EFFECT OF LOGISTICS MANAGEMENT PRACTICES ON

CUSTOMER SERVICE PERFORMANCE OF EABSC ETHIOPIA

(COCA-COLA PLC) ADDIS ABABA:

By
Betelhem Mamush

UNITY UNIVERSITY ADAMA CAMPUS

DEPARTMENT OF BUSINESS MANAGEMENT
MBA PROGRAM

July, 2020
Adama, Ethiopia

1
 EFFECT OF LOGISTICS MANAGEMENT PRACTICES ON
CUSTOMER SERVICE PERFORMANCE OF EABSC ETHIOPIA
(COCA-COLA PLC) ADDIS ABABA:

A Thesis Submitted to Department of Business Management in

Partial Fulfillment of the Requirements for the award of Master’s
Degree in Business Administration (MBA)

By
Betelhem Mamush

Advisor: Bekele Reta (Asst. Prof)

UNITY UNIVERSITY

FACULTY OF BUSINESS AND SOCIAL SCIENCES

DEPARTMENT OF BUSINESS MANAGEMENT

MBA PROGRAM

July, 2020
Adama, Ethiopia

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 Letter of Approval

EFFECT OF LOGISTICS MANAGEMENT PRACTICES ON

CUSTOMER SERVICE PERFORMANCE OF EABSC ETHIOPIA

(COCA-COLA PLC) ADDIS ABABA:

Prepared by: Betelhem Mamush

Approved By a Board of Examiners

___________________ _____________ __________

Chair Person Signature Date

___________________ _____________ _________

Internal Examiner Signature Date

___________________ _____________ _________

External Examiner Signature Date

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 Declaration

I, the undersigned, declare that, this study “Effect of Logistics Management Practices on
Customer Service Performance of EABSC (East African Bottling Share Company) Ethiopia:
Addis Ababa” is my original work and has not been presented for a degree in any other
university, and that all sources of materials used for the study have been duly acknowledged.

Declared by:

Name: Betelhem Mamush

Signature: ______________

Date: __________________

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 Confirmation
This is to certify that Betelhem Mamush has carried out this thesis on the topic entitled “Effect of
Logistics Management Practices on Customer Service Performance of EABSC (East African
Bottling Share Company) Ethiopia: Addis Ababa” Under my supervision. Accordingly, I here
assure that her work is appropriate and standard enough to be submitted for the partial fulfillment
of the requirements for the award of Masters Degree in Business Administration.

Bekele Reta (Asst.Pro.)

Signature: ______________

Date: __________________

iv
 ACKNOWLEDGMENT
I wish to extend my deepest gratitude to my advisor Bekele Reta (Asst.Pro.) for his professional
guidance and advice throughout my study.

I also want to sincerely thank EABSC (East African Bottling Share Company) Coca- cola
Ethiopia employees and customers (employees of agent distributers and retailers) for the
assistance they accorded to me during data collection period. In addition, my heartfelt
appreciations to the staff of Unity University Adama campus for their unreserved support during
the research study.

Finally, my acknowledgement extends to all my family and friends for their unreserved
encouraging support to accomplish this study.

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 Table of Contents
Declaration.....................................................................................................................................iii
Confirmation...................................................................................................................................iv
ACKNOWLEDGMENT.................................................................................................................v
Acronyms/ List of Abbreviations...................................................................................................ix
List of Tables .......................................................................................................................x
List of Figures ...................................................................................................................xi
Abstract..........................................................................................................................................xii
CHAPTER ONE: INTRODUCTION..............................................................................................1
1.1. Background of the study.......................................................................................................1
1.2. Statement of the Problem......................................................................................................3
1.3. Research Questions:..............................................................................................................6
1.4. Objectives of the Study.........................................................................................................6
1.4.1. General Objective..............................................................................................................6
1.4.2. Specific Objectives............................................................................................................6
1.5. Significance of the Study......................................................................................................7
1.6. Scope of the study.................................................................................................................7
1.7. Organization of the Study.....................................................................................................7
CHAPTER TWO: REVIEW OF RELATED LITERATURES.......................................................8
2.1. Theoretical Review of Related Literature.........................................................................8
2.1.1. Concept of Logistics......................................................................................................8
2.1.2. Logistics Management................................................................................................11
2.1.3. Logistics Management Practices.................................................................................12
2.1.3.1. Information Flow Management...............................................................................12
2.1.3.2. Transport Management............................................................................................13
2.1.3.3. Physical Distribution...............................................................................................15
2.1.3.4. Inventory Planning and Management......................................................................16
2.1.3.5. Warehousing Management......................................................................................17
2.1.4. Customer Service........................................................................................................18
2.2. Empirical Review of Related Literature.........................................................................20
2.2.1. The Impact of LMPs on Customer Service Performance............................................20

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 2.3. Conceptual Framework of the Study..............................................................................25
CHAPTER THREE: RESEARCH DESIGN AND METHODOLOGY.......................................26
3.1. Research Approach.........................................................................................................26
3.2. Research Design..............................................................................................................26
3.3. Types and Sources of Data..............................................................................................26
3.4. Population.......................................................................................................................26
3.5. Sample size determination..............................................................................................26
3.6. Sampling Techniques......................................................................................................27
3.7. Data Collection Instruments............................................................................................28
3.8. Data Collection Procedure..............................................................................................28
3.9. Method of data analysis..................................................................................................28
3.10. Ethical Consideration..................................................................................................29
3.11. Validity and Reliability...............................................................................................29
3.11.1. Test of Reliability........................................................................................................29
3.1.1. Test of Validity............................................................................................................30
CHAPTER FOUR: DATA PRESENTATION, ANALYSIS AND DISCUSSION........................31
4.1. Introduction.........................................................................................................................31
4.2. Response Rate.....................................................................................................................31
4.3. Demographic characteristics...............................................................................................32
4.4. Descriptive Analysis...........................................................................................................33
4.4.1. Logistics Management Practices.................................................................................33
4.4.1.1. Information Flow Management Practices............................................................33
4.4.1.2. Transportation Management Practices.................................................................35
4.4.1.3. Physical Distribution Management Practices......................................................36
4.4.1.4. Inventory Management Practices.........................................................................38
4.4.1.5. Warehouse Management Practices......................................................................39
4.4.2. Customer Service Performance...................................................................................40
4.5. Inferential Statistics for LMPs and Customer Service Performance..................................41
4.5.1. Correlation Analysis....................................................................................................41
4.5.2. Regression Analysis....................................................................................................43
4.5.2.1. Multi-co linearity Test.........................................................................................43

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 4.5.2.2. Model Summery...................................................................................................44
4.5.2.3. Coefficients of Regression Analysis....................................................................45
4.5.2.4. Summary of Regression Analysis........................................................................47
CHAPTER FIVE: SUMMARY OF MAJOR FINDINGS, CONCLUSION AND RECOMMENDATION
.......................................................................................................................................................48
5.1. Summary of Major Findings...........................................................................................48
5.2. Conclusion......................................................................................................................49
5.3. Recommendation............................................................................................................50
5.4. Limitation and Suggestion for Future Research.............................................................51
Reference.......................................................................................................................................52
Appendix........................................................................................................................................58

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Acronyms/ List of Abbreviations
CSP Customer Service Performance
EABSC East African Bottling Share Company
EDI Electronic Data Interchange System
ERP Enterprise Recourse Planning
IFMP Information Flow Management Practices
IM Inventory Management
IMP Inventory Management Practices
ICT Information Communication Technology
LM Logistics Management
LMP Logistics Management Practices
PDMP Physical Distribution Management Practices
SCM Supply Chain Management
SDP Service Delivery Performance
SPSS Statistical Package for Social Science
TMP Transportation Management Practices
WMP Warehouse Management Practices

.
.
.

