Improving Customer Service through Just-in-Time Distribution Fitting into the customer’s service offer in case of ELECTROLUX LAUNDRY SYSTEMS Authors: Katsiaryna Kazak Wing Yee Choi Tutor: Joachim Timlon Program: Growth Through Innovation and International Marketing Subject: Business Administration Level and semester: Masterlevel Spring 2009 Baltic Business School Abstract The international environment today has been undergoing unprecedented change and many companies are seeking new ways to stand out from the competition by sustaining their competitive advantage. Internationalization and firms’ consolidation increase competition in the dynamic marketplace .Companies are no longer staying competitive simply through focusing on product quality and pricing as customers are becoming more high-demanding related to customer service offer. This issue directs the companies’ main focus today to address the customer needs in the ever- changing environment. In order to be the winners in the marketplace, timing and superior customer service are becoming the keys to attain competitive advantage for a company. Time-based competition is an important issue that many companies are facing currently as customers are becoming more time-sensitive and time-oriented in terms of better services, reliability and delivery. To keep up with the changes in demand from customers, it is important to satisfy customers’ objectives and needs in order to provide superior customer service, thus, establish good relationship with them. In the ever-changing and dynamic business environment company needs to adapt and exploit the changes in order to meet the new challenges in the marketplace. It is crucial for the company to respond to changing needs of existing customers and seeking to serve new customers externally. The ways to renew the customers’ services and how they are delivered are critical capabilities for many companies to acquire nowadays. This leads to increasing interaction between marketing and logistics where logistics is considered a platform for supporting new strategic moves on the market. This master thesis originates from a need to research the links between customer service improvement and Just-in-time distribution in order to sustain competitive advantage. We propose to extend the Just-In-Time concept to incorporate a customer perspective, which results in changes the warehousing, ordering and delivering routines. Subsequently, this creates timing ability as well as coordination of information and material flows through timely decisions, which are difficult for competitors to emulate. Based on our analysis and conclusion, companies are recommended to shift from the traditional production-oriented to market-oriented focuses through incorporation of customers' perspective into the value chain. To deploy this, companies should start from the customer end and understand customers' needs and establish mutual beneficial relationships with customers. Long-lasting business relationships ultimately determine the success of the company. Furthermore, we conclude that successful learning to change the routines requires time for the transformation of traditional delivery practice to perform direct deliveries activities. They are based on the common understanding of the tasks and rules as well as common codes of internal coordination processes. Keywords: Electrolux Laundry Systems, Just-in-time distribution, Relationship marketing, Dynamic capabilities, Competitive advantage Acknowledgements We would like to express our sincere gratitude to our supervisor Joachim Timlon and lecturer Hans Jansson who have been giving great support throughout the whole research. This paper would have not been possible without their constant guidance and encouragement as well as knowledge and expertise. We are sincerely grateful. We are also grateful to have had the opportunity to participate in this master thesis at the Baltic Business School (BBS) in Kalmar. We would like to express our gratitude for all the support that Electrolux Laundry Systems Sweden AB has been giving and to all people involved, especially Sven Kallin, ELS Vice President for Global Logistics, who has made this research possible and been very supportive during this research. In addition, we would like to give our special thanks to following people in the corresponding countries. In France, we would like to thank Philippe Caraminot and Pascale Kerneis for dedicating their time and for the arrangement of the meeting in Paris. In Spain, we would like to thank Juan Prado Lopez and Pilar Lanau for dedicating their time and for the arrangement of the meetings in Barcelona. We are also grateful for the country managers in the United Kingdom- Andrew Jell, in Germany -Herald Heske; and in Finland- Hans Mellner for interviews and providing contacts of local customers. Our interviews and research would not have been as successful without their help. Last but not least, we would like to thank you for your interest in our thesis and for the support from our families and friends. Högskolan i Kalmar, May 25th , 2009 Katsiaryna Kazak and Wing Yee Choi Table of contents 1 Introduction .............................................................................................................................. 1 1.1 Background .........................................................................................................................................1 1.2 Problematization ................................................................................................................................2 1.3 Research Problem...............................................................................................................................3 1.4 Purpose ...............................................................................................................................................4 1.5 Delimitations ......................................................................................................................................5 1.6 The Case Company ............................................................................................................................6 1.6.1 Electrolux Laundry Systems (ELS) ....................................................................................................6 1.6.2 The Logistic Center in Ljungby (LCL) ................................................................................................7 1.7 Outline of the thesis ........................................................................................................................ 10 2. Methodology ........................................................................................................................... 11 2.1 Scientific Approach .......................................................................................................................... 11 2.1.2 Research Approach ....................................................................................................................... 11 2.1.3 Systematic Combining methodology ............................................................................................ 12 2.2 Research Strategy ........................................................................................................................... 12 2.2.1 Case Study Design ........................................................................................................................ 13 2.3 Research Method ........................................................................................................................... 14 2.4 Data Collection and Analyses .......................................................................................................... 15 2.4.1 Types of data ................................................................................................................................ 16 2.4.2 Data Analysis ............................................................................................................................... 18 2.5 Quality of Research ......................................................................................................................... 18 2.5.1 Construct validity .......................................................................................................................... 19 2.5.2 Internal validity ............................................................................................................................. 20 2.5.3 External validity ............................................................................................................................ 21 2.5.4 Reliability ...................................................................................................................................... 21 2.6 Ethics ............................................................................................................................................... 22 2.7 Methodology summary ................................................................................................................... 22 3. Theoretical framework ............................................................................................................ 25 3.1 JIT Distribution ................................................................................................................................. 25 3.1.1 The evolution of Just-in-time (JIT) distribution ..........................................................................