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CHAPTER I

THE PROBLEM AND ITS SCOPE

INTRODUCTION

Rationale of the Study

A vast expansion of production has occurred during the present century,

and thousands of products have been introduced. Correlatively, the size and

complexity of business firms have also markedly changed. Single-plant

production has been supplanted by multi-plant operations which are widely

dispersed. Markets have expanded geographically from regional to national and

multinational points of production and distribution in a relatively short period.

Physical distribution is the most visible aspect of any company's marketing efforts

with regards to the production expansion. It provides the need of the company to

expedite its daily operation from warehouse/storage to end-user or consumer.

This mainly addresses the process improvement and cost-saving initiatives of the

company with regards to delivery. It is by ensuring that the entire delivery has

successfully satisfied the consumers or buyers demand. This study will look into

the physical distribution of the company which specializes in delivering frozen

seafood products to customers in the Cebu area.

In the Philippines, it is often heard the reasons why deliveries or

distributions are delayed in the day to day operations. Firstly, the drivers have to

beat heavy traffic in the city especially if the weather is bad. Traffic causes a lot

of troubles in regards to time setting. Secondly, some clients are setting time for
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delivery. There is a wide distribution of products to customers in Cebu City; the

delivery drivers could not afford to meet the time set by the clients. These

hindrances are preventing the company to meet the satisfaction of the customers

to its delivery. And lastly, there are elements of physical distribution that the

company needs to achieve to satisfy its customers.

The physical distribution issues of Strabo Import and Export, Inc. has

affected its reputation becoming inefficient of distributing or delivering products to

its customers. Most of the research environment are famous restaurants here in

Cebu mainly Cebu City, Lapu Lapu, and Mandaue. Its nature of the business is

supplying seafood products daily to clients who ordered the day before the

delivery. Though the company is practicing physical distribution, still, it fails to

meet customer service demands.

With such issues, the researcher deems it necessary to assess the

effectiveness of their physical distribution practices. A challenge like this,

examining customer preferences very specific to time and achieving the

elements of physical distribution are the main reasons why this study was made.

The researcher used to work in Strabo Import and Export, Inc. and was

assigned in the accounting and collections. Daily operations of the company

sparked the interest of the researcher to assess its distribution practices to meet

the customer's demands. With its very limited transportation resources, traffic

and time setting of the clients, the researcher is proposing, attentively. Thus, this

study aimed to solve the problem of the company which entails about the

effectiveness and efficiency of physical distribution issues.

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THEORETICAL BACKGROUND

This study shall be anchored on the Distribution Management focusing on

the Information flow, Customer Service and Order-processing: Transportation

and Delivery (Rosenbloom, 2016).

Any logistics system consists of three basic components: Information flow,

Customer Service and Order processing which includes transportation and

Delivery.

The first component, (Sinha, and Mugali, 2013) is information flow talks

about the foundation of modern logistics management. Physical distribution

involves the handling and moving of raw materials and finished products from

producer to consumers, often an intermediary. Its objective is to “put the product

within an arm’s length of desire." By administering its physical flow from the

organization to the customers at the time and place where they want them at a

reasonable cost. So, physical distribution management is the process of

strategically managing the movement and storage of materials, parts and

finished inventory from suppliers, between enterprise facilities and to customers.

Physical distribution objective as getting the right goods, to the right places, at

the right time, for the least cost. There are two dimensions to the physical

distribution process, the flow of information from the producer to the consumer or

the user. In both, these retailers and wholesalers are usually involved. The two

dimensions are interrelated, though information flow generally triggers the

material flow into motion. Physical distribution is the science of business logistics

whereby the proper amount of the right kind of product is made available at the
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place where demand for it exists. Viewed in this light, physical distribution is the

key link between manufacturing and demand creation.

Hence, physical distribution involves planning, implementing, and

controlling the physical flow of materials and final goods from points of origin to

points of use of meet customer needs at a profit. It is not only a cost; it is a patent

tool in competitive marketing. Companies can attract additional customers by

offering better service or lower prices through physical distribution improvements.

Companies lose customers when they fail to supply goods on time. Significant

activities that are typically grouped in an integrated approach to physical

distribution management are transportation, inventory, warehousing and order

processing.

The second component, order processing, the task of filling orders may at

first appear to be a minor part of logistics and a rather routine activity that does

not require a great deal of thought to do well. Order processing is the critical

component of logistics and developing an efficient order processing system can

be far from routine. Its importance lies in its relationships with order cycle time,

which is the time between when an order is placed and when it is received by the

customer.

If order processing is cumbersome, it can slow down the order cycle time

considerably. It can even increase transportation costs if a faster mode of

transportation must be used to make up for the slow order processing time.
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The meaning and importance of customer service in the context of

logistics, Customer service is the collection of activities performed in filling orders

and keeping customers happy or creating in the customer's mind the perception

of an organization that is easy to do business with (Johnson et al., 2016). (

Heskett, Galskowsky, et al, 2015.) Stresses the following categories of logistics

service standards:

1.Time from order receipt to order shipment

2. Order size and assortment constraints

3. Percentage of Items out of stock

4. Percentage of orders filled accurately

5. Percentage of orders filled within a given number of days from

receipt of the order

6. percentage of orders filled

7. Percentage of customer orders that arrive in good condition

8. Order cycle time

9. Ease and flexibility of order placement.

Bowersox and Closs distill what they refer as " Basic Service Capability" into

three categories: availability, operational performance, and reliability. Ketchen et

al., have argued that the output of a firm's logistical system or supply chain

should not only be aimed at providing superior customer service but should also

be seen as an ore dimension of a firm's competitive strategy.

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On the Framework of Supply Chain Metrics by Lambert and Pohlen

(2001). The Framework consists of steps, to wit:

 In identifying where vital relationships and linkages exist, mapping the

supply chain from point-of-origin to point-of-consumption is needed.

 To align the behavior of individuals to the customer service and the order

processing, the management shall establish non-financial performance

measures.

 In keeping the processes up-to-date, revision of processes and

performance measures be done at suitable intervals.