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List of Tables Page
Table 3.1: Sample Respondents by stratum -----------------------------------------------------------38
Table: 3.2: summery of sample respondents with Sampling Techniques Used--------------------39
Table 3.3: Reliability of constructs----------------------------------------------------------------------42
Table 4.1: Descriptive statistics on Information Flow Management Practices--------------------46
Table 4.2 Descriptive statistics on Transportation Management Practices-------------------------47
Table 4.3 Descriptive statistics on Physical Distribution Management Practices-----------------48
Table 4.4 Descriptive statistics on Inventory Management Practices-------------------------------49
Table 4.5: Descriptive statistics on Warehouse Management Practices----------------------------51
Table 4.6: Descriptive statistics on Customer Service Performance--------------------------------52
Table 4.7 Correlation coefficient-------------------------------------------------------------------------53
Table 4.8 Correlation matrix between constructs of LM practices and CSP-----------------------53
Table 4.9: Multi co linearity test of independent variables-------------------------------------------55
Table 4.10: Regression Model between LM Practices and Customer Service Performance-----55
Table 4.11 ANOVA Result between constructs of LMPs and Customer Service Performance- 56
Table 4.12 Regression Coefficients between LMPs and Customer Service Performance--------57

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List of Figures Page No.
Figure 2.1: Major Channels of Distribution------------------------------------------------------------25
Figure 2.2: The relationship between independent and dependant variables-----------------------36
Figure 4.1: Respondents’ frequency distribution of Age---------------------------------------------43
Figure 4.2 Respondents’ frequency distribution of Educational Qualification--------------------43
Figure 4.3: Respondents’ frequency distribution of Work Experience-----------------------------44

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 Abstract
The purpose of the study was to examine the effect of Logistics management practices on
customer service performance of EABSC Ethiopia. To study the effect of logistics management
practices five dimensions were selected as independent variables and were tested the
respondents understanding perspectives on the effect of logistics management practices on
customer service performance. The study used descriptive and explanatory research designs. A
sample of 207 employees or samples were taken using non-probability sampling techniques
particularly purposive and convenience sampling technique. Questionnaires were used as a
research tool for the collection of data. The Collected data was analyzed using descriptive
statistics, correlation and regression. From the result of the analysis it is concluded that all
variables of inventory management practices used in this research (Information Flow
Management Practices, Transportation Management Practices, Physical Distribution
Management Practices, Inventory Management Practices and Warehouse Management
Practices) had a strong, significant and positive effect on Customer Service Performance of the
company. It is obvious Improving logistic performance yields numerous benefits, including
greater customer satisfaction, increased delivery speed, more rapid response to demands, order
and delivery flexibility, and faster order completion capability. In order to achieve these
objectives and to be a competitive enough, it is better for the organization to give due attention
on LM practices for more improvement of their customer service performance.

Key word: Logistics, Logistics Management Practices, customer Service Performance

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 CHAPTER ONE: INTRODUCTION
This chapter consists of the back ground of the study, statement of the problem, research
questions, and objectives of the study, significance of the study, scope of the study, definition of
terms and organization of the paper.

1.1. Background of the study

The challenges of global competition increasingly poses to firms have prompted the shift
towards a greater focus on customer needs and expectations in order to reduce costs by
improving service quality and efficiency (Lai & Cheng 2009). Therefore, Customer service is an
important means of differentiation from competitors, setting the components of customer service
and quantifying the level of service are means of keeping the company’s competitive advantage.
According to Martin Christopher (2007), the role of customer service is to provide time and
place utilities in the transfer of goods and services between the manufacturer and the customer.
In another form, the product has no value until it is in the hands of the customer. That’s why in
recent years organizations have focused on delivering customer value through logistics as a
measure of remaining superior (Mentzer, John T., Daniel J. Flint, and G. Tomas M. Huit (2001).
Logistics is defined as maximizing internal and external flexibility aiming at, for instance,
customization. This implies that logistics has become focused on meeting customers’ service
requirements and is considered as a key source to company’s competitive advantage (Mentzer et
al. 2001).

Logistics is the responsibility to design and administer systems to control movement and
positioning of raw materials, work-in process, and finished inventories at the minimum total cost
(Bowersox, Closs, & Cooper, 2007). Logistics means planning and organizing activities that
ensure that resources are in place so that the process can be effectuated accordingly in efficient
and effective manner (Mellat-Parast and Spillan, 2014). Thus, Logistics encompasses all of the
information and material flows throughout an organization. It includes everything from the
movement of a product or from a service that needs to be rendered, through to the management
of incoming raw materials, production, the storing of finished goods, its delivery to the customer
and after-sales service (Ittmenn & King, 2010). Accordingly, logistics is strategically important
in many industries as it is central to achieving competitive advantage (Kenyon and Meixell,
2007). That’s way managing the logistics process is an important part of management function.

1
Logistics performance is highly dependent on the quality, efficiency and effectiveness of the
managerial involvement in the transportation of raw materials/products in a supply chain (Ülgen
& Forslund 2015). Consequently, it affects the production speed, capacity to fill the customer
orders, delivery flexibility, and creation of an efficient delivery system that meets customers’
needs (Forslund 2012). In simpler terms, logistics performance measurements can be
summarized as the ability to process orders in the shortest time at the lowest cost without
affecting service and product quality (Kersten & Koch 2010). The ultimate aim of logistics is to
respond to customer needs while minimizing logistics costs. As logistics performance
measurement is typically based on customer order fulfillment, it consists of delivery reliability or
perfect order fulfillment and responsiveness or order fulfillment lead times (Supply Chain
Council 2010).

Logistics management is treated as a part of the supply chain management that deals with
management of goods in an efficient way. It is the management process that integrates the
movement of goods, services, information and capital, right from the sourcing of raw material, to
the consumer (Springinklee and Wallenburg, 2012). According to The Supply Chain
Management Professionals, (2007) logistics management is defined as that part of Supply Chain
Management that plans, implements, and controls the efficient, effectively forward and reverses
the flow and storage of goods, services and related information from the point of origin and the
point of consumption in order to meet customers’ demands. The goal of the logistics
management is to provide the right product with the right quality at the right time in the right
place at the right price to the ultimate customer (Mentzer et al., 2004). Thus, Logistics
management has been defined as a high priority for contemporary organizations. The success of
logistics management is determined through the combination of efficiency, effectiveness and
differentiation (Fugate, B. S., Mentzer, J. T. and Stank, T. P. (2010). Therefore, Logistics
through its activities remains one of the business processes that must be integrated throughout
the supply chain in manufacturing organizations to better serve the ultimate customers while
enhancing the performance of the organization and individual chain supply members (Cohen &
Roussel, 2005).

various empirical studies, such as Ellinger, A.E., Daugherty, P.E. and Keller, S.B. (2000), show
that logistics is a strategic vector in companies’ organization and influences their performance,
namely in terms of service quality and overall profitability. Schramm and Morschett, (2006),
2
Opines that marketing performance (sales and market share growth) and financial performance
(return on investment and profit growth) are consequences of performance of logistics activities.
It can therefore be argued that logistics activities must be ingrained in organization strategies so
that it can secure high performance. Competitive position of a business mainly results from the
evaluation of what the firm delivers with regards to value creation as compared to what other
competitors offer (Gorynia, 2004) cited in (Olaf & Grrzegorz, 2015 ). According to Nyaberi and
Mwangangi, (2014) in their study on Effects of logistics management practices on performance
of Rift Valley Bottlers Limited in Kenya found that logistics management practices contributes
to increase in profit, sales volume, service delivery, production levels and quality of product
which denotes organizational performance. Thus, the management of logistics activities has
become a valuable way of securing competitive advantage and improving organizational
performance (Li, S., Ragu-Nathan, B., Ragu-Nathan, T. S., and Rao, S. S. (2006)).

