Cause and Effect Analysis of ANL Logistics Company - Case Study Example

Complaints Handling Name Institution Date Table of Contents Table of Contents 2 1. Introduction 3 Background of ANL 4 2. Cause and Effect Analysis 5 3. Analyzing the Firm’s Response 10 4. Conclusion 12 Appendices 14 Complaint Letter 14 Response letter 16 References 18 1. Introduction Provision of “zero-defect” service is often the mission and objective of a typical service provider. However, service delivery problems are often inevitable within a service industry because of the inimitable characteristics of services (Kau & Loh, 2006). Accordingly, poor service recovery and service failure are the fundamental causes of customer complaints (Komunda, 2013). During the recent years, the issues of complaint management have found a rising attention in scholarly researches in addition to customer service practice. As Kau and Loh (2006) explain, one fundamental reason for this is since complaint satisfaction could be effectively attained through effective complaint handling. In turn, this would contribute to positive attitude changes, increased customer satisfaction, customer loyalty, and customer retention. While this is so, complaint dissatisfaction may, on the other hand, aggravate the situation, in turn driving customers to the competitors (Garding & Bruns, 2015). While the service providers may not prevent customer complaints, they can plan effective response to these complaints (Nikbin et al., 2010). In this respect, it becomes exceedingly vital for companies to gain an insight into the variable of complaint satisfaction and to determine what complaining customers look forward to, the firm’s response strategy, as well as the right strategies that can influence customers’ repurchase behaviour. It is based on this backdrop that this paper examines a scenario of customer complaint handling at ANL to addresses these aspects while simultaneously testing the strength of justice theory in a bid to explain how customers evaluate complaint handling. Background of ANL ANL is Logistics Company that specializes in the business of shipping products in various destinations globally. The company extensively focuses in North America, Europe, Asia, New Zealand, Australia and Mediterranean. It is driven by exclusive principles spearheaded by quality customer service, modern and efficient IT systems and competitive attitude to help in providing exceptional services. Through its subsidiaries globally, such as the ANL Logistics, the company carries out delivery services and customized logistics solutions, which are tailored to ensure efficiency in the supply chain. Another affiliation is the ANL Container Hire & Sales that deals with a broad collection of domestic and international containers sold or rented within Papua New Guinea and Australia. ANL has a major focus on the environment for its office operations, containers, and vessels. The company also offers container-tracking services. ANL’s customer targets include individuals who know what they want, as well as who would wish to be served effectively without having to face mediocre insufficiencies. The targeted customers tend to be conscious about the environment and are willing to go green. The company’s services are not exclusive to anyone but loyal customers will always be considered. The customers targeted include individuals who look to have their commodities shipped to and from the locations affiliated to the company across the globe. Usually, the goods are shipped based on the laws and regulations of specific countries of operation. It also targets individuals and organizations that seek to buy or hire containers for transport or other uses. ANL Logistics provides logistics solutions to customers. This is done through a variety of strategic alliances. ANL Logistics delivers end-to-end services throughout a company’s entire supply chain. The company is committed to tailoring solutions to enhance a company’s supply chain. The company’s major competitors include other shipping and logistics companies not just locally but globally, as they do pose as options for the customer base the company’s target. Other competitors include the brokers who get shipping containers and sell them. 2. Cause and Effect Analysis A client called Christopher Walker Enterprises launched a complaint through their purchasing officer Christopher Walker Jr. The complaint was to the effect that the company had placed an order through ANL Logistics and that the services were delivered shoddily (Burrow, 2002). The company claimed that a consignment that had originated from China had significant irregularities in terms of quantity and the pricing. The client also stated delays in the deliveries and the pricing too. The company got back to the client immediately and explained the reasons for the insufficiency to which ANL Logistics apologized. Subsequently, the company did an in-depth research and found out several causes for the alleged problem the client experienced (Hoang, 2010). The company claimed that it ordered that the goods be taken in one consignment from China to Sydney Australia. However, this did not happen. Once ANL staff started operations to deliver the consignment, the Chinese side of the deal provided conflicting information regarding delays in certain products because of issues of weather that were experienced in China. Because of this, the company saw the need for double shipment (Sen, 2008). ANL’s staff further failed to provide solutions to the problem and instead assumed that the client had already communicated with his supplier and resolved to double a consignment. In cases of full containers or FCL, the loading ordinarily occurs at the supplier’s locations and later on taken back to the container’s yards that are at the port. Once a slot is booked on the vessel, the courier issues a cut-off date (Sen, 2008). This is the date whereby the loaded container should be back at the port. The Chinese company, in this case, went well past their cut off time, which led to the delays in the client receiving his order. In many cases, the container experiences delays and fails to get to the port on time. This leads the container to end up missing the scheduled ship. In the case of an LCL shipment that the clients were subjected to, the merchandises are referred to a