 To complement the steps in the supply chain, replication of the steps

above at each link is required.

To assess how the relationship between the customers and the supplier

affects profitability for both firms, developing or checking into their profit and loss

statements is done in the third step of the framework. The statement of financial

performance contains the revenues and costs. It can be noted that if the supplier

provides a similar item to a customer that is another manufacturer, then the

customer's report about the supplier depicts the total cost analysis. It may vary

when the revenue can be attributed to a specific source of supply, which may be

above-standard quality and lesser returns. More importantly, the statement can

be used as a tool to determine changes in performance (Kurata, 2014). The

management can compare the total revenues and costs for the current period to
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similar periods in the past, or even compare to other suppliers. The statement

can also be used to provide the best indicator in aligning the performance

measures across different suppliers.

The second necessary step refers to realigning the supply chain processes.

Through this, the business shall refer to the inventory management system being

implemented, and the previously-cited profit and loss statements. By the P&L

analysis, the business can decipher the impact and significance of aligning their

actions with the objectives of the supply chain. The results of the analysis can be

utilized to negotiate in equally distributing benefits and risks of improvements in

the processes of the supply chain and ultimately, the objectives of the whole

system (Manuj and Sahin, 2011). In realigning the processes, one of the key

activities to be undertaken shall be eliminating the non-value-adding processes

(Stavrulaki and Davis, 2010). By getting rid of them, the physical distribution

activities and channels can also be simplified; thereby, eradicating complexities,

and more importantly, costs are reduced. One example cited in their study refers

to opting to route products through internal distribution centers, rather than

shipping high volume products to the customers. By routing the products through

some centers, lesser human involvement is needed, and single data entry for the

information system shall be utilized. Badenhorst et al. (2013) cited that

implementing effective supply chain strategies and in gaining competitive

advantage, qualified staff and relevant information system technologies are a

must. With the relevance of the information system, complex decisions are

broken down to simple, easy-to-solve ones, and network facility can be

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established. Further, the prevalence of accurate and timely information regarding

the customers and suppliers cannot be discounted.

The next step in the framework refers to the most important part of the

business: its employees. The above-cited economic value adding activities are

not enough to ensure the improvement of supply chain processes. These

processes shall be inculcated among the employees for their effective

implementation. Bulut and Atakisi (2015) posited that human resource

management, being an essential part of the supply chain, shall identify the

employees as an asset, rather than the cost to the business. Since supply chain

management gives greater weight on marketing, and customer service, new

approaches being performed by the employees shall also be given attention to

obtain customer satisfaction. By fulfilling customer expectations, the company

creates value for the customer with the use of its human resources (Marshall et

al., 2015). To properly measure the employee performance, various tools are

being used by businessmen and managers to incentivize the employees

properly. There are no specific metrics set by standards, this could vary per

company depending on their strategies, and short-term and long-term plans.

Performance measurement tools facilitate the decision-making process in the

business and are helpful for firms to measure and assess the right things and

right people to take action in a supply chain (Ellinger and Ellinger, 2014).

The last two steps point of comparing shareholder value, and replicating

the steps above in each of the processes in the supply chain. Ha-brookshire

(2017) asserted that the supply chain should be sustainable, and shall have
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continued and updated processes to maintain the business' competitive edge.

The business also needs to adapt to the fast-paced, and highly-demanding

production industry. The optimization of the organization's resources, and

cooperation among stakeholders can be considered one of the factors to achieve

a successful supply chain (Li, 2009). Through this, higher profit and greater

customer satisfaction shall be obtained.

The quality of the physical distribution service industrial purchasers

receive from suppliers is an important consideration in industrial purchasing

decisions. To better understand the criteria used to assess physical distribution

service quality, the researcher examined the literature on physical distribution

and service quality and conducted interviews with purchasing managers. Based

on the results of the literature reviews and interviews, plus a two-step data

gathering process, a valid and reliable measurement instrument for perceptions

of physical distribution service quality (PSDQ) was developed and refined.

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Flow of Research Process

The flow of the research chart is composed of three stages: the input,

process, and output.

The INPUTS of the study were divided into two areas: the profile of the

respondents and areas of physical distribution. The respondent provided the

name of the company and classification for profiling. The areas of physical

distribution focused on information flow, order processing, and customer service.

The PROCESS used the descriptive survey method. A questionnaire was

formulated, tested, administered and retrieved. Interviews were conducted during

the survey as well. Clients or customers were free to suggest and recommend

what they prefer for the delivery or distribution of the goods. The data were

gathered, analyzed, interpreted and presented.

The OUTPUT of the study was used to improve the existing physical

distribution system of Strabo Import and Export, Inc.

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STATEMENT OF THE PROBLEM

This aims to study the Physical Distribution System of Strabo Import

and Export, Inc. The output of the study is an improved physical distribution

system of the company. Specifically, the study answers the following questions:

1. What is the level of satisfaction as assessed by the restaurant

managers receive the production distribution of Strabo Import and Export, Inc.

based on the following areas of physical distribution:

1.1 Information Flow

1.2 Order Processing

1.3 Customer Service

2. What is the level of satisfaction as assessed by the selected retail

owners receive the physical distribution of Strabo Import and Export, Inc. based

on the following mentioned above?

3. Is there a significant difference between the assessments of the

selected retail owners and managers?

4. Based on the results of this study, what improvement may be proposed

to improve the physical distribution services of Strabo Import and Export,

Inc.?
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SIGNIFICANCE OF THE STUDY

Different groups of the industry, the academe, and their corresponding

external communities may benefit from this study. The sectors that may benefit

from this study are enumerated below and the details on how they are benefited.

Company

This study is beneficial to the company that the study will focus into. It will

provide the company with the distribution system that will ensure timely delivery

of goods and services to its clients. The data gathered in this study may be used

to create a more effective ordering and delivery system to avoid delays and

unnecessary expenses of the company and at the same time meeting the needs

of its clients.