By addressing logistics management practices that contribute to customer service performance,

will help the researcher better understand the scope and activities related to logistics
management that create enhanced level of customer service in competitive business marketplace.
Therefore, the purpose of this study was to empirically test the effect of logistics management
practices on customer service performance of the company.

1.2. Background of the Organization

Coca-Cola was first bottled in Ethiopia's capital Addis Ababa in 1959 by the Ethiopian Bottling
Share Company, which later opened a second branch in Dire Dawa in 1965. The two plants were
nationalized in 1975 and ran as public companies until 1996, when they were bought by private
investors. Just prior to that, in 1995, the Coco-Cola South African Beverage Company (Coca-
Cola SABCO) bought shares in the business and in 1999 signed a joint venture agreement with
the plants. In 2001, Coca-Cola SABCO increased its shares to 61 percent and the company
changed its name to the East African Bottling Share Company. EABSC continues to run the two
plants in Addis Ababa and Dire Dawa. "We employ over 1,500 people in Addis Ababa and Dire
Dawa and produce 720 million bottles of soft drinks a year," says Jansen. "We are one of the top
performing countries in terms of growth, profitability and efficiencies." In April last year,
EABSC unveiled an eight-year, $500 million investment plan, intended to boost its presence in

3
the country by the year 2020. The plans will see it open a further three Ethiopian plants.
"The proposed plants include one in Hawassa and another in western Ethiopia, whose
construction depends on the performance of the company's other lines," says Jansen. "In the next
two or three months we'll start the civils in Bahir Dar, a project which will cost $25 million. We
have received 30ha of land from the Bahir Dar city administration to build what will be our third
Coca-Cola factory and it'll be completed before the end of 2014. The handover of land will be
next month. "If we look at what we're doing in terms of the new investment, it is something in
the region of nine new lines," Jansen adds. "We're really bringing in a whole new portfolio over
the next couple of years and our strategy is to be able to have a cold Cola-Cola within arm's
reach for all our consumers in Ethiopia by 2020." Companies interested in doing business in
Africa can learn a lot by looking at how Coca-Cola and EABSC operate. Multinationals cannot
operate in Africa without ensuring that the communities in which they do business benefit and
have a significant stake in those businesses, says Jansen. A recent survey conducted by the
company found that for every one person directly employed by EABSC, another 10 were
indirectly employed. If you do the maths it means Coke impacts the lives of nearly one million
Ethiopians.

"We have commissioned a study that says close to one million people make a living by
distributing and selling Coca-Cola," Jansen says. Now is the time to invest. "Look at the
statistics: something in the region of 90-100 million people live in the country and the population
is growing fast. Ethiopia has one of the fastest growing economies in Africa and the world and
the government is spending lots of money on infrastructure. There have been huge improvements
on the road networks, electricity and in sectors like banking. All of the economy is growing. It is
fantastic. I don't think you can overlook Ethiopia in terms of investment. It is a very safe and
stable country. Its location is ideal and the government is very interested in export."
At the end of this year EABSC will have invested a total of $150 million dollars in Ethiopia.
That money has led to the completion of a totally refurbished production facility in Dire Dawa,
the building of a five story top-of-the-line multi-tier PET (plastic) building and the revamp of the
existing Addis Ababa production facility. Addis Ababa is now capable of producing 36,000 PET
bottles an hour. "We have increased capacity from the old plants by a factor of four and we
currently don't have a single bottle in the warehouse," says Jansen. The investments will have

4
positive ramifications for the whole country. "By 2020 we will be water neutral," Jansen
explains. "This means, for every liter of water we take out from the earth, we will put one litre
back. We have a best practice in waste water treatment in Ethiopia. We have spent well over $2
million for the plant in Addis Ababa and $3 million for Dire Dawa and we'll do the same in all
new plants. "By 2020, we will also be energy neutral, by then we will not be pulling power off
the grid. We will be totally self sufficient on power. We are involved in cleaning up rivers and
recycling. We're committed to caring for our environment." As Coca-Cola continues to expand in
the fast-growing East African nation, be sure that Africa Outlook will keep an eye on things.
www.cocacolasabco.com visited July (2020)

1.3. Statement of the Problem

In today's highly competitive environment, some companies are aiming to gain global market
share and to obtain a higher output and efficiency of resources. Nowadays, a key determinant of
the performance of business is the role of “logistic function” in ensuring the smooth the flow of
materials, products and information throughout supply chains organizations (Sum et al., 2001).
Due to the high intensity of global competition, the performance of the supply chain through
logistic, is considered increasingly important as a strategic weapon to achieve and maintain
competitive strength.

In the past the goals of logistics were connected primarily to cost effectiveness. Nowadays,
besides cost effectiveness, attention is paid also to fast lead times and developing customer
service. As a result of costs, the price is still an important factor in competition, but in addition
companies want shorten delivery times, increase the speed of distribution and reaction, make
sure that the delivery arrives on time. Logistics is not just “save money” action; it is an important
part of customer oriented service strategy. (Sakki 2003 p.25: cited by Koykka 2010).

Improving logistic performance yields numerous benefits, including greater customer

satisfaction, increased delivery speed, more rapid response to demands, order and delivery
flexibility, and faster order completion capability (Droge et al. 2004). However, optimal logistics
performance implies efficiency and effectiveness of all steps in the supply chain (Gunasekaran &
Kobu 2007, Fugate et al. 2010). Effectiveness is the extent to which a customer’s requirements
are met, whereas efficiency measures how economically a firm’s resources are utilized when
providing a pre-specified level of customer satisfaction (Shepherd & Günter 2006). Customer

5
satisfaction is a primary measure of business success and is thus significant for evaluating
logistics performance (Stank et al. 2003). Hence, when setting targets for logistics performance,
order fulfillment must be a priority (Croxton 2003). Managers take a decisive role in the creation
of such effectiveness. The role of managers has to be in building dynamic processes, while
maintaining the organization's stability and prosperity, survival and success, in a very complex
network, which are of critical importance to its constituent organizations (Harland et. al. 2000).

Therefore, in logistics management, unwise decisions create multiple issues. Failed or delayed
deliveries lead to buyer dissatisfaction. Damage of goods, due to careless transportation is
another potential issue. Poor logistics planning gradually increases expenses and issues may arise
from implementation of ineffective logistics system. To resolve these issues, organizations
should implement best logistics management practices. Companies should focus on collaboration
rather than competition. Good collaboration among transportation providers, buyers and vendors
helps reduce expenses. Also an efficient and safe transportation provider is vital to business
success. (Jansssen et al., 2010)
Different researches have been done about the impact of logistics activities (practices) on
organizational performance but there has been limited or we can say that no academic effort
about logistics management practices and firm customer service performance specifically. For
instance, Mwangangi (2016) conducted a research on influence of logistics management on
performance of manufacturing firms in Kenya. Findings revealed that transport management;
inventory management; order process management, and information flow influences firm
performance. Ontita (2016) conducted a research on inventory management approaches and
performance of textile manufacturing firms in Kenya. Finding revealed that inventory
management approaches used manufacturing companies include; information technology, lean
inventory system and strategic supplier partnership. It was also revealed that there was a strong
positive correlation between the inventory management practices and operational performance of
the textile manufacturing firms.

