service quality assessment in pt. indokemika jayatama

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543 THE INDONESIAN JOURNAL OF BUSINESS ADMINISTRATION Vol. 2, No. 5, 2013:543-553 SERVICE QUALITY ASSESSMENT IN PT. INDOKEMIKA JAYATAMA USING INDSERV SCALE AND IMPORTANCEPERFORMANCE ANALYSIS Eduardus Ivan Subianto and Mohammad Hamsal School of Business and Management Institut Teknologi Bandung, Indonesia eduardus.ivan@sbmitb.ac.id Abstract— Everyday, competition in the business landscape is always increasing. In the year 2012, its 25 th year of establishment, PT Indokemika Jayatama tries to achieve its goal to become the leading player in the chemicals trading and distribution business. To achieve goal to become leading player, Indokemika needs to better understand market’s perception toward its service quality. This study aimed to achieve that understanding by conducting a market survey, followed by gap analysis in service quality dimensions described by INDSERV scale, which Gounaris introduced in 2005, and focusing the target using ImportancePerformance Analysis by Martilla and James (1977). Questionnaires, containing 21 questions to explain B2B service quality attributes, were sent to Indokemika’s active customers. The PerformanceImportance Gap Analysis and ImportancePerformance Analysis (IPA) Map inferred that Indokemika’s performance of service quality is perceived as lower than customers’ perceived importance. This is showed by the positive gap score with average gap score at 0.302, and 14 attributes dominated by Hard Process and Output Quality dimension of INDSERV scale are above the average gap. The IPA Map then indicates that the quality attribute that needs improvement, which has the third highest gap score, is ‘Look after customer’s interest’ of the Soft Process Quality dimension. Thus, Indokemika should focus improvement in that direction. Keywords: Perceived service quality, INDSERV, PerformanceImportance Gap, IPA Map 1. Introduction In developed economies where it is easy to set up a business, increasing market share is always difficult because of increased competition. Simply put, no matter what idea you have or business model you put in place there is always someone else competing with you for customers (Amerland, 2012). Every day, competition in the business landscape is always increasing. In the year 2012, its 25 th year of establishment and after undergoing restructurization in the previous year, Indokemika tries to reposition itself in the market to be able to achieve its goal to become the market leader. PT Indokemika Jayatama (Indokemika) was founded in 1987 as a distributor for Indonesia’s leading group of chemical producers. Indokemika is a part of Salim Chemicals Division of Salim Group. Increased demand for the chemical products in Indonesia’s other industrial centers prompted Indokemika to expand. In 1990 Indokemika opened a branch in Bandung followed by another branch in 1996 in Semarang. Indokemika then opened representative offices in Medan in 2007 and also representative offices in Cirebon and Solo in the year 2009. The next year, Indokemika opened representative office in Bali. Indokemika’s newest branch, Makassar, was established in 2011. Indokemika’s Vision "To be a leading and respectable chemicals trading and distribution company in Indonesia and to satisfy customers' needs by providing good quality products and services at competitive prices"

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SERVICE QUALITY ASSESSMENT IN PT. INDOKEMIKA JAYATAMA USINGINDSERV SCALE AND IMPORTANCE‐PERFORMANCE ANALYSIS

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  • 543

    THE INDONESIAN JOURNAL OF BUSINESS ADMINISTRATION

    Vol. 2, No. 5, 2013:543-553

    SERVICEQUALITYASSESSMENTINPT.INDOKEMIKAJAYATAMAUSINGINDSERVSCALEANDIMPORTANCEPERFORMANCEANALYSIS

    EduardusIvanSubiantoandMohammadHamsal

    SchoolofBusinessandManagementInstitutTeknologiBandung,Indonesia

    [email protected]