Clients

Since customer experience is the new battlefield, this study would be

beneficial to the clients for it will ensure the timely delivery of the company. It

would also help them to determine the order points and placing an order of the

company. And in a way, it will give the clients the opportunity to build their brand

relationship with customers.

Government

The findings will provide the Department of Environment and National

Resources and Department of Health with feedback in terms of the operation of

the company that might help them in dealing with business clearances and
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permits. This will also aid the government in a possible creation of legislation or

administrative issuances to ensure timely delivery of goods at its maximum

quality.

Future Researcher

The future researcher will refer to this research work to improve it or to do

further study on the physical distribution or supply chain management of the

company. It can also be used as a jump-off point to do business planning

especially distribution having known these factors.

Researcher

This study would be very beneficial to the researcher to widen knowledge

about the nature of physical distribution and logistics. All the learnings will be

documented, having the data analyzed correctly and effectively be put to

practice. This serves as a one-stop shop for the researcher to find practical

information when having a future business like this.

DEFINITION OF TERMS

To give a clearer understanding to this study, presented below are the

operational definition of the following terms:

Customer Advantage

These are conditions that allow a company or country to produce a good

or service of equal value at a lower price or in a more desirable fashion. These

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conditions allow the productive entity to generate more sales or superior margins

compared to its market rivals.

Customer Satisfaction

It is a measure of how products and services supplied by a company

meet or surpass customer expectation. The company can’t grow a sustainable

business without happy customers. When it comes down to it, customer

satisfaction is a reflection of how a customer feels about interacting with the

brand.

Customer Service

Customer service is the collection of activities performed in filling orders

and keeping customers happy. It takes place while performing a transaction for

the customer, such as making a sale or returning an item as per company’s

required.

Delivery

Delivery can be in the form of something physical, as when you receive

delivery in the mall, or verbal, as in the delivery of a speech or address. Delivery

once could only mean the action of handling something to another, but it has a

long history of being applied in other ways. For the company, it is the action of

delivering goods or seafood products to the customer.

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Information Flow

The foundation of the modern logistics management and it involves the

handling and moving of raw materials and finished products from producer to

consumers, often an intermediary.

Multiplant operation

It is the ability to model and make decisions to schedule production

between alternate internal production locations, which can produce the same

product. It is sometimes called multi-state planning.

Order Processing

The task of filing orders which is a minor part of logistics and a rather

routine activity that does not require a great deal of thought to do well.

Physical Distribution

It includes all the activities associated with the supply of finished product

at every step, from the production line to the consumers. Essential physical

distribution functions include customer service, order processing, inventory

control, transportation and logistics, and packaging and materials. Also, this is

the handling, movement, and storage of goods from the point of origin to the

point of consumption or use.

Point of origin
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This is the point at which something begins or rises or from which it

derives. The place at which a shipment received by a carrier from the shipper. In

supply chain management explores how goods are transformed from raw

materials to finished goods or move from the manufacturer to the end-user, the

customer.

Point of consumption

The process in which the substance of a thing is completely destroyed,

used up or incorporated or transformed into something else. Consumption of

goods and services is the amount of them used in a particular period.

Product Knowledge

It is the ability to communicate information and answer questions about a

product or service. For example, an organization may offer product knowledge

training for executive management sales, marketing, and customer service roles.

Product Quality

It refers to the perception of the degree to which the product or service

meets the customers’ expectations. The group of features and characteristics of

a saleable good which determine its desirability and which can be controlled by a

manufacturer to meet specific basic requirements. Most business that produces

goods for sale has a product quality or assurance department that monitors

outgoing products for consumer acceptability.

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Single-plant production

It often uses an assembly line, which is a process where a product is put

together in sequence from one work station to the next. This is managing the

supply chain like one firm, with all partners operating on the same line.

Timeliness

The fact or quality of being done or occurring at a favorable or useful time.

It is a proprietary rating system used to rate stocks while taking into account

earnings changes and price performance to assess potential price performance

over the short term.

RESEARCH DESIGN

Research Method

This study, physical distribution of Strabo Import and Export, Inc used

the descriptive survey method. A researcher made questionnaire was used as

the main instrument for data collection. Interview questions were also conducted

for clarifications and to answer the preferences of respondents. The researcher

was also soliciting additional information about the physical distribution. The

questionnaires were delivered to the target respondents by the researcher. This

method employed applications of the scientific method by examining the source

materials, thorough analysis of data gathered, and by arriving at a conclusion.

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Research Environment

The company, Strabo Import, and Export, Inc. started last 2006 located

at Riverside Canduman, Mandaue City. It has a parent company which is the

HJR International Corporation. Two managers are handling the company, the

sales and marketing managers. They are focusing mainly on the selling of

seafood products rather than knowing the sales itself. Only one accounting clerk

is incurring the credits and collections. There are only one truck driver and a

helper that makes everything a hindrance for delivery distribution. The capacity of

the delivery truck is ten cartoons or boxes, with 10 kilograms each box. There is

a weekly meeting of the managers and staff for sales and marketing update.

The company currently supplies seafood products to different restaurants,

retailers, and individuals located in Cities of Cebu, Mandaue, and Lapulapu.

Research Respondents

This study had two groups of research respondents. These were the

management of Strabo Import and Export, Inc. and its existing clients.

There were 32 clients located in the different cities, 15 from Cebu City, ten

from Mandaue City and seven from Lapu-Lapu City as certified by the Managing

Director. This research undertaking considered the entire population of the

clients summarized as follows:

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Table 1

Respondents
N=32
TYPE OF RESPONDENTS TOTAL NO. OF

CUSTOMER CUSTOMERS

Restaurant Manager 27

Retailer Owner 5

TOTAL 32

Sampling Techniques

This research undertaking will consider the entire population of the

customers of Strabo Import and Export, Inc. The list of customers is provided in

Annex “A” of the Appendix.

Research Instrument

A questionnaire was created to serve as the primary tool for gathering data.

The questionnaire was composed of two parts. The first part included the profile

of the respondents. This dealt with the company’s norm of settling the business,

restaurants, retailers, door to door individual and the company workers.