Njoroge and Kabare (2016) investigated the role of fleet management on supply chain
performance in logistics firms based in Nairobi Industrial Area, Kenya. It was recommended that
logistic firms should invest heavily in ICT such as; installation of onboard vehicle
communication systems, vehicle safety technology and fleet management systems. Information-

6
enabled collaboration reduces costs across the chain while enhancing customer service and
value. Advances in information technology have changed modern business practice, making
collaborative supply chain management possible (Chatfield et al, 2004). Information’s
competitive value is widely heralded it substitutes for inventory, speeds new product design,
shortens order fulfillment cycles, drives process reengineering, and coordinates SC activities
(Hult et al., 2004).

Also Musau, Namusonge, Makokha and Ngeno (2017) conducted a research on the effect of
transport management on organizational performance among textile manufacturing firms in
Kenya. It was concluded that transport management influences performance of supply chain. The
study recommended that the organization must come up with new strategies such as; scheduling,
route planning, fleet management, and vehicle tracking. Through this, the organization will be
able to become more competitive. In addition, according to (Sbihi and Eglese, 2010; Genchev et
al., 2011, Bienstock et al., 2008) Customer satisfaction is affected by warehouse and inventory
management solutions and sharing and managing of common Information Communication
Technology (ICT) processes.

Moreover many researchers investigate the impact of Logistics Management Practices either on
organizational performance, operational performance or business performance in general but no
one is investigated on customer service performance partially. Therefore, the proposed paper will
intend to investigate the effect of LMPs on customer service performance of the company (East
African bottling share company - coca cola). Therefore, from empirical evidences the researcher
was taken five LM practices that has a relation to customer service performance to investigate
the effect of LM practices, (Information Flow Management Practices, Transportation
Management Practices, Physical Distribution Management practices, Inventory planning and
Management practices, and Warehouse Management practices) on customer service performance
of the company as it is the main source of companies’ competitive advantage. And also based on
the empirical evidences the researcher has set the following major research questions to be
answered from the proposed research.

1.4. Research Questions:

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The following research questions were answered in the study

1. What is the effect of Information Flow Management Practices on customer service

performance of EABSC of Ethiopia?
2. What is the effect of Transportation Management Practices on customer service
performance of EABSC of Ethiopia?
3. What is the effect of Physical Distribution Management practices on customer service
performance of EABSC of Ethiopia?
4. What is the effect of Inventory planning and Management practices on customer service
performance of EABSC of Ethiopia?
5. What is the effect of Warehouse Management practices on customer service performance
of EABSC of Ethiopia?
1.5. Objectives of the Study
1.5.1. General Objective

The general objective the study was to assess the effect of the logistics management practices on
customer service performance of EABSC Ethiopia, Addis Ababa.

1.5.2. Specific Objectives

In addition to the above main objective the research will intend to investigate the following
specific objectives.

 To examine the effect of Information Flow Management Practices on customer service

performance.
 To assess the effect of Transportation Management Practices on customer service
performance.
 To assess the effect of Physical Distribution Management practices on customer service
performance.
 To evaluate the effect of Inventory planning and Management practices on customer
services performance.

8
 To ascertain the effect of Warehouse Management practices on customer service
performance.
1.6. Significance of the Study

The study will have significant importance in strengthening the existing knowledge and
understanding of logistics management practices and customer service performance by
examining and empirically testing the relationship between logistics management and customer
service performance for the case of EABSC (East African Bottling Share Company) Coca-Cola
Ethiopia. The study will also provide some insight or recommendations to EABSC Ethiopia,
Addis Ababa to evaluate and improve their logistics management practice based on the study
findings. Finally, the proposed study can serve as an additional reference to others researchers
who are interested in the area of logistics management and customer service performance.

1.7. Scope of the study

Logistics management encompasses vast areas of managerial practices. However, it is difficult
and unmanageable to conduct the proposed study in all areas that summarizes Logistics
management in terms of time, finance, and research manageability. Therefore, the scope of the
study was delimited to examine the effect of Logistics management practices (Information Flow
Management Practices, Transportation Management Practices, Physical Distribution
Management practices, Inventory planning and Management practices, and Warehouse
Management practices) on customer service performance. To manage the research flow only
EABSC Ethiopia, located in Addis Ababa were subjects of the study, through assessing how the
company interacts with its down streams of the supply chains or customers (distributors and
retailers). The subject scope of this study also delimited to the company’s customers around
Addis Ababa.

1.8. Organization of the Study

The research is organized into five chapters: 1st Chapter contain the introductory part dealing
with back ground of the study, the statement of the problem, objectives of the study, scope of the
study, significance of the study and definition of basic terms. The 2 nd chapter focuses on the
theoretical review and empirical review taken from different sources. The 3 rd chapter presents the
research methodology of the study. The 4 th chapter presents data analysis, presentation and

9
interpretation of the study and finally, the 5 th chapter presents the summary of major findings,
conclusion, recommendations and limitation & suggestion for future researches.

10
 CHAPTER TWO: REVIEW OF RELATED LITERATURES
This part of the study provides theoretical and empirical review collected from different sources
and specific to concepts or ideas of Logistics Management, Logistics Management practices and
Customer Service Performance. Based on the literature reviewed, the selected conceptual
framework of the study is also presented.

2.1. Theoretical Review of Related Literature

2.1.1. Concept of Logistics

Logistics has evolved from a mere classic transport function to a strategic, cross-functional, and
global discipline (Grant et al., 2006). Supplying production material to factories and distributing
finished goods to warehouses and shops are prerequisites of highly fragmented value chains in
global economies today. The increasing impact of logistics on a company’s success and
economic growth underlines the importance of future planning in this field. Supplying the
world’s population with food, daily goods, books, educational material, and medicine has
become one of the key issues in fostering economic prosperity in developing and emerging
countries, especially in rural areas (A. Carallo, 2013).

Additionally, the professionalization of logistics management, as well as the strong conviction

that logistics contributes to economic wealth and costs savings, have changed the way logistics-
related aspects are viewed. Disaster relief, humanitarian aid, and refugee camp supplies are some
important areas which are handled by professional logistics nowadays. Consequently, the overall
importance of logistics is increasing. Thus, innovative and up-to-date methods are needed to
cope with new challenges in the field (Berghaus, 2015).

Since logistics advanced from 1950s, due to the trend of nationalization and globalization in
recent decades, the importance of logistics management has been growing in various areas. For
industries, logistics helps to optimize the existing production and distribution processes based on
the same resources through management techniques for promoting the efficiency and
competitiveness of enterprises (Alessandro Vitale, 2014).

Logistics can be defined as the process of planning, implementing and controlling procedures for
the efficient and effective transportation and storage of goods including services and related
information from the point of origin to the point of consumption for the purpose of conforming

11
to customer requirements and includes inbound, outbound, internal and external movements
(Lambert & Stock, 2008). It comprises the management of raw materials flow to finished goods
through an organization. Logistics means planning and organizing activities that ensure that
resources are in place so that the process can be effectuated accordingly in efficient and effective
manner (Mellat-Parast and Spillan, 2014). Similarly, According to the Council of Logistics
Management (CLM) “Logistics is the process of planning, implementing and controlling the
efficient and effective flow of goods, services and related information from point of origin to
point of consumption in order to meet customer requirements”.
It is also defined as part of supply chain that plans, implements, controls the efficient and
effective forward and reverse flow, storage of goods, services and related information between
the points of origin and the point of consumption in order to meet customer’s requirement
(Vitasek, 2007). Logistics activities and processes are fundamental elements that a company’s
supply chain capabilities and competences are based upon. The close relationship between
logistics and customer service, and its effect on a firm’s competitiveness dictate that companies
handle their logistics function prudently so as to achieve its full potential as a source of
competitive advantage. The main functions of logistics managers involve organizing and
planning of inventory, purchasing, transportation, warehousing activities. The logistic activities
can be divided in two categories (Lambert and Burduroglo, 2000):

 Inbound Logistics, that refers to the activities connected with the procurement of
material, handling, storage and transportation; and
 Outbound Logistics, that refers to the activities connected with the collection,
maintenance and distribution or delivery of the product to the final consumer.