    AbstractEveryday,competitioninthebusinesslandscapeisalwaysincreasing.Intheyear2012,its25thyearof establishment, PT Indokemika Jayatama tries to achieve its goal to become the leading player in thechemicals tradinganddistributionbusiness.Toachievegoal tobecome leadingplayer, Indokemikaneeds tobetter understand markets perception toward its service quality. This study aimed to achieve thatunderstandingbyconductingamarketsurvey,followedbygapanalysisinservicequalitydimensionsdescribedby INDSERVscale,whichGounaris introduced in2005,andfocusingthetargetusing ImportancePerformanceAnalysisbyMartillaand James (1977).Questionnaires,containing21questionstoexplainB2Bservicequalityattributes, were sent to Indokemikas active customers. The PerformanceImportance Gap Analysis andImportancePerformance Analysis (IPA) Map inferred that Indokemikas performance of service quality isperceivedaslowerthancustomersperceivedimportance.Thisisshowedbythepositivegapscorewithaveragegap scoreat0.302,and14attributesdominatedbyHardProcessandOutputQualitydimensionof INDSERVscale are above the average gap. The IPA Map then indicates that the quality attribute that needsimprovement,which has the third highest gap score, is Look after customers interest of the Soft ProcessQualitydimension.Thus,Indokemikashouldfocusimprovementinthatdirection.Keywords:Perceivedservicequality,INDSERV,PerformanceImportanceGap,IPAMap1. IntroductionIn developed economieswhere it is easy to setup a business, increasingmarket share is alwaysdifficultbecauseof increased competition.Simplyput,nomatterwhat idea youhaveorbusinessmodelyouputinplacethereisalwayssomeoneelsecompetingwithyouforcustomers(Amerland,2012).Everyday,competitioninthebusinesslandscapeisalwaysincreasing.Intheyear2012,its25thyearofestablishmentandafterundergoingrestructurization inthepreviousyear, Indokemikatriestorepositionitselfinthemarkettobeabletoachieveitsgoaltobecomethemarketleader.PT Indokemika Jayatama (Indokemika)was founded in1987asadistributorfor Indonesias leadinggroup of chemical producers. Indokemika is a part of Salim Chemicals Division of Salim Group.Increased demand for the chemical products in Indonesias other industrial centers promptedIndokemikatoexpand.In1990IndokemikaopenedabranchinBandungfollowedbyanotherbranchin 1996 in Semarang. Indokemika then opened representative offices inMedan in 2007 and alsorepresentative offices in Cirebon and Solo in the year 2009. The next year, Indokemika openedrepresentativeofficeinBali.Indokemikasnewestbranch,Makassar,wasestablishedin2011.IndokemikasVision"Tobea leadingand respectable chemicals tradinganddistribution company in Indonesiaand tosatisfycustomers'needsbyprovidinggoodqualityproductsandservicesatcompetitiveprices"

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    544

    IndokemikasMission"Understandingthecustomers'needsandcloselymonitoringthe industrytogaincompetitiveedgebyusingintegratedinformationsystemandwellstructuredorganization"Indokemikasmainbusinessactivity istotradechemicalmaterialsproductstovarious industries inIndonesia.As anever growing company, Indokemika is always trying to improve itsportfolio. Forseveralyearspriorto2011,Indokemikasbusinessesaredividedintofiveproductdivisions:Industrial(general) Chemicals, Coating& Ink Chemicals, Plastics& Rubber Chemicals, Food Chemicals, andCosmetics&Oleochemicaldivision.Intermsofrevenuegenerated,IndustrialChemicalscontributesthebiggestportion,whichisaround50%.ThisisfollowedbyPlasticandRubberChemicalswith20%revenue contribution. Though generating higher revenue, the kind of products served by thosedivisionsistypicallycommodityproductswithtightmargin.OtherdivisionssuchasCosmetics,FoodIngredientsdealsmostlywithspecialtyproductswhicharesmaller inquantitybuthigher inmargingenerated.WorkingUnitIndokemikashumanresourcesconsistsofapproximately300persons,50%of it isconcentrated inthecommercialsideofbusiness(SalesandMarketing)whiletherestisbusinesssupport(Accounting,Finance,Procurement,Logistics,Collection,HR&GA).ThelatestrestructuringinIndokemikainyear2011separatedthefunctionofsalesandmarketing.BusinessIssueAsbusinessgettingmorecompetitiveeveryday,salesmustbeabletodealwithnewplayers inthebusiness that always try to penetrate themarket. The increasing competition sometimes led thecompaniestoenterapricewarsituation.Tominimizethepricewarpossibilities,everysalespersonhastomaintaingoodrelationshipwiththecustomers.Theincreasingcompetitioninthedownstreammarketsometimesforcesthecustomerstoseekforthebestpriceforthesamequalityproducts inthemarket.EvenifothercompetitorscanmatchorbeatIndokemikasprice,theidealscenariowouldbecustomersstillprefertodobusinesswith Indokemika.That iswherecustomersatisfaction levelwilldeterminecustomersdecisiontobuy.Whensuppliersmeetcustomersneeds,desiresandrequests,thusincreasingthesatisfactionleveloftheircustomers,theycaninthelongtermexpectapositiveeffectregardingtheprofitabilityoftheirbusinesses (Helgesen,2007).Therefore, it is importantfor Indokemikatosatisfy itscustomers.Thequestionsthatneedtobeansweredbythisresearchare:(1)How iscustomersperceptiontowardIndokemikas service quality? (2)Which area of improvement is needed for Indokemikas servicequality?(3)Whatfutureactionsneedtobedonefortheimprovementstobeachieved?

