THE RELATIONSHIP BETWEEN SERVICE QUALITY AND CUSTOMER

SATISFACTION ON FOOD SUPPLY SERVICE AT HEADQUARTERS LOK KAWI

STAFF STATION, LOK KAWI CAMP, SABAH

CHAPTER 1

INTRODUCTION

1.0 INTRODUCTION

Organisations over the years have regarded perceived service quality as a strategic tool

for positioning as well as means of achieving operational efficiency and improving business

performance (Mehta, 2018). Service quality has been seen as critical for the success of

organisations because of its close link with customer satisfaction especially in the service

industry (Parasuraman, 1985). Thus organisations regard quality as a source of competitive

advantage which they always strive to achieve. Moreover, excellent service increases

customer retention and leads to repeat customer purchase behaviour which ultimately

increases the market share of the companies and generates high revenues (Cronin, 2016). For

this reason, restaurant marketers and service researchers more often try to study and

understand customers’ needs and desires on service quality and satisfaction level (Gilbert,

2016).

The Malaysian Army (MA) food service industry has experienced many changes over

the last 15 years. Most of the time, the food service at army units is prepared by military chefs

and cooks. Starting from 2005, a wide range of local catering companies were attracted to

provide catering services to the army units. The local catering operators followed western
advanced management techniques and developed innovatively in a rapid manner. Apart from

this, competition among domestic catering companies is intense because of army units’

account for nearly 50% market share of the industry. Starting from 2007, food service provided

by military chefs and cooks has been outsourced to third parties known as catering companies.

The main purpose of this initiative is to enable the MA to concentrate on their main core

business that is to protect national sovereignty, integrity and interest.

1.1 BACKGROUND OF STUDY

The initiative by Malaysian Armed Forces (MAF) to outsourced or privatise food

supply at units to third parties is to reduce MAF expenses in maintaining and building new

cookhouse including its facilities and equipment. In addition, the privatization of food services

is to mitigate the shortage of military chefs and cooks in service which if it is not resolved

immediately, the quality of food may be compromised and will eventually affects satisfaction

of the soldiers. According to Military Cookhouse Privatization Agreement, the selected caterer

is responsible to provide new building of cookhouse including its facilities such as dining hall,

kitchen area, equipment and others or to take over and upgrade existing cookhouse as well as

to maintain the building and equipment (MAF, 2007). It is also responsible to serve quality

food for 5 times a day according to menu cycle. In return, the government will award the

catering company a contract for 16 years and each soldier taking the catering service will be

charge for a certain agreed amount payable to the caterers (MAF, 2007)

As for MA, in year 2007 the outsourcing of food supply was initiated for army training

institutions, several units from combat support corps and service support corps in Peninsular

Malaysia before it was expanded to Sabah and Sarawak the following year. The caterer

awarded with the contract is responsible for preparing meals according to the menu and to be

served according to the stipulated timing at the units. The food supplied should be sufficient in
terms of quantity and quality. Due to this, the preparation process until serving of food is no

longer responsible to the military representatives. Those caterers are also required to ensure

that the existing dining hall is upgraded either through renovation or building new cookhouse

in order to allow military personnel enjoy their food in a more conducive and healthy

environment. The MAF had allocated a huge spending for these outsourcing of food supply for

the sake of the soldiers. Nevertheless, the return of investment from this spending is worthwhile

and satisfied with the soldiers have yet to be ascertained.

1.2 PROBLEM STATEMENT

In the early 2010s, the hostile environment around the Sabah maritime waters has

tinkled MA to focus attention to the security at the Sabah region. All unit under command of

the Sabah region are ordered to be fully alert and ready to be deployed at any time to fight the

intruders at Sabah waters. Due to this, in year 2012, the outsourcing of food supply to third

parties at the units has expanded to Lok Kawi Camp, Kota Kinabalu, Sabah so that the units

here could focus on their primary tasking. There were eight cookhouse taken over by third

party for upgrading. Among the eight upgraded cookhouse, two became Central Processing

Unit (CPU) while the reminder became Satellite. One of the cookhouses that function as CPU

is belongs to Headquarters Lok Kawi Staff Station. The services from third party goes well

until there were complaints on the quantity and quality of food served were not met the

requirements. Sometimes the food served was not accordance to the menu or changing the

menu without any notification and consensus from end user.

Before outsourcing to third party, all the cooking process from preparation until serving

stage was the responsible of military chefs and cook. All these existing processes were in

accordance with the standards that has been outlined by the Army Logistics Command
Headquarters. Each process will be monitored by qualified individuals according to their

expertise. All shortcomings identified during preparation would be mitigated immediately.