Logistics is the responsibility to design and administer systems to control movement and
positioning of raw materials, work-in process, and finished inventories at the minimum total cost
(Bowersox, Closs, & Cooper, 2007). Thus, Logistics encompasses all of the information and
material flows throughout an organization. It includes everything from the movement of a
product or from a service that needs to be rendered, through to the management of incoming raw
materials, production, the storing of finished goods, its delivery to the customer and after-sales
service‖ (Ittmenn & King, 2010).

12
To conclude, the commonality of the recent definitions in logistics is that, it is a process of
moving and handling goods and materials, from the beginning to the end of the production, sale
process and waste disposal, to satisfy customers and add business competitiveness (Tseng, Yue,
& Taylor, 2005). It is the process of anticipating customer needs and wants; acquiring the capital,
materials, people, technologies, and information necessary to meet those needs and wants;
optimizing the goods or service-providing network to fulfill customer requests; and utilizing the
network to fulfill customer requests in a timely way (Tseng, Yue, & Taylor, 2005).

The role logistics system can play also in reducing the environmental impact of industries has
not been extensively researched. It is especially important to understand the relationship between
operational effectiveness and environmental aspects. Both result from a number of decisions
taken within the firm concerning both strategic and operative levels (Aronsson and Huge Brodin,
2006). Moreover, Logistics purposes may lead to increased levels of performance for the
adopting firm and that complimentary firm resources may affect the degree of performance
(Hazen and Byrd, 2012).

Logistics generates value through the accommodation of clients’ delivery requests. Thus,
logistics performance should indicate the organization’s ability to deliver goods and services
when required at acceptable cost in the quantities required by customers (Zelbst et al., 2008).

Logistics performance can be viewed as a subset of the broader concept of organizational output
(Duong and Paché, 2016). The most traditional logistics performance is based on the creation of
time and place utility, while the attributes of an organization’s product or service offering that
lead to utility creation through logistics activities, which are reflected in seven-R formula. It
refers to the organization’s ability to deliver the right amount of the right product at the right
place at the right time in the right condition at the right price with the right information (Lee et
al., 2016).

Logistics performance is defined as the degree of efficiency, effectiveness, and differentiation

linked with the accomplishment of logistics activities (Mentzer et al., 2004). The logistics
function as a whole should strive to reduce the ratio of resources utilized against derived results
(efficiency), accomplish pre-defined goals (effectiveness), and gain superiority in comparison
with competitors (differentiation) (Tuan, 2017).

13
Accordingly, logistics is strategically important in many industries as it is central to achieving
competitive advantage (Kenyon and Meixell, 2007). However, companies must respond to
changing customer needs, and logistics flexibility is an important part of the response (Zhang et
al., 2005). Each company must develop or create its own logistical values that will be
incorporated into the product, or its value in use. For customers despite the shape of the product,
it is important that it will be accessible to them in the required time. There are six reverse
logistics capabilities that have impact on companies’ performance: logistics information
management, close-loop capability, supply chain integration, supply chain coordination,
conformity capability, and institutional incentives (Vlachos, 2016).

To conclude, in the past the goals of logistics were connected primarily to cost effectiveness.
Nowadays, besides cost effectiveness, attention is paid also to fast lead times and developing
customer service. As a result of costs, the price is still an important factor in competition, but in
addition companies want shorten delivery times, increase the speed of distribution and reaction,
make sure that the delivery arrives on time. Logistics is not just “save money” action; it is an
important part of customer oriented service strategy. (Sakki 2003 p.25: cited by Koykka 2010).

2.1.2. Logistics Management

Logistics management is treated as a part of the supply chain management that deals with
management of goods in an efficient way. It is the management process that integrates the
movement of goods, services, information and capital, right from the sourcing of raw material, to
the consumer (Springinklee and Wallenburg, 2012). Accordingly, The Supply Chain
Management Professionals, (2007) defined logistics management as that part of Supply Chain
Management that plans, implements, and controls the efficient, effectively forward and reverses
the flow and storage of goods, services and related information from the point of origin and the
point of consumption in order to meet customers’ demands. The fact that logistics is a unifying
link intra organizationally between the production and marketing function and inter
organizationally between suppliers and customers cannot be gain said (Green, Whitten, &
Anthony, 2008).Autry, Zacharia, and Lamb, (2008) contends that logistics must focus on the
coordination, collaboration of activities, logistics social responsibility, and strategic distribution
planning, technology and information systems. These altogether are the fulcrum of customer-

14
firm-supplier relationship management which improves customer satisfaction and operational
performance and in consequence impacts on organization performance.

In addition, Logistics management is the process of strategically managing the procurement,

movement and storage of materials, parts and finished inventory (and the related information
flows) through the organization and its marketing channels in such a way that current and future
profitability are maximized through the cost-effective fulfillment of orders (Christopher,
Logistics & Supply Chain Management, 2011). Therefore, the logistics management process
begins with raw material accumulation to the final stage of delivering goods to the destination.
By adhering to customer needs and industry standards, logistics management facilitates process
strategy, planning and implementation. Logistics management needs new pattern of thinking
based on entropic thinking and nonlinear thinking which bring together the capacity of
developing strategies and approaching complex problems (Bolisani and Bratianu, 2017;
Bratianu, 2007).

Logistics Management has the mission of getting the right goods or services to the right place, at
the right time, and in the desired condition at the lowest cost and highest return on investment
but with real satisfaction of customers. Logistics has become a part of a company’s strategic
planning, management and controlling. Every company must develop their strategy and logistics
competitiveness factors from their own point of view Haapanen 2005 p15 (cited by Koykka

2010). Therefore, The goal of the logistics management is to provide the right product with the
right quality at the right time in the right place at the right price to the ultimate customer
(Mentzer et al., 2004). Thus, Logistics management has been defined as a high priority for
contemporary organizations. The success of logistics management is determined through the
combination of efficiency, effectiveness and differentiation (Fugate et al., 2010). Eventually,
supply chain management measures through procrastination affect price/cost, product’s quality,
innovation (Mamad & Chahdi, 2013).

2.1.3. Logistics Management Practices

Manufacturing companies are constantly faced with the challenges of keeping track of inventory
and ensuring that their products are successfully delivered to the customers. This workflow

15
generally involves various forms of logistics, each of which functions a little differently. The
various forms of Logistics Management according to (Ristovska, Kozuharov, & Petkovski, 2017)
are:

2.1.3.1. Information Flow Management

According to Harisson and van Hoell (2002) information flow was defined as the flow of data in
different directions with variable contents between various data base (department) within a
company. Before, the information flow within the logistics had become vital since it enabled
chains to respond on real time and accurate data (Harisson& van Hoell, 2008). Firms then,
looked at information flow as an asset, since it was not possible to have efficient and reliable
materials flow without it ( (Mattsson & Lemmink, 2002) (Stevenson & Spring, 2009) concurred
that, the flow of accurate and real time information in logistics was considered very important to
the flow of materials.