The second part required the assessment of the satisfaction of the physical

distribution to clients in terms of Information Flow, Customer Service, and Order

Processing.
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The questionnaire included the name of the company and the position of

the representative. The next part asked the respondent to assess whether the

services were currently received from Strabo Import and Export, Inc. Each item in

the questionnaire was assigned with a corresponding numerical and qualitative

description as follows:

Scale Description Interpretation

4 Very Satisfied (VS) means that the company has always met

the expectations of the customer

3 Satisfied (S) means that the company has usually met

the expectations of the customer

2 Less Satisfied (LS) means that the company has sometimes

met the expectations of the customer

1 Not Satisfied At All means that the company has never met

(NS) the expectations of the customer

Data Collection Technique

Prior to the study, the researcher reviewed the list of current or existing

clients of Strabo Import and Export, Inc. From the list, the questionnaire was

distributed to the clients' respective address. There was a brief explanation of the

purpose of the questionnaire of study will be done. Aside from the written

answers, the interview was also be conducted.

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The results of the survey instrument were supplemented by a structured

interview of the management and the selected representatives of the target

respondents.

Data Analysis

The data gathered by the researcher were tabulated, tallied, presented in

tables or tabulated and interpreted. The researcher utilized a qualitative

assessment of the data gathered. The respondent's choice answers were the

basis of the conclusion or improvement of the physical distribution of the

company.

Responses provided by the designated representatives of the respondents

will be tabulated. The mean was used to provide an average value of the data

under study. It was computed by dividing the sum of values or observations with

the number of observations.

∑𝑛𝑖=1 𝑥𝑖
𝑥̅ =
𝑛

The scores were the weighted mean scores, and the corresponding

descriptions and interpretations.

T-Test Analysis

The T-test is used to compare the values of the means from two samples

and test whether it is likely that the samples are from populations having different

mean values. To determine if there was a significant difference between the

managers of the restaurants and the selected retail owner's of Strabo Import and
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Export, Inc. the T-test analysis was used. The result tallied that there was no

significant difference between the two mean.

Range Description Interpretation

3.26 – 4.00 Very Satisfied (VS) means that the company has

always met the expectations of

the customer

2.51 – 3.25 Satisfied (S) means that the company has

usually met the expectations of

the customer

1.76 – 2.50 Less Satisfied ( LS) means that the company has

sometimes met the expectations

of the customer

1.00 – 1.75 Not Satisfied At All means that the company has

(NS) never met the expectations of the

customer
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The researcher studied and scrutinized the treatment of data carefully and

deliberately, and gave a deeper understanding of the survey conducted.

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CHAPTER II

PRESENTATION, ANALYSIS, AND INTERPRETATION OF DATA

After all the pertinent data have been gathered, these are then tabulated,

analyzed and interpreted to answer the general and specific objectives of this

study. Both descriptive and inferential statistics were utilized to suit this purpose.

THE EXTENT OF PHYSICAL PRODUCTION DISTRIBUTION OF

STRABO IMPORT AND EXPORT, INC. AS PERCEIVED BY THE SELECTED

RESTAURANT MANAGERS AND RETAIL OWNERS

Table 3

Information Flow
N=32
INFORMATION
Managers Description Retailers Description Average Description
FLOW

1. Request for Very

3.36 Very Satisfied 3.50 3.43 Very Satisfied
quotation Satisfied

2. Purchase order
2.55 Satisfied 2.90 Satisfied 2.72 Satisfied
status update

3. Reports on supplier
2.41 Less Satisfied 2.80 Satisfied 2.60 Satisfied
performance

4. Change requests 2.64 Satisfied 3.00 Satisfied 2.82 Satisfied

5. Presentation of the
2.91 Satisfied 3.00 Satisfied 2.95 Satisfied
company offers

Factor Average 2.77 Satisfied 3.04 Satisfied 2.91 Satisfied

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The information flow as an important aspect of the physical distribution

was assessed by the chosen respondents, and the table above shows their

respective perceptions. Both the managers of the selected restaurants and the

retail owners rated this dimension of physical distribution as “Satisfied." Much of

this satisfaction is attributed to the respondent's groups perception on "Request

for quotation” to be very satisfactory. However, it can be noted from the

managers’ perception that “Reports on Supplier Performance” can be much

improved as it tallied the least rating of Less Satisfied by the managers. Based

on the researchers’ observation of the daily operation of the company, due to the

busy schedule of the Sales Manager, the reports on suppliers performance is

sometimes not submitted and presented. Often, checking the supplier's

performance report is not obtained, the reason being the company has the least

number of people operating it. During the day, the Sales manager is busy

contacting the dealers of the imported products and also managing the

warehouse. On the other hand, the reports on supplier performance as to the

selected retailers was perceived as satisfied because it was never a problem or a

hassle for the company to shoulder the supplier's performance. Nevertheless, it

should be noted that the company is held liable for their performance towards the

customers.

Under this scheme rules of the parent company state that, all engaging

companies are required to submit a Supplier Performance Report for each

engagement where the performance of and the services provided by the

company are considered by the customer to be, in this case, "Less Satisfied."
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Table 4

Order Processing
N=32
ORDER
Managers Description Retailers Description Average Description
PROCESSING

1. Standard

order taking the 3.23 Satisfied 3.44 Very Satisfied 3.34 Very Satisfied

form

2. Customer

order 3.46 Very Satisfied 3.44 Very Satisfied 3.45 Very Satisfied

confirmation

3. Timeliness 1.14 Not Satisfied 1.30 Not Satisfied 1.22 Not Satisfied

4. Ask for

customer 2.09 Less Satisfied 1.90 Less Satisfied 2.00 Less Satisfied

feedback

5. Give details of

the order once 2.27 Less Satisfied 2.10 Less Satisfied 2.19 Less Satisfied

transported

Less Less
Factor Average 2.44 2.44 2.44 Less Satisfied
Satisfied Satisfied

In terms of order processing, both sets of respondents rated this physical

distribution aspect as Less Satisfied. It can be verified above that the less

satisfaction emanated from the perception of the managers and retail owners

regarding the “Timeliness” of the processing of orders. Likewise, “asking

customers for feedbacks” and “giving details of the order once transported” also

received less rating from the two groups respectively. The company had the least
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initiative when it comes to following up the details of the order once transported.