    2. BusinessIssueExploration

    Tobeable tocompetebetter in themarket, thecompany tries toobservecustomerssatisfactionlevel andhow it affects companyperformance.Customer satisfaction isperceived asbeing a keydriveroflongtermrelationshipsbetweensuppliersandbuyers,asitispositivelyrelatedtocustomerloyalty and customer profitability (Helgesen, 2007). Customer satisfaction is affected by severalfactors. Three major factors that influence customer satisfaction are product quality, price, andservicequality.Sinceproductqualityandpricearecertainandrelativelyeasiertobemeasuredandcompared, competing in product quality and pricing are usually not the main issue in thecompetition. Service quality is somewhatmore abstract than the other two, because it involvescustomers experience toward the companys service level. Thusmeasuring service qualitymightprovide challenge for the company. Bhattacharjee, (2010), suggests that service qualitymeasurementandimprovementisoneofthemostsignificantstrategictoolsforenhancingefficiencyand business growth. Realizing the importance of service quality measurement, this research isfocusingonthatparticularareaofservicequality.

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    545

    Astimegoesby,Indokemikasperformancegrowsyearbyyear.Eventhoughmacroeconomicalcrisishitthemarkettwice inthe lastfiveyears,which isendof2008andbeginningof2012,Indokemikawas stillable tokeep itsperformance levelnot todrop. In termsofworkforce, Indokemika is stilladding new employees, mostly to improve sales force, and any other areas that need to beimproved. Employee turnover is a normal thing and generally will not destabilize Indokemikasperformance.Indokemikasbusinessasachemicaltradinganddistributioncompanyhassimilarandblending of characteristicswith that of service and B2B industries. Though operating in the B2Bcontext,theapproachestowardcustomersaresomewhatsimilartoserviceindustries.Thechemicaltradinganddistributionbusinessisastillgrowingbusinessandnewplayersareemergingeveryday.The chemical trading and distribution business is a still growing business and new players areemerging every day. Simply said, a companywith strong financial power and extensive networkmighttrytoenterthemarket.CustomerProfileandAttitudeIndokemikascustomersarerangingfromasbigasMultiNationalCompaniessuchasUnilever,KAO,LOreal, to as small as home industries that produces nonbranded detergent, food (cookies)packaging, andmanymore. The attitudes of the customers are different butwe can draw somespecificcharacteristicsamongsimilar industries.Normally Indokemikaseparatecustomersgeneralbusinesstype intotwo:commoditybusinessandspecialtybusiness.Commoditybusiness isusuallydealingwithbigvolumesandtightmargin.Becauseitisnothardtoreplaceaproductwithanotherproduct in this commodity type of business, penetrating themarketwill be easier but customerretentioncouldbechallenging.Ontheotherhand,specialtybusinessneedsmorepatientapproachsinceproduct replacementcantbeexecutedaseasyascommoditybusiness.Hence,entering themarketwouldbetoughbutonceweestablishedourexistence,itwouldnotbeashardtoretainthecustomers.IndokemikasSuppliersIndokemikahasbeenworkingwithlocalandforeignchemicalmanufacturersforyears.Someofthemajor suppliers are Styron Indonesia, Chimei Corporation (Taiwan), Styrindo Mono Indonesia,HuntsmanTioxide(UK),AlbrightandWilson,Petrocentral,Borregaard,AdityaBirla,etc.Indokemikaalsoownsamanufacturingpresenceinthesurfactantbusiness.MarketingandDistributionLineTo reach every corner in Indonesia, Indokemika now has established 9 branches that spreadthroughoutthiscountry.Everybranchholdssome inventoryand issupportedbyat leastonesalesrepresentative. The bigger and older branches have more resources compared to the youngerbranches. The newer branches with limited warehouse space are expansions of nearby biggerbranches.Forexample,SolobranchwasusedtobepartofSemarangbranch,whereasCirebonandBandung branch. This research however is using the old area separation that brings four majorregions:Jakarta,Surabaya,Bandung,andSemarang.A. ConceptualFrameworkOneofthemostwidelyusedmethodstomeasuretheservicequalitylevelistheSERVQUALmethod.Parasuramanetal(1988)describedservicequalityintofiveaspects:Reliability,Assurance,Tangibles,Empathy,andResponsiveness (RATER).SERVQUAL ismostvaluablewhen it isusedperiodically totrackservicequality trends,andwhen it isused inconjunctionwithother formsofservicequalitymeasurement. (Parasuramanetal,1988). In the service realm,mostof the researches focusedonmeasuring service quality in the consumer sector are particularly using the SERVQUAL scale(Gounaris,2005).However,sincethescaleoriginallymeantforconsumergoodssector,itgavemixedresults for B2B context, hence led Gounaris (2005) to develop an alternative measure, namedINDSERV.