large forwarder, whereby they put together several LCL consignments, which they combine into one container and send back to the port. This is the major cause of shipping delays experienced when it comes to transporting the good via the ocean. It was also the main cause for the delays (Total quality management, 1990). The delays were also caused by customs paper work. Recent studies have showed that a majority of Chinese suppliers are issued with export allowances from the government, of about 0% to 17%. These allowances claim a large fraction of profits, and sometimes more than the sales direct margin. As a result, some companies claim erroneous HS codes to maximize their rebate income, which is rebate fraud (Charantimath, 2011). Occasionally, the unintentional recording of incorrect HS code occurs. Sometimes the reason is due to lack of surety of the accurate HS Code or due to data-entry mistakes. There are several other issues related to paperwork that were the cause of delays in customs clearance of the China shipment. The client had not given all the proper information and papers to assist ANL Logistics in providing the best services. According to Godfrey et al. (1999), the company’s management and customer should ensure that they liaise with organizations that are experienced in the export processes. When dealing with a company that is not proficient in international trade, the clients should ensure that the company employs a reliable forwarder who is well acquainted with the processes and has a good knowledge of the products they procure. This is particularly so when operating in the developing nations, like Brazil or India. They should as well have the correct HS code for the product before commencing the shipment operations (Godfrey et al., 1999). Customs at Port of Loading and Port of Destination use a ratio of the containers for checkup. Each customs has unique policy for choosing the containers to be inspected, which is usually in relation to a few elements like the exporters’ history or the safety profile of a product. However, randomness is also put into use (Boden, 2001). Generally, it becomes a challenge to identify the exact method for inspection, as it varies highly with different countries. Unfortunately, when such occurs, customers end up missing the cut-off date. In most cases, they may have to pay customs fees for the privilege of getting the container checked (Rusill, 2010). In addition, they have to pay the rent charges and demurrage charges for the container. These include some of the factors that led to the additional charges that the client notice in the invoice issued to him. Clients should ensure that they have the required paperwork and that their products are of acceptable standards, as this would ensure that they lower the probability of such inspections from happening (Booth, 2010). Another issue that could have led to delays could be attributed to the fact that they did not read the signed agreement with ANL. The agreement stated a 2- to 4-week allowance to ensure that they receive the dispatch in due time. However, they complained because the company received them in two weeks after the agreement but delivered them two weeks later (Chopra & Meindl, 2007). The backroom staffs claims that they did not have the appropriate authorization for them to check personally if all the materials were inside the container due to the fact that some of the materials were flammable (Chopra & Meindl, 2007). The staff also did not follow up on the company’s check-in procedures. Because they were inefficiency experienced. 3. Analyzing the Firm’s Response The scenario at ANL Logistics could be effectively analyzed using the Justice Theory. Integrating the concept of Justice Theory to the scenario is, therefore, crucial. The theory is modified from social exchange and equity theories. The Justice theory suggests that individuals can evaluate a transaction based on what they invest and gain in comparison to what the other party invests and gains. The parties seek to create a balance of the ratio in the transactions (Kau & Loh, 2006). The theory suggests three key dimensions of justice, namely, interactional, procedural, and distributive justice. Within the context of the processes of service recovery at ANL, the three dimensions are all vital (Kau & Loh, 2006). This implies that aside from the outcome of the recovery being significant, the level and efforts of employees to show politeness (interactional justice), and the nature of flexibility and speed of the processes (procedural justice) are as well crucial. Conversely, distributive justice denotes the entire actions ANL will need to consider taking to address the customer’s complaint. According to Komunda (2013), these actions include problem recognition, rectifying the problem, providing refund to the customer, and apologizing to the customer. Nikbin et al. (2010) stress that service providers should all make efforts to ensure they have the service recovery process, as this would make complaining easy, fasten the recovery process, as well as provide customers with some level of control. Some scholars like Kolos and Kenesei (2012) have also provided evidence showing that distributive justice influence customers’ perceived control, which in turn influences the customer’s ultimate satisfaction. What this implies is that the process of distributive justice, such as problem recognition, rectifying the problem, providing refund to the customer, and apologizing to the customer would lead to customer’s ultimate satisfaction. For this reason, ANL’s complaint handling demands the interaction of divergent parties. Indeed, scholarly evidences have showed that complaints are often made to the front line rather than the customer service employees. This is what happened at ANL. The customer who brought the complaint first confronted the logistics staff. What this implies is that the front line employees need to be as well prepared to comply with the proper recovery actions (Hocutt et al., 1997). On the other hand, interactional justice implies that the ANL staff needs to show politeness, as well as empathy to the customers. At the same time, the customer will need to be made to to feel real emotions through sincerity. However, some researchers like Nikbin et al. (2010) have reiterated that while the entire