For as long as the product is delivered already, they won’t entertain questions

anymore because the product is always noted to be of good quality. Timeliness,

rated as “Not Satisfied “ by both managers and owners due to the company’s

lack of delivery truck and time constraints. The capacity of the delivery truck is 10

kilograms only limited to 6 to 8 customers only. Most companies rely on timely

delivery offered by the suppliers. The company lacks the delivery schedule

adherence, a business metric used to calculate the timeliness of deliveries from

suppliers. This is the main factor the company has to consider in their daily

operation.

Timeliness is crucial to the company's side. It can ruin their image

towards other customers through word of mouth from previous customers or

clients. As what the researcher had experienced during the delivery of the

product, as the accountant of the company before, travel to collect payments

from the customers are to be made together with the delivery. Sometimes, the

accountant drops by at the nearest customer to collect their payments not

considering the time demanded by the customers waiting for the delivery. Also,

the management of Strabo

Import and Export, Inc. fails to consider the traffic conditions in the area of Metro

Cebu. The timing is critical to the buyer's operations for supplier controls, on the

timeliness of deliveries has always been difficult to implement.

In terms of the standard order-taking form, the managers assessed it as

"Satisfied and Very Satisfied" by the selected retailers. The managers have a
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high standard when it comes to forms especially it reflects on the company's

cleanliness and orderliness. Strabo Import and Export is using only a basic

standard form without even a print or logo of the company. For the benefit of the

customers’ records, the company should consider in putting creative designs and

standard on their order taking forms.

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Table 5

Customer Service in Terms of Schedule

N=32
Customer Service

in terms of Managers Description Retailers Description Average Description

Schedule

1. On-time delivery

of the firm’s

products directly to 2.36 Less Satisfied 1.30 Not Satisfied 1.83 Less Satisfied

the customers’

points of use

2. Customer’s

future needs are 4.00 Very Satisfied 2.00 Less Satisfied 3.00 Satisfied

determined

3. Clients’ needs

are immediately 1.50 Not Satisfied 2.30 Less Satisfied 1.90 Less Satisfied

answered

4. Speed for order

1.14 Not Satisfied 2.00 Less Satisfied 1.57 Not Satisfied
processing

5. Distribution

planning schedule
2.50 Satisfied 3.50 Very Satisfied 3.00 Satisfied
as per request of

the clients

6. Order size
2.46 Less Satisfied 3.00 Satisfied 2.73 Satisfied
Constraints

7. Physical
3.52 Very Satisfied 3.50 Very Satisfied 3.51 Very Satisfied
condition of goods

Less
Factor Average 2.50 2.51 Satisfied 2.51 Satisfied
Satisfied
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Overall, the clients were “Satisfied” with the brand of customer service

offered by the establishment in its efforts to distribute their products to them.

However, the managers of the participating restaurants believed that the “Clients’

needs are immediately answered” and “Speed for order processing” were not

satisfactorily given to them. This is due to a lack of manpower and assignment of

multiple tasks to each employee. Likewise, the retail owners were not satisfied

with the “On-time delivery of the firm’s products directly to the customers’ points

of use." Most of the time the driver is considering the restaurants ( customers)

rather than the selected retail owners because they ( restaurant managers) have

more orders than that of selected retail owners. It is, however, worthy to note that

the "Physical condition of goods" was rated very satisfactory by the two sets of

clientele. This is because the company is using a four-wheeled ATC refrigerated

truck.

It can be pointed out that there are delays in the delivery of the order, still

ensures that they can deliver quality products which is the most important factor

in customer satisfaction. Based on the interview conducted by the researcher,

manager and retailers will still order the goods for the company because of the

quality of the product. However, they emphasized that the company must

improve in its timely delivery of service for it may affect their business.
 32

Table 6

Customer Service in Terms of Transportation and Delivery

N=32
Customer

Service in terms
Managers Description Retailers Description Average Description
of Transpo and

Delivery

1. Response time
Less
across the supply 2.36 Less Satisfied 2.50 Satisfied 2.43
Satisfied
chain is reduced

2. Free deliveries Very Very

4.00 Very Satisfied 4.00 4.00
are offered Satisfied Satisfied

3.Frequency of Not
1.50 Not Satisfied 1.30 Not Satisfied 1.40
Delivery Satisfied

4. Satisfied as to Not
1.14 Not Satisfied 1.60 Not Satisfied 1.37
time demanded Satisfied

5. Responsiveness Less Less

2.50 Satisfied 2.40 2.45
to urgent deliveries Satisfied Satisfied

6. The firm’s ability

Less Less
to meet delivery 2.46 Less Satisfied 2.10 2.28
Satisfied Satisfied
due dates

7. Specialized type

of vehicle to Very Very

3.52 Very Satisfied 3.40 3.46
deliver the type of Satisfied Satisfied

goods.

Less Less Less

Factor Average 2.50 2.47 2.48
Satisfied Satisfied Satisfied
 33

In terms of transportation and delivery, both groups of respondents

indicated a lower rating as it implied that they were Less Satisfied with the

services. This rating can be attributed to both group perceptions that "Frequency

of Delivery” and “Satisfied as to time demanded” were not satisfactorily met by

the Strabo Import And Export, Inc. This is due to the system that the company

has. Just like what the researcher had stated in the previous chapter that the

company has one delivery truck to deliver the goods and the accountant collect

payments with the delivery. The task of both is a total disagreement about the

time demanded by the customers. Sometimes, the driver has to make a new

route to avoid traffic in effect the capable customers are to be considered first not

the customer who ordered first and demanded time of delivery.

It should also be noted that the services can also be improved in terms of

“Response time across the supply chain is reduced” and the “firm’s ability to

meet delivery due dates." About this, there are customers who order in advance.