When the food supply is outsourced to third parties, the military chefs and cooks do not have

any authority to monitor their preparation process until the food are served. Moreover the

kitchen area is prohibited to unauthorised person except for their own catering staffs. Presently,

there were complaints on the quantity and quality of food served by third party not meeting the

requirements at Headquarters Lok Kawi Staff Station cookhouse. The quantity of food should

be adequate because the strength of military personnel entitled for the food supply is given to

the catering operator every week. Nevertheless, there are times military personnel did not have

their entitled fruits and certain dishes at the serving point during meal time. In terms of food

quality, spoiled dishes are the most obvious weaknesses found. Although the catering operator

compensate and replaced with new dishes, but it became bad experience to the military

personnel and also jeopardise the administrative process of the units during training and

routine. For this outsourced food supply, the Service Quality (SERVQUAL) and customer

satisfaction is a point MA need to consider to evaluate the service providers. Most soldiers

utilizing this outsourced food supply will have the perception of good service, attractive menu

and clean environment while eating. However, there were complaints with regards to the

caterer’s service quality, cleanliness in dining hall, food handling, taste of the menu and etc.

Other than that, the atmosphere in the dining hall at serving complex also plays an important

role in attracting military personnel to consume their food. Although the serving complex has

been upgraded or newly built, the arrangement of seating, buffet line and set up inside the

complex is still not conducive and attractive.

Based on the above discussion, the arising problems need to be resolved accordingly so

that the number of military personnel who entitled meals in the serving complex will not avoid

taking the food provided to them. Due to the problem faced on service quality, they might turn
to canteen or other places to have their meals. Most importantly, MAF have to bear the losses

because the food supply service is not fully utilised by military personnel.

On the other hand, poor SERVQUAL of the food supply can have impact on customer’s

satisfaction. The customers are the military personnel receiving this outsourced food supply.

The unhappiness of the personnel can be caused by food supply service does not comply with

the required standards, and it is feared that military personnel did not get the desired nutrition.

Other issue arising is when caterers gain an extra profit by reducing the quantity of food on

the weekends because they are aware that most military personnel prefer to go out rather than

having meals in the camp. When the military personnel are unhappy, this may affect their job

performance and quality of work. In an interview conducted by the researcher, one of the

Operational Officer from combat support unit in Lok Kawi Camp mentioned the problem and

challenges that he faced in the unit as follow,

‘The tasking of units in Sabah in operational had been intensified due to the hostile

condition plus with the last incident at Lahad Datu. The involvement of my men had also

increased to a high level and this situation created a challenging moment to my manpower to

focus on fighting intruders. Nevertheless, the outsourced food supply for the soldiers in the

camp had relieved a big burden of the unit and allow us to focus entirely on our primary task.

The service provided by the caterers was good initially, but of late there are problem arising

from the SERVQUAL and soldiers satisfaction towards the food supply service provided to

them. As the Operational Officer of my unit, I always welcome anyone within the organisation

or academic entity to assist us to rectify these arising complications so that the focus on the

unit will not be distracted by the food supply problem. I must ensure my unit achieves the

operational availability set by Malaysian Army, while it is important for me to conduct

improvement to my personnel’s satisfaction towards the food supplied to them’

 Hence, based on the above problems and challenges, the researcher decided to conduct

this study on the relationship between SERVQUAL with Customer Satisfaction on outsourced

food supply at Headquarters Lok Kawi Staff Station, Lok Kawi Camp, Sabah. This study will

be important to the unit leaders to conduct improvement towards SERVQUAL so that

customer satisfaction is high at all times and most importantly the huge amount of money

spent by MAF would have the desired return of investment (ROI).

1.3 RESEARCH QUESTION

The research questions about this study are as follow:

a. What is the level of Service Quality dimensions and customer satisfaction on

food supply service at Headquarters Lok Kawi Staff Station?

b. What is the relationship between Service Quality dimensions with customer

satisfaction at Headquarters Lok Kawi Staff Station?

c. What is the extent of Service Quality dimensions towards customer satisfaction

at Headquarters Lok Kawi Staff Station?

d. What recommendation can be proposed to improve service quality and

customer satisfaction at Headquarters Lok Kawi Staff Station?.

1.4 RESEARCH OBJECTIVES

The objectives of the study are as follow:

a. To identify the level of Service Quality and customer satisfaction on food

supply service at Headquarters Lok Kawi Staff Station.

b. To identify the relationship between Service Quality dimensions with customer

satisfaction at Headquarters Lok Kawi Staff Station.

 c. To identify the extent of Service Quality dimensions with customer satisfaction

at Headquarters Lok Kawi Staff Station.

d. To provide recommendation to improve service quality and customer

satisfaction at Headquarters Lok Kawi Staff Station.

1.5 RESEARCH FRAMEWORK

In general, this study is to determine the relationship between SERVQUAL and

Customer Satisfaction at Headquarters Lok Kawi Staff Station. This study focuses only on

Headquarters Lok Kawi Staff Station personnel at Sabah. This study uses quantitative method

through questionnaire survey. The personnel population at Headquarters Lok Kawi Staff

Station is taken from signallers, military police, mechanics, technicians, drivers and general

duties. Altogether the population is 360 and the samples will be 186 respondents as shown in

the population-sampling table by Krejcie and Morgan (1970).