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  • SubiantoandHamsal/TheIndonesianJournalofBusinessAdministration,Vol.2,No.5,2013:543553

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    Lee,etal (2008)gave the interpretationof the importanceperformancemapwhich isprovided inthefourquadrants,asbelow:1. ConcentratehereHighimportance,lowperformance2. Keepupthegoodwork.Highimportance,highperformance3. LowpriorityLowimportance,lowperformance4. PossibleoverkillLowimportance,highperformance

    UsingthisImportancePerformanceAnalysis,wecanobtainanotherviewforanalyzingservicequalityassessmentthatusesINDSERVmodel.UsingthequestionsfromINDSERVthatcandescribethefourlevelofqualityanduseitasthequalityattributesfortheIPA,wecanthenplaceeachattributesontheIPAmapandanalyzewhichaspectofqualitythatneedsimprovement.SamplePopulation,Size,andLimitationThe researchs sample population is limited only to customers of Indokemika. According toIndokemikasdatabase,thetotalactivecustomers,whicharecustomersthatplacedpurchaseorderto Indokemika during the period of year 2011 up to 2012 yeartodate, are as much as 2370customers,nationally.Thetheorythat iswidelyused indeterminingsamplesize isSlovinsformula.Theformulaisasfollowing(Ariola,2006): n=N/(1+(Nxe2))Where,n=samplesize;N=population;e=marginoferrorThisformula isbasedonthecalculationusing95%confidence levelwithastandardmarginoferrorof5%.AccordingtoanarticlebyDataStar(2008),oftenanacceptablemarginoferrorusedbysurveyresearchers falls between 4% and 8% at the 95% confidence level.Basingon this statement, thebiggestmarginoferror,8%,willyieldtheminimumnumberofsampleasmuchas147.SamplingMethodStratified random sampling could give broader view about what is customers perception ofIndokemikasservicequality indifferent regions.However,since this research is intended togetaresultthatrepresentsthesituation inthewholecompany,themostsuitedsamplingmethodwouldbe simple random sampling. This sampling design has the least bias and offers the mostgeneralizability(Sekaran,2003)SurveyFormDesignCustomer survey form was designed using attributes generated from INDSERV model. The 21questionsthatrepresenttheattributesareshowninTable1.