An example is the case of 7 C's Marine, a retailer of frozen goods, which they

order in advance and the payment is to be paid three months after delivery.

Sometimes the company fails to pay Strabo Import and Export, Inc., that is why

they won't consider the additional delivery made or ordered in advance by 7 C's

Marine.

However, both groups were thankful of the quality services delivered in

terms of “Specialized type of vehicle to deliver the type of goods." The company

is always on the quality of the products delivered to the customers. Fortunately,

 34

the company is currently having a specialized vehicle for the delivery. In return,

they are capable of delivering quality goods to customers.

SUMMARY OF THE EXTENT OF PHYSICAL PRODUCTION

DISTRIBUTION OF STRABO IMPORT AND EXPORT, INC. AS PERCEIVED

BY THE SELECTED RESTAURANT MANAGERS AND RETAIL OWNERS

Figure 2

Summary of the Assessment

3.50
3.04
3.00 2.77
2.44 2.44 2.50 2.51 2.50 2.47
2.50

2.00

1.50

1.00

0.50

0.00
INFORMATION FLOW ORDER PROCESSING Customer Service in terms Customer Service in terms
of Schedule of Transpo and Delivery

Managers Retailers

It can be verified that the chosen respondents slightly differ in the way how

they perceived the level of satisfaction as the company tries to meet their

expectations in terms of distribution. The total average of the Information flow is

2.91 noted as percepted as satisfied by both managers and selected retail

owners; the total average of the Order Processing is 2.44 percepted Less

Satisfied by both respondents; the total average of the Customer Service in

terms of Scheduling is 2.51 percepted as Satisfied by both respondents; and

 35

lastly, the total average of the Customer Service as to Transportation and

Delivery is 2.48 which was perceived as Less Satisfied by respondents based on

the result of the survey conducted by the researcher. In this aspect, the order

processing received the least rating from the respondents followed by customer

service in the area of transportation and delivery.

HYPOTHESIS TESTING FOR THE SIGNIFICANCE OF THE DIFFERENCE IN

PHYSICAL DISTRIBUTION OF STRABO IMPORT AND EXPORT, INC. AS

PERCEIVED BY THE RESTAURANT MANAGER AND RETAIL OWNERS

Hypothesis testing procedure indicates that the determination of a

significant difference between the two independent variables is found by

comparing the p-value and the level of significance which is predetermined by

the researcher to be 0.05. The p-value is the probability or likelihood of accepting

the null hypothesis. Hypothesis testing says that if the p-value is lesser or equal

to 0.05, then the null hypothesis of no significance can already be rejected. For

this purpose, the t-test (assuming unequal variances) was utilized to detect the

significance of the mean differences of the perspective of the respondents

towards physical distribution.

 36

Table 7

Physical Distribution
Managers Retailers p-value Decision Description
Aspect

There is no

Information Flow 2.77 3.04 0.57 Accept Null significant

difference

There is no

Order Processing 2.44 2.44 1.00 Accept Null significant

difference

There is no
Customer Service in
2.50 2.51 0.97 Accept Null significant
terms of Schedule
difference

Customer Service in There is no

terms of Transpo and 2.50 2.47 0.96 Accept Null significant

Delivery difference

*Difference is significant at 0.05 level of significance.

The preceding table shows the level of non-significance of the differences

measured from the respective mean perceptions of the respondents regarding

the dimensions of physical distribution. That is, on the onset of the survey, there

is no sufficient evidence yet to support the differences of the mean perceptions to

be statistically significant. This also suggests that the level of satisfaction was

unanimously experienced not just by the restaurant managers but also to the

retail owners which strengthen more on the probable windows for the distributor

to affect changes and improvements.

 37

CHAPTER III

THE PROPOSALS

This chapter shows the proposals that were identified and developed to

address the different results of the survey and analysis of the data gathered.

The proposals were based on the problems indicated in the previous

chapter. An action plan was made to show of the concrete plan.

The data were continued in a table containing the action plans for the

areas with the weak area.

This chapter is composed of two parts. Part I presents the general outline

of the proposals for the specific practices rated to be less satisfied which needs

to be addressed and acted upon.

The budget for the implementation of the action plan would come mainly

from the Parent company’s budget of the HR Department.

Part II provides a detailed discussion of each proposed action plan

presented in Part I.

To improve the physical distribution system of Strabo Import and Export,

Inc., the researcher was required to take part in a quality evaluation scheme and

to collect data about the quality of their service.

38
 39

Part II

Detailed Proposal Actions

Rationale of the Detailed Proposal

Delivery performance indicates how successful the supply chain is at

providing products and services to the customer. This proposal is most important

in physical distribution as it integrates the measurement of performance right

from supplier end to the customer end. After a critical review of the results based

on the previous chapter, it has been identified that the focus was mostly on a few

crucial one-dimensional performance indicators.

Proposal No. 1 “Customer Service Training”

I. Course Title/ Proposal Title: Customer Service Training of

Strabo Import and Export, Inc.

This is addressed to the concern/activity based on the previous chapter on

the presentation of results that has resulted in a "Less Satisfied and Not

Satisfied" rating. The person who is responsible for this one is the Sales Manager

of the company.

II. Objectives

Objective 1.1. Educate every employee who has direct contact

with consumers. Emphasize the importance the company places upon

maintaining a high standard of service. At every point of customer contact,

employees must recognize customer service as a priority. It means that drivers

 40

and sales staff should maintain a friendly, a considerate demeanor toward

consumers when addressing their needs.

Objective 1.2. Communicate the company’s expectation for high

levels of customer service. Do it through internal newsletters and emphasize it in

management meetings. Implement competitions and contests to generate

company-specific suggestions o how to enhance customer service. This will not

only incentivize the performance of customer service through bottom-up

participation but will also encourage active thought regarding continual customer

service improvement.

Objective 1.3. Empower the frontline staff to better service

customer concerns. Every staff member operating in direct contact with

customers should have at least some ability to address their concerns or have a

superior address them when they are reported. This might be as simple as

issuing mobile phones to drivers or empowering drivers to grant customer

credits.

