Supply Case

During last several years almost all industries have been experiencing a tremendous and drastic change in the traditional way of purchasing and logistic functions. Therefore, the supply chain management introduces the strategic approach that manages the material procurement, material management, and material distributions in efficient way to enhance the level of productivity in an organization. As we learned in supply chain introduction class (SCM-3301), "Supply chain management aims to integrate all key business activities through improved relationships at all levels of supply chain, such as internal operations, upstream supplier network, and downstream distribution channel to achieve a competitive advantages. Supply chain management does not only bring efficiency and costs deduction, but also gives competitive advantage edge in a firm. So, if any organization considers being success in current competitive market, then organization should have a better supply function, and major supplies that requires operationally and strategically contributions. The contributions do not have only direct impact on the bottom line, but also has indirect impact in terms of enhancing the performance of others in organizations. According to this viewpoint, the required contribution of supply function gives a secondary importance to the service perspective.

The purchasing function of supply chain and customers who purchases the materials or services for the companies' different department that defines as internal customers. Most of the organizations are using the SERVQUAL questionnaire for the customer satisfaction, which was developed by Parasurman. According to Parasurman, SERQUAL questionnaire has a following set of service quality dimensions, such as reliability, responsiveness, assurance, empathy, and tangibles. Reliability: is an ability of purchasing department to perform dependably and accurately according to promised services. Responsiveness: willingness of purchasing department to help internal customers, and provides the prompt services. Assurance: knowledge and courtesy of purchasing department's employees ability to convey trust and confidence. Empathy: purchasing department provides personalized attention to the customers. Tangible: appearance of purchasing department's physical facilities, equipment, personnel, and communication materials. These dimensions were measured in past, however Cronin and Taylor argued that "performance based measurement are more effective for evaluating the service quality rather than SERVQUAL. The SERQUAL measurement tool was chosen for the investigations, which was widely used for the research that provides the breadth and accuracy to observe the complexities of construct for the internal customer satisfaction".

The supply chain management is experiencing a theoretical and practical development; therefore different arguments and concepts set forth, where SCM conceptualization introduced the strategic purchasing. According to Fantazy et al noted, "Early understanding of the purchasing responsibility was limited to obtaining the supplies, materials, and a service that was required to produce a product or a service". So, the proper supplier selections was impossible without appropriate recognition of the stakeholders; therefore only few people were interested in organizations to know how the purchases were made, and did they receive the merchandise what they wanted, and from whom they wanted these merchandises. Moreover, the traditional services of purchasing was to prevent the profession from evolving to meet demands of the future, which was creating a functional capacity, as a result neither acquisition area influenced nor other function influenced. According to Stanly and Winsor, "this old-fashioned purchasing function in organizations has been developed with more strategic integration in higher level of organization, which enhances the performances in a firm." Some of the organizations are focuses only on the purchasing's routines and operational activities, due to these reasons the service perspective are getting less attention, which reduces the high quality personnel and needs for staffing. Moreover, some of the simpler and yet most powerful value improvement tools value analysis, standardizations, and simplifications in the supply area never exploited the service context; therefore, servicing perception is still limiting the supply function's activities along with the roles and contributions that fills the requests of internal customers. As a result, it becomes easy to lose sight of the real external customer's needs, and assumes that satisfying internal customers are sufficient.

In contrast, Service quality is one of most important part which influences customer retention and determines the growth and successful competition in the business. As known that service is intangible product in the service industry, customers evaluated organization base on the service quality. Customer satisfaction and customer loyalty are established if service quality is satisfied or exceeded customer expectations which means the service level is high and satisfy customer need. Service quality is undoubtedly a significant element of service product design process, as it influences the volume of demand for a given service product, as well as customer profile of this service product. Service business should understand well about service quality because the impact of quality service on profit and financial indicators of business performance. As there are many researchers stated that service quality impacts customer satisfaction, customer buying behavior, service loyalty and company's profit. The estimation of service quality lead to customer satisfaction, because it is based on what level of service quality consumer received. Service quality can be evaluated in terms of customer satisfaction, customer attitude, and customer needs and wants. It is very important to improving service quality as it will increase customer satisfaction. For instance, improving