    Table1.ListofSurveyQuestions

    1 Easeofcontact

    Potential

    2 Easeofobtainingproductpricing

    3Easeofobtainingproductinformation

    4 Leveloftechnicalservicesupport5 Qualityofproduct6 Networkofprincipals/partners7 Fulfillmentofspecialrequest HardProcess

    8 Abilitytodelivertheorderinfull9 Abilitytodelivertheorderontime

    10Completenessandaccuracyofdocuments

  • SubiantoandHamsal/TheIndonesianJournalofBusinessAdministration,Vol.2,No.5,2013:543553

    548

    11 Understandscustomer'sneeds12 Enthusiasmofsalesstaff

    SoftProcess

    13 Handlingofcomplaints14 Responsivenesstoqueries

    15Professionalismandcourtesyofsalesstaff

    16 Visitfrequencyofsalesstaff17 Lookaftercustomer'sinterests18 HelpcustomertoreachObjectives

    Output

    19Actuallydeliveringbenefitforcustomer

    20Contributestocustomer'ssales/image

    21Canaccommodatecustomer'sstrategy

    The scoringwasusing7point Likertscale, and taking suggestion from the articlebyMartilla andJames (1977), the importance and performance measurement is separated to minimizecompoundingandordereffects.Customerswerealsogivenspacetogiveadditionalcomments.Thiscomment space gave the opportunity to the customers to freely share their opinions towardIndokemikas services. These comments are the source of qualitative data thatmight beused toassessIndokemikasservicequality.3. BusinessSolution

    A. AlternativeBusinessSolution

    Forthecompanytobeabletoenhancecustomersatisfactiontowininthecompetitivemarket,thealternative paths are: lowering price, increasing quality, and optimizing service quality. Since thisresearchfocusisontheimpactofservicequalitytowardcustomersatisfaction,thebusinesssolutionwouldbeoptimizingservicequality.

    B. AnalysisofBusinessSolutionFrom2370Indokemikasactivecustomers,asmuchas173companiesthatvariesinlineofbusiness,geographiclocation,andsizes,haverespondedtothesurveyformandgivefeedback.Byusingsurveydata from 173 customers, themargin of errorwould be approximately 7.5%,which iswithin theacceptable4to8%range.DataAnalysisTheproportionofthecustomersrespondingtothesurvey,basedonproductdivision,whichrelatestocustomersnatureofbusiness,isasshowninTable2.

    Table2.CustomerProportionBasedonSurveyRespondent

    SalesDivision Respondents Percentage

    IndustrialChemical 21 12%Plastics&Rubber

    Chemicals 75 43%Oleochemical&

    Cosmetics 29 17%Coating&InkChemicals 28 16%

    Food 20 12%TOTAL 173 100%

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  • SubiantoandHamsal/TheIndonesianJournalofBusinessAdministration,Vol.2,No.5,2013:543553

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    Table4.IndokemikaPerformanceImportanceGap

    Attribute/Description Question IMP PERF GapFulfillmentofspecialrequest Q7 5.88 5.45 0.427Actuallydeliveringbenefitforcustomer Q19 5.84 5.44 0.403Lookaftercustomer'sinterests Q17 6.06 5.67 0.393HelpcustomertoreachObjectives Q18 5.86 5.49 0.374Abilitytodelivertheorderontime Q9 6.27 5.90 0.371Handlingofcomplaints Q13 6.21 5.84 0.370Contributestocustomer'ssales/image Q20 5.80 5.44 0.357Completenessandaccuracyofdocumentation Q10 6.23 5.88 0.350Understandscustomer'sneeds Q11 6.13 5.79 0.337Networkofprincipals/partners Q6 5.78 5.47 0.320Canaccommodatecustomer'sstrategy Q21 5.65 5.34 0.318Responsivenesstoqueries Q14 6.20 5.89 0.312Leveloftechnicalservicesupport Q4 5.92 5.62 0.309Abilitytodelivertheorderinfull Q8 6.25 5.94 0.307Easeofobtainingproductpricing Q2 6.16 5.90 0.260Easeofobtainingproductinformation Q3 6.14 5.90 0.243Easeofcontact Q1 6.36 6.13 0.231Qualityofproduct Q5 6.27 6.03 0.231Enthusiasmofsalesstaff Q12 6.20 6.05 0.150Professionalismandcourtesyofsalesstaff Q15 6.28 6.14 0.139Visitfrequencyofsalesstaff Q16 5.44 5.31 0.133

    Average 6.044 5.743 0.302

    =PotentialQuality

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    =HardProcessQuality =OutputQuality

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