Objective 1.4. To enhance external and internal customer

relationships by delivering a consistently superior customer experience. And to

efficiently and successfully resolve queries, supply relevant information and

conclude every interaction on a positive note.

 41

III. Training Design

Course Title/ Proposal Title: Customer Service

Training of Strabo Import and Export, Inc.

Target Audience: Sales Manager, Sales Staff,

Accounting, Drivers, Helpers

Training Time: (1 day) – 9:00PM – 5:00PM

Training Method: Lecture and Experienced Based

Videos

Prerequisites: None

Instructor: Sales Manager

IV. Resources and Proposed Budgetary Requirement

A. Person Involved

Sales Manager, Sales Staff, Accounting, Drivers, Helpers ( 8 people)

B. Budgetary Resource

The budget is the company's expense shouldered by Strabo Import and

Export, Inc.

The source of fund is from the company.

Training Package(training materials included) 1,000.00

Meals for Speaker 500.00

Meals for Attendees (8pax x Php 200/head) 1600

Supplies and Materials 2,000.00

TOTAL Php5,100.00
 42

C. Facilities Needed

 Sound System

 Lapel and Microphone

 Computer with Projector

D. Venue

HJR International Corp, Conference Room

E. Time Frame

Thirty Minutes of Introduction

One hour Lunch Break

Six hours and thirty minutes of Discussion and activity

Proposal No. 2 “ Transportation Provider On-Time Delivery through Buying

New ATC ( Advanced Temperature Control ) Delivery Truck”

Objective 2.1 To maximize the delivery performance of the

company.

Objective 2.2 To make everything easy for the drivers to carry the

products to the customers.

Refrigerated delivery trucks have been such an integral part of the supply

chain, that’s it is impossible to imagine life without the products they transport. In

1938 Frederick McKinley Jones invented the Refrigeration unit. Later with the

creation of the interstate highway system, refrigerated transportation of goods

became and continued to be an important aspect of perishable and temperature

sensitive products.
 43

The cold chain as it is known is the method and process of transporting

products while ensuring they remain fresh, kept from deterioration and losing

their value. The global trade of perishable items has increased in the past years

causing a high demand for quick transportation. This is not only true for food,

such as produce, meat, and dairy, but also other sensitive items such as medical

products and pharmaceuticals. Strabo import and Export, Inc. has one delivery

truck which is the traditional 12 ft straight truck.

Proposed ATC Delivery Truck 1

1. 0.5T Refrigerated Van Truck for sale in Foton/Forland Brand for Frozen

Food Delivery

Php 450,000 / Units | 1 Unit/Units (Min. Order)

2. JAC monoblock refrigeration unit truck, yogurt transportation truck, Frozen

food delivery trucks

Php 459,000/ Sets | 1 Set/Sets (Min. Order)

This truck is good for the Strabo Import and Export, Inc. for it will provide

the maximum quantity of products to be delivered to the customers daily.

Proposal No. 3 “ Leasing a Warehouse in Lapu-Lapu City”

This is an additional task of the Sales Manager to look for vacant

warehouse space in Lapu-Lapu City. The company should rent a warehouse in

Lapu-lapu, this is due to the reason that traffic is heavy between Mandaue area

and Lapu-lapu area. It is more advantageous to lease a warehouse in Lapu-lapu

 44

in addition to the current warehouse occupied in the area of Mandaue. Most

businesses, at some point, consider whether to lease or purchase their place of

business. Below are some advantages and disadvantages of leasing versus

purchasing. As there is no ‘right’ answer, the company needs to consider its own

specific needs before making a decision. Part of this decision would be to choose

the option that will provide the required space at the least net cost.

Some believe that leasing is cheaper than purchasing, but this is not

always the case, as the obligations on a lease can sometimes be similar to those

when you are buying. The preferable proposal for this study is to rent a lease.

Objective 3.1. To be able to have easy or immediate access to

valuable customers or clients within Lapu-Lapu City. This is also a means of

expanding market reach at a lower cost. Also, in renting a warehouse, it will

establish a streamlined distribution system that encompasses all facets of

transportation management on local delivery.

Proposed Warehouse Space for Lease

Inland Warehousing and Logistics Division

3rd Avenue, Between 4th & 5th St., MEPZ 1, Ibo, Lapu-lapu, 6015 Cebu

Open: 6:00 AM - Closes 5:30PM

Phone: (032) 511 1047

 45

Inland Corporation is a Total Logistics Company. Commenced in October

1975 under SEC Reg. no.64038, we have diversified from our Primary Purpose

of Customs Brokerage. Among the other services we offer include Freight

Forwarding, Trucking, Container Yard Operations, Heavy-lift Movement, Rigging

and Crating, Warehousing/Cold Storage and Vendor Management Inventory.

Request for Post-Performance Evaluation

To measure the effectiveness of the physical distribution performance of

the company as to customer service, an evaluation will be conducted by the

customers. The evaluation will be administered using conducting an electronic

survey, or through phone calls by the manager of the client and the Sales

Manager of Strabo Import and Export, Inc. the set of questions that will be

distributed are referenced from the survey questionnaires given beforehand. The

results of the Post – Performance Evaluation will be compared to the pre-

evaluated results on the previous questionnaire given during the conduct of this

study.

Furthermore, to maintain and ensure the same level of performance in the

long run, the same survey will be conducted by the Sales Manager at the end of

the week. By incorporating the results of the survey on the Performance

evaluation and the survey questionnaires given, this can provide a safe

mechanism on ensuring a consistent level of performance to customers.

 46

CHAPTER IV

SUMMARY, FINDINGS, CONCLUSION, AND RECOMMENDATIONS

The physical distribution concept is concerned with the group of

interrelated processes that are involved in the physical flow of traffic from the

source of the warehouse to customers. Chapter four contains a brief presentation

of the summary, findings, conclusions, and recommendations of the study based

on the outcomes of the previous chapter.

