The trucking industry is categorized into private carriage and for-hire carriage forms

(Tang & Yulong, 2002). Private carriers haul for a specific firm that owns its own fleet

(e.g., Publix grocery stores have a private fleet that delivers to their stores), and for-hire

carriers haul for multiple firms under contract or upon request. The two major divisions


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within the for-hire category of for-hire as follows: general freight hauling and specialized

freight hauling. Specialized freight trucks include tankers, refrigerated trailers, steel

carriers, dump trucks and construction vehicles. General freight hauling includes any

freight that can travel in standard road trailers. Within general freight hauling, the three

main segments are: truckload (TL) firms that haul in excess of 10,000 pounds, from the

shipper directly to the consignee; package express firms that haul shipments, letters and

boxes, that weigh, less than 150 pounds; and less-than-truckload firms that haul

shipments smaller than TL but larger than package express (Kirkeby, 2008).

Trucking has grown considerably since it began as an industry in the early 1900s

(Cantelon & Durr, 1996). The industry grew during the 1920s, competition increased, and

aggressive competition and economic reliance on trucking led to regulation. Regulation

of interstate trucking began when the Interstate Commerce Commission (ICC) was

granted authority under the Motor Carrier Act of 1935. The American Trucking

Association, the industrys lobbying group, was established in the early 1930s to promote

regulation because trucking firms were engaged in severe price wars. Until the late

1970s, most transportation was regulated because regulators perceived that pure

competition would lead to decreased safety and diminish the ability to serve the public.

Since the movement of passengers and goods is deemed essential to commerce, the

economy could not risk having reduced safety and poor service. Although the economy

continues to depend on trucks to haul the majority of commercial and retail goods, the

regulatory governance view has been replaced with a view that market forces do not lead


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to reduced safety and that they actually increase the ability to serve the public (Tang &

Yulong, 2002).

During regulation the ICC restricted routes, rates, and entry into the market. Rate

bureaus were formed to set fair rates based on weight, distance, and class. For example, a

trailer was limited in the freight that it could transport based on the volume of the truck

(physical capacity) and weight of the load (regulatory restrictions). The rate bureaus, and

now the firms attempt to price the freight based on how greatly it affects either constraint

(Kirkeby, 2008).

Classes were developed to capture the general characteristics of freight. Because

entry was also restricted, a firm could not grow unless it bought operation rights from

other firms or unless it proved that existing firms did not offer the service. The costs to

the economy of trucking regulation the included firms inability to offer flexible or

customized service and poor management of truck lines. Generally the ICC approved

rates that were 7% above operating costs for the region (Jerman & Anderson, 1994).

This lead to a disinterest in cost control by managers. Labor contracts with large wage

increases were not a problem, as firms could recoup the costs. On-time service and

customer satisfaction were often not considered in the regulated industry era (Pettus,

2001).

Description of Less Than Truckload Operations

The less than truckload (LTL) segment is organized into national, interregional,

and regional types of firms. National firms concentrate on long-haul shipments of three-

to-four-day lanes (e.g., lanes in excess of 1500 miles). Interregional firms carry freight


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between regions (Belman & Monaco, 2001). For example, they pick up shipments in the

Midwest destined for the Southeast. They concentrate on one to two day lanes of 500 to

1,000 miles. Regional firms carry all freight within a region and they primarily do all

their business overnight or the next day; their lanes are less than 500 miles (Kirkeby,

2008).

Recently, some blurring of the lines has occurred between these three types of

carriers. Most LTL firms believe that long haul and short haul cannot be effectively

handled by the same firm (Belzer, 2002) however, other firms are attempting to be the

single carriers that shippers demand. For instance, in order to reduce transportation costs,

some shippers have begun to demand that for-hire carriers remove all the freight from the

dock and take care of administration and transportation, regardless of whether their

carrier services all the locations. The carriers consign the freight for areas they do not

serve. Thus, shippers have only one firm to call and carriers subcontract (Sornn-Friese,

2005).

The following describes a typical LTL day. Beginning at noon, pick- up and

delivery drivers begin loading their trailers with freight from shippers. Some of the pick-

ups are scheduled before the driver leaves in the morning, but many are called in from

shippers while the driver is on the road making deliveries. The dispatcher receives the

pick-up requests and communicates them in some manner to the driver (the method of

contact varies quite substantially. Some terminals have RF or Nextel phones, beepers,

and alpha numeric pagers. Some still have radios, some require drivers to call in after

each stop often from the shippers phone, and others use cell phones). The driver is given


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a bill of lading. For some firms, this information is immediately transmitted back to the

terminal so they can plan where to ship the freight. Other firms wait until the drivers

return to the terminal to process the information. Once the pick-ups are complete, the

driver returns to the terminal. Some terminals have specific times after which they will

not pick up freight from a shipper. Others will never miss a pick-up (Cantelon & Durr,

1996).

Not all terminals function the same way. For a large terminal, the driver parks the

tractor and trailer in the yard and a company employee backs it up to the dock for

unloading. For small terminals, drivers back the trailer into the dock themselves and may

unload the freight as well. Once the trailer is backed up to the dock, the freight is taken

from the trailer and put onto line haul trailers to be shipped to another terminal that

evening or over the course of the next few days. A dock supervisor plans how to unload

the city trailers and load the line haul trailers. However for smaller terminals, the terminal

manager does that planning. There are several philosophies on how to organize freight for

line haul distribution. For larger hauls the hub and spoke system is commonly used. The

hub and spoke system was first used in trucking by Roadway in the 1960s (Cantelon &

Durr, 1996). The hub and spoke system was first introduced in the airline industry in

1955 by Delta Airlines. Its purpose is to route all traffic through one central hub or hubs

with very few direct routes between other destinations. Airlines used the system so

airplanes would spend less time in the air, thus reducing their costs. Trucking firms have

adopted this strategy and designate certain terminals as hubs and then have smaller, more


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fuel efficient vehicles carry the freight to their final destination (Lumsden, Fabrizio, &

Ruggeri, 1999).

Freight is constantly in transit and moving over the road from terminal to

terminal. When the freight arrives, the dockworkers break down the inbound shipments

and may be expected to coordinate pool shipments or shorter routes for the morning city

operations. Some terminals run fixed routes based on geography and re-adjust if trailers

are imbalanced. Others considered that all the inbound freight and plan routes based on

freight flow. Once the trucks are loaded, the drivers move the freight out to the customers

and deliver it. When the task is finished, the day begins again with pick-ups.

Quality Improvement Research in Logistics

Quality improvement programs in manufacturing have received much attention by

researchers, and the results achieved by these companies have been dramatic and well

documented (Wisner & Lewis, 1997). Over time, efforts to improve performance and

competitiveness have led transportation companies to implement formal quality

improvement programs as well. Limited attention has been given to the quality

improvement

Documents

Truck Driver Determinants of Service Quality as Perceived By