Bowersox, Closs, & Cooper, (2010) named four reasons why timely and accurate information
flow had become more critical for effective logistics systems' design and operations: Customers
perceived information about order status, product availability, delivery schedule, shipment
tracking, and invoices as necessary elements of total customer service. With the goal of reducing
total supply chain assets, managers realized that information could be used to reduce inventory
and human resource requirements; Information flow increased flexibility with regard to how,
when, and where resources may be utilized to gain strategic advantage; Enhanced information
transfer and exchange capability utilizing the internet was changing between buyers and sellers
and redefining the channel relationships (Somuyiwa & Adewoye, 2010).

This information explosion had enabled logistics to become an important weapon in the firm's
arsenal to add value to the bottom line (Closs, et al., 2005). Information sharing was a key to
success of logistics performance (Whipple, Lambert, Vermeersch., 2002). Sharing of information
on transfer; exchange of information indicating the level and position of inventory; sales data and
information on the forecasting; information about the status of orders, production schedules and
delivery capacity, and firm performance measures had become essential to all firms (Wardaya, et
al., 2013). Product and delivery lead times are shortened making products available on time to
customers (Tachizawa and Ginemez, 2005).Access to information enables channel members to
plan how much to stock for a given period of time (Fasanghari, Roudsari and Kamal, 2008). In

16
order for information sharing to take place, chain partners should have a collaborative potential
and IT infrastructure (Shore and Venkatachalam, 2003).

However, this information flow can only be successful when firms impress on information
technology use. Information technology provides the capacity to see data that is private in a
system of cooperation and monitor the development of products, where information is passing in
every process in the supply chain (Simatupang & Sridharan, 2002).

2.1.3.2. Transport Management

Transportation can be defined as the act of moving goods or people from an origin to a required
destination. It also includes the creation of time and place utilities. Transportation plays a key
role in the supply chain, because without the efficient movement of finished goods and raw
materials the entire system would not be able to work at its full potential (Randall et al., 2010).
Transportation plays a key role in the supply chain, because without the efficient movement of
finished goods and raw materials the entire system would not be able to work at its full potential
(Green, Whitten, & Anthony, 2008). The modes of transportation can be divided into five: rail,
road, air, water and pipeline. Intermodal freight transport involves the transportation of freight in
an intermodal container or vehicle, using multiple modes of transportation (rail, ship, air, water
and truck), without any handling of the freight itself when changing modes. The method reduces
cargo handling, and so improves security, reduces damages and losses, and allows freight to be
transported faster (Cavinato et al., 2007).The goal for any business owner is to minimize
transportation costs while also meeting demand for products.

Transport management is the planning, controlling and decision making on operational area of
logistics that geographically moved and positioned inventory (Bowersox, Closs, & Cooper,
2010). Because of its fundamental importance and visible cost, transportation had traditionally
received considerable managerial attention and almost all enterprises, big and small, had
managers responsible for transportation (Bowersox, et al., 2010). Transportation occupied one-
third to two thirds of the amount in the logistics costs hence transport management influenced
the performance of logistics system immensely (Bowersox, et al., 2010). Transporting is required
in the whole production procedures, from manufacturing to delivery to the final consumers and
returns. Only a good management and coordination between each component would bring the
benefits of logistics to a maximum. A good transport management in logistics activities could

17
provide better logistics efficiency, reduce operation cost, and promote service quality on firms
(Bowersox, et al., 2010).

From the logistical system point of view, three factors were fundamental to transportation
performance: cost, speed, and consistency (Bowersox, et al., 2010). The cost of transport is the
payment for shipment between two geographical locations and the expenses related to
maintaining on-transit inventory. Logistical systems utilized transportation that minimized total
system cost (Bowersox, et al., 2010). According to Bowersox, (2010) speed of transportation
was the time required to complete a specific movement. Speed and cost of transportation were
related in two ways. First, transport firms capable of offering faster delivery typically charged
higher rates for their services. Second, the faster the transportation service was, the shorter the
time interval during which inventory were on transit and the higher the charges (Bowersox, et al.,
2010). Thus, a critical aspect of selecting the most desirable method of transportation to a firm is
to balance speed and cost of service.

2.1.3.3. Physical Distribution

Distribution is an integral part of the marketing mix. With the right distribution strategy in place
that is with the right mode of delivery the right speed of delivery to the appropriate place of
purchase, customer satisfaction can be significantly increased. Failure to deliver these practical
points will result in the loss of orders and income to the company and long-term customer loyalty
will decline (Drummond and Ensor 2001).

Physical distribution is a whole process that concern also materials and finished product, a
physical movement of goods from the manufacturers to intermediaries and finally to the ultimate
consumer. Distribution accomplishes this by providing time and place utility, in other words,
availability and its goals are like any other marketing goals: consumer’s satisfaction and profit
for the firms (Muhscina, 2008). There are various routes that products or services use after their
production until they are purchased and used by end users. These channels are referred to as
distribution channels or marketing channels. Therefore, distribution channels are all those
organizations that a product has to go through between its production and consumption (Kotler et
al, 2006). Distribution channel management is very critical for the firms when they decide to
enter one or more markets.

18
 Figure 2.1: Major Channels of Distribution

Source: Etzel et al. (2004)

There are 3 degrees of intensity of distribution namely; selective, intensive and exclusive
distributions with their application relying on the nature of the product and market type (Etzel et
al, 2004).

According to (Etzel et al, 2004), A firm with intensive distribution policy seeks to achieve a wide
distribution for its products. This in essence means that the firm will make use of as many outlets
as possible perhaps a combination of both direct and indirect methods of distribution are likely to
be out into use. Such intensive distribution aims the product at the mass marketing and the
distribution strategies implemented tend to carry the product to all the nooks and corners of the
market. With selective distribution however, not every outlet or channel will be utilized. The
firm will rather rely on a few outlets to handle the products. The firm may resort to this method if
the product involved is of a durable nature and requires an after-sales service or it is associated
19
with certain prestige. Exclusive distribution entails the granting of exclusive rights to a single
seller in with a particular territory or area to sell the company’s products such a right therefore
provides that the firm supplies all the necessary tools including promotional device to the seller.
The seller in turn undertaken to handle only the Firm’s middlemen all stand to gain from such
arrangement. The middlemen get larger commission because his mark-up is high; he also
commands the prestige of such a role. The firm on the other hand, is free from the burden of
having to handle completely the marketing of its products and it is in the better position to fight
off competition.

2.1.3.4. Inventory Planning and Management

The overall objective of Inventory Planning and Management is to determine and maintain the
lowest inventory levels possible that will meet the customer service policy requirements
stipulated in the CSP. Inventory is the stock of any item or resource used in the organization. An
inventory system is the set of policies and controls that monitor levels of inventory and
determine what levels should be maintained, when stock should be replenished, and how large
orders should be. Inventory control is the supply of goods and offerings at the proper time with
the right time and amount (Ogbo, 2011). Adeyemi and Salami (2010) state that the main purpose
of inventory management is to have what is needed, and to reduce the quantity of instances
production and services operations are interrupted by using issues of stock outages. According to
Vergin (2012), organizations use inventory management practices such as automatic
replenishment, ABC inventory model, just-in time (JIT) inventory, economic order quantity
(EOQ) and vendor managed inventory. In addition, the use of inventory management has also
helped organizations become competitive in the market. Use of information technology to
manage inventory enables an organization to become more efficiency and cut cost (Kithinji,
2015).