SUMMARY

This study examines and analyzes the Physical Distribution system of

Strabo Import and Export, Inc. The output of the study checked the physical

distribution system of the company. Specifically, the study answers the following

questions:

1. What is the level of satisfaction as assessed by the restaurant manager

receive the production distribution of Strabo Import and Export, Inc. based

on the following areas of physical distribution:

1.1 Information Flow

1.2 Order Processing

1.3 Customer Service

2. What is the level of satisfaction as assessed by the selected retail

owners as to the physical distribution of Strabo Import and Export, Inc. based on

the following mentioned above?

 47

3. Is there a significant difference between the assessments of the

owners and managers?

4. Based on the results of this study, what improvement may be proposed

to improve the physical distribution services of Strabo Import and Export,

Inc.?

This study utilized the descriptive survey method. A modified version of

the standard Strabo Import and Export, Inc. questionnaire was used as the main

tool in collecting data needed for the study. The questionnaire was subjected to

a dry-run procedure, finalized, and then administered. As soon as it was

collected, the data was then processed, tabulated, presented, analyzed and

interpreted. The results of the study were used as a reference in the

improvement of the physical distribution system that aims to help address the

apparent issues or problems of the of Strabo Import and Export, Inc.

FINDINGS

The following are the findings of the study based on the survey

questionnaire of Strabo Import and Export, Inc. in the aspect on the satisfaction

of the customers.

1. The degree of satisfaction in the area of Physical Distribution System as to

Information Flow assessed by both managers and selected retail owners :

a. The request for quotation factor average is 3.43 interpreted as

Very Satisfied
 48

b. The purchase order status update factor average was 2.72 and

interpreted as Satisfied.

c. The reports on supplier performance factor average were 2.60 and

interpreted as Satisfied.

d. The change requests factor average was 2.82 and interpreted as

Satisfied.

e. The presentation of the company offers factor average was 2.95

and interpreted as Satisfied.

The overall Information Flow factor average was 2.91 and interpreted as

Satisfied.

2. The degree of Satisfaction in the area of Physical Distribution System as

to Order Processing as assessed by both managers and selected retail

owners.

a. The standard order taking form factor average was 3.34 interpreted

as Very Satisfied.

b. The customer order confirmation factor average was 3.45

interpreted as Very Satisfied

c. The timeliness factor average was 1.22 interpreted as Not

Satisfied.

d. The asking for customer feedback factor average was 2.00 and

interpreted as Less Satisfied.

e. The giving of details of the order once transported factor average

was 2.19 interpreted as Less Satisfied.

 49

The total factor average for Order Processing of Strabo Import and Export, Inc.

was 2.44 and interpreted as Less Satisfied.

3. The degree of satisfaction in the area of Physical Distribution System as to

Customer Service mainly Scheduling as assessed by both managers and

selected retail owners :

a. The on-time delivery of the firm's products directly to the customers'

points of use factor average was 1.83 and interpreted as less

satisfied.

b. The customer’s future needs are determined factor average was

3.00 and interpreted as Satisfied.

c. The clients’ needs are immediately answered factor average was

1.90 and interpreted as Less Satisfied.

d. The speed for order processing factor average was 1.57 and

interpreted as Not Satisfied.

e. The distribution planning schedule as per request of the client's

factor average was 3.00 and interpreted as Satisfied.

f. The order size Constraints factor average was 2.73 and interpreted

as Satisfied.

g. The physical condition of goods factor average was 3.51 and

interpreted as Very Satisfied.

The total factor average of Customer Service in terms of Scheduling was 2.51

and interpreted as Satisfied.

 50

4. The degree of satisfaction in the area of Physical Distribution System as to

Customer Service mainly Transportation and Delivery as assessed by

both managers and selected retail owners :

a. The response time across the supply chain is reduced factor

average was 2.43 and interpreted as Less Satisfied.

b. The free deliveries are offered factor average was 4.00 very

satisfied.

c. The frequency of Delivery factor average was 1.40 and interpreted

as Not Satisfied.

d. The satisfaction as to time demanded 1.37 and interpreted as Not

Satisfied.

e. The responsiveness to urgent deliveries factor average was 2.45

and interpreted as Less Satisfied.

f. The firm’s ability to meet delivery due dates factor average was

2.28 and interpreted as Less Satisfied.

g. The specialized type of vehicle to deliver the type of goods factor

average was 3.46 and interpreted as Very Satisfied.

The total factor average of Physical Distribution System as to Customer Service

mainly Transportation and Delivery was 2.48 and interpreted as Less Satisfied.

5. Significant Differences in the assessment of managers and retail owners

Based on the hypothesis testing procedure conducted by the statistician,

there is no significant difference between the assessments of the selected

retail owners and managers.

 51

CONCLUSION

In light of the survey findings, it can be therefore concluded that as

to order processing in terms of timeliness, the supplier, Strabo Import and

Export, Inc. should deal with this factor. Since timeliness is the reason why

the company’s operation of on-time delivery is inconsistent or insignificant

to the customer. It can also be concluded that the speed for order

processing was interpreted as not satisfied by both selected retail owners

and managers and should be looked into by the supplier.

Consistent to what the Foundation of the modern Logistics

Management (Sinha, J.C., and Mugali, V.N.) stated, the results provide

additional evidence on the existence of the issues and problems of the

Physical Distribution System of Strabo import and Export, Inc. With the

proposals outlined by the researcher, it is concluded that the need for

improvement on the transportation and customer service is solved.

As delivery and transportation are the most important factor that affects

the operation of the business, it is, therefore, the responsibility of the

company to provide good customer service.

 52

RECOMMENDATION

These are the recommendation of this study to the company,

Strabo Import, and Export, Inc.

Primary Recommendation:

The proposed action plans as outlined in Chapter 3 of this book

must be implemented.

Secondary Recommendation:

Conduct further studies in the following area:

1. Customer Relationship Management – to gain a competitive advantage

2. Supplier Relationship Management – interaction with current and

potential suppliers

3. Supply Chain Management – the conduct of the business operation.