1.6 SIGNIFICANCE OF STUDY

This study is conducted to find out if the outsourced food supply service providers or

known as caterers offers good service quality and what is the level of soldier’s satisfaction

towards the food supply service at Headquarters Lok Kawi Staff Station. The military units

has such a big amount of soldiers or can be known as customers that it became an important

issue to evaluate the catering company’s service, as no customer satisfaction survey has been

conducted by the military organisation till present. Therefore, this study can assist to know

how people see the service quality of the company from the customer’s point of view. A lack

of knowledge about customers’ perceptions (soldier’s perception) might lead MAF

management to misallocate resources when attempting to improve customer perceived quality.

Since the concept of catering food service quality is not fully explored, this study aims to

identify the SRVQUAL relationship with customer satisfaction on food supply at

Headquarters Lok Kawi Staff Station. It also provide recommendation on how to improve the

service quality and customer satisfaction towards food supply service at Headquarters Lok

Kawi Staff Station.

1.7 Scope of Study

Presently, Headquarters Lok Kawi Staff Station is using the outsourced food supply

service for the meals of their soldiers. This study attempt to identify the SERVQUAL of the

catering operators and the soldier’s satisfaction towards the food supply service. This

framework of SERVQUAL uses five dimensions of Tangible, Reliability, Responsiveness,

Assurance and Empathy. The Headquarters Lok Kawi Staff Station unit is chosen for this study

and the respondents targeted for this study consist of soldiers that consume their meal for the

catering operators.

1.8 Limitation of Study

There were some limitations in this study. These limitations may have affected the end

results, whether directly or vice versa. The data was collected via questionnaires. Hence, the

limitation is in the honesty of the respondent answering the survey questions. The data obtained

from this study is appropriate for Headquarters Lok Kawi Staff Station and it didn't include

other organizations. Time constraint is another limitation to this study. There is limited time

for data collection and completion of this study. The funding for this study is self-funded by
the researcher. There is no budget being allocated for this study. Hence, the researcher designed

this study in such a way that it will not implicate a huge funding. Being a former army officer

in the units at Sabah, the researcher did not need to allocate funding for data collection as it

was done voluntarily by the respondents as part of their duty and responsibility to improve the

catering operator’s SERQUAL.

1.9 Organisation of Chapters

This study consists of five chapters. Chapter 1 provides an overview of the study which

outlines the research problem, research objectives and states the significance of the study and

organisation of the paper. Chapter 2 will discuss on the literature review of the study. Chapter

3 will discuss on the methodology of the study. The research method will be explained and a

thorough explanation will be given concerning research design, research strategy, data

collection, and data analysis. Chapter 4 will be focussed on the analysis and discussion of the

study. Chapter 5 will elaborate on the recommendation for improvement, conclusion and future

work for this study.

1.10 DEFINITION OF KEY TERMS

1.10.1 Outsourcing

Outsourcing is the business practice of hiring a party outside a company to perform

services and create goods that traditionally were performed in-house by the company's own

employees and staff (Khan, 2014). In this paper, the focus of study is the outsourcing of food

supply service at military units to a third party known as catering operators.

1.10.2 Service Quality (SERVQUAL)

According to Parasuraman (1985) service quality is ‘a form of attitude, related but not

equivalent to satisfaction, and results from a comparison of expectations with perceptions of

performance’. As for this study, the service quality is the perceived expectations and military

personnel perceptions pertaining to actual delivery of the outsourced food supply service by

the caterers.

1.10.3 Tangibles.

This determinant is related to the appeal of facilities, equipment and material used by a

service firm as well as to the appearance of service employees. As for this study, tangibles is

related to the facilities, equipment and material used by the catering operators.

1.10.4 Reliability.

This means that the service firm provides its customers with accurate service the first

time without making any mistakes and delivers what it has promised to do by the time that has

been agreed upon. As for this study, reliability is the accurate service provided by the catering

operators.

1.10.5 Responsiveness.

This means that the employees of a service firm are willing to help customers and

respond to their requests a well as to inform customers when service will be provided, and then

give prompt service. As for this study, responsiveness is the respond to the military unit’s

request by the catering operators.

1.10.6 Assurance.
 This means that employees’ behaviour will give customers confidence in the firm and

that the firm makes customers feel safe. It also means that the employees are always courteous

and have the necessary knowledge to respond to customers’ questions. As for this study,

assurance is the catering operator’s employee’s behaviour that will give customer confidence

in the firm.

1.10.7 Empathy.

This means that the firm understands customers’ problems and performs in their best

interests as well as giving customers individual personal attention and having convenient

operating hour. As for this study, empathy is the catering operators able to understand

customers’ problems and performs in their best interests and giving customers individual

personal attention.

1.10.8 Customer Satisfaction

Customer satisfaction is feeling of contentment when the customer “has or achieves

what one needs or desires”, according to the Oxford Advanced learner’ dictionary

(1991:403).Customer satisfaction “is a direct result of firm and environmental variables rather

than solely of individual transaction” Emerson and Grimm (1999:403).

1.11 CONCLUSION

This chapter focussed on the aims and purpose of the research that will be conducted.

The elements included are the background of study, the problem statement, research question,

objective of the study, the scope of study and also the significant of research.
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