Therefore, Inventory management is a strategic area in logistics operation and has an impact of
efficiency and effectiveness of the overall supply chain system. Whilst inventories provide some
security against fluctuations in the level of customer demand, there is concern that they may
reduce the ability of supply chains to respond to changes in the nature of demand. Inventories in
the international supply chains may therefore act as a buffer against one risk whilst increasing
another type of risk. Etienne (2005) lists factors such as speed to the market for new products,

20
responsiveness to market niches, and feedback time for quality issues. Harrison and Van (2008)
have put forward inventory reduction strategies such as: reduction of production lead times,
product postponement, total cycle time, compression, centralization of inventory and the virtual
warehousing concept. Managing all kinds of assets in an organization can be viewed as an
inventory problem.

Successful inventory management involves creating a purchasing plan that will ensure that items
are available when they are needed (but that neither too much nor too little is purchased) and
keeping track of existing inventory and its use. Two common inventory-management strategies
are the just-in-time method, where companies plan to receive items as they are needed rather
than maintaining high inventory levels, and materials requirement planning, which schedules
material deliveries based on sales forecasts, Christopher 2007.

2.1.3.5. Warehousing Management

A warehouse is a commercial building for buffering and storage of goods or an intermediate area
for storing of raw materials or products until they are needed for production or consumption
Chua and Teo 2008 (cited by Haung Min study 2010). Warehousing refers to the activities
involving storage of goods on a large-scale in a systematic and orderly manner and making them
available conveniently when needed. In other words, warehousing means holding or preserving
goods in huge quantities from the time of their purchase or production till their actual use or sale.

Being an essential component of logistics, is a key aspect of modern supply chains and plays a
critical role in the success or failure of business today Frazelle 2002a. (Cited by Haung Min
study 2010)

According to Tompkins et al., (2003) the typical warehouse functional areas and flows as;
receiving, staging for cross-docking, reserve, forward and shipping. Receiving, transfer and put
away, order picking, cross-docking, and shipping. Order picking is the most labor-intensive and
costly activity of most warehouses. The most common order picking system is picker-to-parts
systems, in which the order pickers walks or drives along the aisle to pick items (De Koster
(2004). Therefore, Warehousing is an important part of a firm’s logistics system that stores
products (raw materials, parts, goods-in-process and finished goods) at and between points of

21
origin and points of consumption. Warehousing can be provided by either warehouses or
distribution centers (Murphy & Wood, 2008).

Warehouse layout is also important in achieve greater efficiencies. Minimizing travel time
between picking locations can greatly improve productivity. However, to achieve this increase in
efficiency, companies must develop processes to regularly monitor picking travel times and
storage locations. Warehouse layout is one important factor affecting the order picking process.
An important decision for many firms is the criteria for locating the warehouse facilities. Cost
factors are prevalent in the decision making models. Resources such as skilled labor are also
emphasized in some of the models. Another dominant factor is what might be named as
accessibility, meaning infrastructure and availability of transportation modes (Melachrinoudis, et
al, 2000). Alberto (2000) also emphasizes time and reliability related considerations. This
includes the proximity of customers manufacturing facilities and suppliers.

2.1.4. Customer Service

According to Stock and Lambert (2001:97), customer service can be defined as a process which
takes place between buyer, seller and the third party. The process results in a value added to the
product or service exchanged. This value added in the exchange process might be short term as
in a single transaction or longer term as in a contractual relationship. The value added is also
shared, in that each of the parties to the transaction or contract is better off at the completion of
the transaction than they were before the transaction took place. Thus, in a process view:
customer service is a process for providing significant value-added benefit to the supply chain in
a cost-effective way. Doctker (in Ballou 2004:93), considering customer service in terms of a
fulfillment process, define it as ‘… the entire process of filling the customer’s order. This
process includes the receipt of the order (either manual or electronic), managing the payment,
picking and packing the goods, shipping the package, delivering the package, providing to the
customer for the end user and handling the possible return of the goods.’

Finally, Emerson and Grimm (in Collins, Henchion and O’Reilly 2001:2) distinguish between
marketing and logistics customer service, both of which are required to meet customer
expectations.

22
They describe logistics customer service activities as providing ‘place, time and form utility, by
ensuring that the product is at the right place, at the time the customer wants it and in an
undamaged condition.’ Its activities are restricted to those that take place during the individual
order cycle, from order placement to order delivery.

Marketing customer services, on the other hand, are those outside the context of the order cycle.
They ‘facilitate possession utility by creating awareness of the product, offering a mechanism
such as price, by which the buyer-seller exchange can take place, and often offering follow-up
service and warranty on the product.

The purpose of the logistic system is to serve customers as well or better than the competition
and at the same time to make profits. Customer service is the chain of sales activities and
meeting customer requirements, which begins with receiving the orders and ends with the
delivery of the products to customers, in some cases continuing with equipment maintenance
services. (Bălan Carmen, 2001) The role of customer service is to provide time and place utilities
in the transfer of goods and services between the manufacturer and the customer. In another
form, the product has no value until it is in the hands of the customer (Martin Christopher, 2007).
Availability is a complex concept, influenced by many factors that together form the customer
service. These factors include the frequency of the delivery and its safety, the stock level and the
time interval the order is released.

The logistic system involves the connection between the business and its customers for the
procurement and stockpiling of materials, the implementation and the physical distribution of
products, so that the firm manages to meet customer requirements. The logistic system provides
an overview of the movement of goods and services from the supplier to the end user and the
movement of payments and information in reverse sense. Between the business and the
customers there are close relationships that allow identifying the benefits from the strategic point
of view of the system functionality. The management’s attention should focus not only on the
business, but also on the interactions giving logistical system functionality. Today we are
witnessing the increasing importance of consumer services, which become a competitive weapon
of the organization. The factors behind this growth are (Martin Christopher, 2007): the

23
continuous changes in the customer expectations, the consumer demands more, he is more
sophisticated than he was 30 years ago. The reduction in the power of the brand growth by the
technologies of the competitive products: thus making difficult to perceive the differences
between products. The specialized literature identified three components of customer service
(Martin Christopher, 2007):

Pre-transactional elements that create a favorable climate for customer service: the customer
service policies and programs, the organizational structure necessary to implement the customer
service policy, the flexibility of the system or its ability to respond to customer needs.

Transactional elements established by meeting the logistic function: the availability of the
product in the stock, information about the order, the order cycle duration.

Post-transactional elements of customer service are generally those that support the product in
use: product guarantee, maintenance service, product replacement, client complaint resolution,
and product reimbursement. It is very difficult for any company to identify its customers' needs.

The relationship between logistics and customer service requires the company to choose one of
the two fundamental strategic options (Porter Michael E, 2001):

A leadership position in pricing, which means that the firm should be the manufacturer with
the lowest cost in the area in which it operates;

A significant differentiation, which consists in visible differences against the competitors

clients are interested in (superiority of the product, delivery in the shortest time and safely,
quality service).

Logistics favors holding cost advantages and contributes to differentiate services. Linking
logistical activities and conducting cost reductions permit the establishment of more competitive
prices. The competitive advantage can also be achieved by providing qualitative services.

24
 2.2. Empirical Review of Related Literature
Mwangangi (2016) conducted a research on influence of logistics management on performance
of manufacturing firms in Kenya. Findings revealed that transport management; inventory
management; order process management, and information flow influences firm performance.
Nuahn (2017) investigated the impact of logistics and transportation practices on performance of
Kenya Cooperative Creameries. The findings revealed that there exists а strong positive
relationship between transportation and performance at KCC.

Musau, Namusonge, Makokha and Ngeno (2017) conducted a research on the effect of transport
management on organizational performance among textile manufacturing firms in Kenya. Target
population was 169 employees. Stratified and simple random sampling methods were used to
select а sample of 139 employees. It was concluded that transport management influences
performance of supply chain. The study recommended that the organization must come up with
new strategies such as; scheduling, route planning, fleet management, and vehicle tracking.
Through this, the organization will be able to become more competitive.