three dimensions are recovery strategy are vital, customers are likely to feel that the procedural and interaction justice to be more vital than distributive justice. The researcher explains that the reason for this is the difficulty the customers may have in judging outcome relative to the manner in which the employees resolve the failure situation, which originates from the nature of services. Within the context of ANL Logistics, the firm responded using a written letter addressed directly to the client that had complained about the services that were provided (MCB, 1996). Atonement refers to the benefits or response outcome that a customer receives from the organization in response to the complaint. Complaints perceptions about distributive justice involve the provision of atonement in the terms of gifts or discounts that the company did by providing the client with a 10% discount in the next business activity that shall been done together. Compensation is the dominant dimension associated with distributive justice (Mentzer, 2001). Facilitation that enables dissatisfied customers to report their issues to the organization was also an aspect applied in the scenario. According to Bowesox et al. (2002), organizations that aim to facilitate clients to launch complaints should make the client understand the willingness of the company to handle the issue. In the case of ANL, the company facilitated this process and further prompted the customers in answering back to the clients’ complaint. Another thing the company did was to apologize to the client. This is a valued reward, which helps to redistribute esteem. ANL also relied substantially on explanations and attentiveness in handling the issue that is evident by the fact that it went ahead, and carried out intense research on the reason for the customer complaint and took actions, which also shows effort (Burt et al., 2003). 4. Conclusion Based on the discussed scenario, the main causes of the delays and customers complaints included the incompetency of the customs officials at the Chinese ports where they slowed ANL’s logistics team down from random inspections. Customs also delayed and missed the vessel due to claims of lack of proper documents to release them. The company that the client had ordered his merchandise from also kept ANL staff waiting for two extra days. This caused irrelevant delays, as they exceeded the time they were allocated to load up the container. This also caused delays (Maclennan, 2003). ANL’s backroom staff also made a few mistakes that the company responded to promptly by informing them about the proper ways to undertake these activities. The company took them to training later on to ensure that they are much more effective and efficient (Maclennan, 2003). The issue of whether the delay was beyond any human control could only be dealt with by ensuring that all delays that were caused by weather were promptly communicated to the client. This also applies to all the information that is required for the transport process to be successful. ANL made it an obligation to ensure that all the information required was well communicated. Companies that face such a situation should ensure that they have great communication between them and the clients. In addition, they should train their staff on the best ways to handle such situations with diligence, efficiency and effectiveness. Appendices Complaint Letter Christopher Walker Enterprises 34 Railway Street ROOTY HILL NSW 2766 AUSTRALIA 15 October 2015 The Administrative Manager ANL Shipping 1432 Sydney,Australia Dear Mr. Landry Re. Order No. 9005672 I am writing to inform you that that the products that we ordered from your company were not supplied as per the order we made. The quantity was wrong, and the invoice was highly inflated, which did not reflect the agreement we had. On 9 October 2015 we placed an order for certain products to be shipped through your company from China to Sydney. The consignment arrived very late, and when I checked inside, I noticed a few thing missing. To my surprise when I also checked the invoice I realized that there were some extra charges that we had not agreed upon. This erroneous act put our company in a position of great difficulty as we had to some emergency purchases to compensate for the discrepancies and help in fulfilling our commitments to both staff and customers. The reason for this letter is to kindly inquire reason for the short comings with immediate effect, and make some changes to ensure that such kind of errors are not experiencedin future.This may lead to our organization seeking business elsewhere. I look forward to hearing from you in not more than a period of two weeks. Yours Sincerely Christopher Walker Jr. Purchasing Officer Response letter ANL Shipping 1432 Sydney, Australia 17th October 2015 Christopher Walker Enterprises 34 Railway Street ROOTY HILL NSW 2766 AUSTRALIA Dear Mr. Walker Re. Order No. 9005672 Please accept our apologies for the error made by our company in filling your order no. 9005672 which was dated 9 October 2015. You requested our services on the shipping, clearing and forwarding of goods from China. The consignment came in shortage due to the Chinese transactionerror who dispatched goods in two different consignments instead of one. The first consignment has already been sent and the second consignment will arrive at your premise shortly, a week later from the day this letter is dated. The invoice error was due to a typing error made by our dispatch office. Since we highly value your services we would like to offer you a 10% discount off the next order you make with our company. We sincerely apologize for the inconvenience and look forward to doing more business with you in future. Yours sincerely Daniel Landry Daniel Landry Administrative Manager References Boden, A. (2001). The handling complaints pocketbook. Alresford: Management Booth, C. (2010). Strategic procurement: Organizing suppliers and supply chains for Bowersox, D. J., Closs, D. J., & Cooper, M. B. (2002). Supply chain logistics Burrow, J. (2002). Business management. Australia: South-Western/Thomson Learning. Burt, D. N., Starling, S. L., & Dobler, D. W. (2003). World class supply management: Charantimath, P. M. (2011). Total quality management. 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