Kimulu (2014) conducted a research on logistics outsourcing and performance of commercial

banks in Kenya. Target population was 43 commercial banks in Kenya. The study conducted а
census. Primary data was collected using standard questionnaire. The findings revealed that route
optimization had been achieved and fleet tracking tools increased vehicle visibility to large
extent while vehicle scheduling improved to a moderate extent. Njoroge and Kabare (2016)
investigated the role of fleet management on supply chain performance in logistics firms based in
Nairobi Industrial Area, Kenya. Cross sectional survey research design was used. The study
targeted 20 logistics firms in the industrial area. Simple random sampling was used to select 65
respondents. It was recommended that logistic firms should invest heavily in ICT such as;
installation of onboard vehicle communication systems, vehicle safety technology and fleet
management systems.

Ontita (2016) conducted a research on inventory management approaches and performance of

textile manufacturing firms in Kenya. Finding revealed that inventory management approaches
used manufacturing companies include; information technology, lean inventory system and
strategic supplier partnership. It was also revealed that there was a strong positive correlation
between the inventory management practices and operational performance of the textile

25
manufacturing firms. According to Womack and Jones (2003), lean inventory system is the
process of reduced level of inventories. Brigham and Gapenski, (2013) posit that reducing the
level of inventory will enable organizations get higher profits. This is because the organization
will be able to reduce storage cost, handling cost and waste. Eroglu and Hofer (2011) conducted
a research on lean, leaner, too lean? Inventory-Performance Link Revisited. Findings revealed
that inventory management has а significant and positive influence on performance of
companies.

Fugate, Mentzer and Stank (2010) conducted a study on logistics performance and its influence
on firm performance in USA on 150 firms. The study revealed that increase in logistics
efficiency, effectiveness, and differentiation decreased expenses, inventory, cash requirements
and increased inventory availability, timely delivery, on-time and damage-free deliveries, line-
item fill rates and sales which improved net margin and asset turnover, which improved return on
assets and overall firm performance.

Liu and Luo, (2008) examined the effect of logistics capabilities on performance in
manufacturing firms in China. The study based on a survey of 1000 manufacturing firms in
central south, south and central china regions. By exploratory and confirmatory factor analyses,
the scale of manufacturing firm’s logistics capabilities is obtained. The results show that logistics
capabilities can be conceptualized as a three dimensional construct: process capability, flexibility
capability and information integration capability.

Mansidão and Coelho, 2014:4 conducted an empirical analysis on data obtained by mail survey
from executives to define and further measure performance with respect to logistics that resulted
in identifying length of promised order cycle times for base-line/in-stock products,
manufacturer’s performance in meeting promised delivery dates, fill rate on base-line/in-stock
items, advance notice on shipping delays, accuracy of manufacturer in forecasting and
committing to estimated shipping dates on contract/project orders, manufacturer's adherence to
special shipping instructions, accuracy in filling orders as appropriate measures for logistical
performance. The study basically dealt with soft measures of logistics performance that can be
characterized with their focus on customer satisfaction. In light of a perspective that dictates the
very existence of an ideal logistics service is for identifying the requirement of the customer it
serves and ultimately ensuring an excelled customer satisfaction, the attention given to such

26
measures that align with logistics customer service is appropriate and is believed to be highly
applicable in a pragmatic manner for an ideal manufacturing business entities. In other words,
such soft measures have a significance importance in capturing the logistical performance
aspects of firms.

Srivastava (2006) investigated the state of logistics and supply chain practices in India. He found
that, while Indian managers are well aware of the need to develop supplier partnerships, integrate
and coordinate the flow of goods from supplier’s supplier to ultimate customer, and share
information among supply chain partners, the infrastructure necessary to facilitate such seamless
integration is as yet unavailable. There is pressure in emerging markets to rapidly adopt logistics
and supply chain integration practices in an effort to compete globally.

Fugate, Mentzer and Stank (2010) conducted a study on logistics performance and its influence
on firm performance in USA on 150 firms. The study revealed that increase in logistics
efficiency, effectiveness, and differentiation decreased expenses, inventory, cash requirements
and increased inventory availability, timely delivery, on-time and damage-free deliveries, line-
item fill rates and sales which improved net margin and asset turnover, which improved return on
assets and overall firm performance.

Hyvönen (2007) conducted a study on the logistics in Finland firms. Descriptive statistics was
used in data collection and analysis. The findings of the study were that when information
technology is applied to logistics management, it resulted in increased sales and customer
satisfaction. The study however, was not able to establish the influence the other aspects of
logistic management had on performance other than information technology.

Bwari et al. (2016) conducted a study on supply chain in East African Breweries Limited. The
study adopted descriptive research design. The study targeted all the 1653 employees in EABL.
From each stratum, the study took a 10% sample to give a sample size of 165 respondents. The
study found out that inventory control, distribution management, transportation management
influenced supply chain performance to a great extent but warehousing management services
influenced supply chain performance to a moderate extent. The study however did not
investigate the relationship that existed between the research variables.

Wathe (2016) investigated the influence of logistics being the independent variables, on the
performance of manufacturing firms being the dependent variable. The study used both

27
descriptive and explanatory research designs. A semi-structured questionnaire was administered
through e-mail survey and hand delivery. The study found out there is a positive relationship
between logistics and the performance of manufacturing companies in Kenya.

Sezen (2005:351) argued that logistics performance can be evaluated by considering logistics
costs, customer satisfaction, product availability in the market, conforming to the promised
delivery dates and quantities, flexibility in all logistics activities, and efficiency in inventory
management. Besides, Fugate et. al (2010:14) were conceptualizing logistics performance as
multidimensional construct that consisted of logistics differentiation, logistics efficiency and
logistics effectiveness. To put it in other words, it seems that the most holistic study that
objectively accounted the vital aspects of logistics performance is that made by Fugate et. al
(2010) where the authors constructed logistics performance in terms of the dimensions of
logistics effectiveness, logistics efficiency and logistics differentiation.

2.3. Conceptual Framework of the Study

The conceptual framework shown in Figure 2.2 is developed based on the literature review. The
conceptual framework will illustrate the linkage between Logistics management practices and
customer services performance.

Independent Variables Dependant Variables

Logistics Management Practices

Information Flow Management

Transportation Management
28
 Physical Distribution Management Customer
service
Inventory Planning & Management performance
Warehouse Management

Figure 2.2.shows the relationship between independent and dependant variables

Source: (compiled by the researcher, 2020)

As it is observed on the literature above Information flow management (coordination,
communication, controlling monitoring and planning logistics processes through ICT),
Transportation management (enabling timely delivery of products & services, using electronic
system to track all transported products, availability of products at customer desire location),
Distribution management (label and load the right product to the right vehicle and etc), Inventory
management (avoiding inventory bottlenecks, keeping cost at minimum, using right inventory
management techniques like ABC, JIT etc), ware house management practices (product delivery
in the right quantity, product leave the ware house clean and damage free for customers and
warehouse location convenient to customers) of the company are practices that is required to
deliver customer requirements. Which in turn all are requirements to improve customer service
performance in terms of lead time, timely delivery of orders, responsiveness and time to market
performance and flexibility.

CHAPTER THREE: RESEARCH DESIGN AND METHODOLOGY

3.1. Introduction
This part of the study consists of research design, type and source of data, population, sampling
techniques, sample size determination, data collection instrument, data collection procedure,
methods of data analysis, ethical consideration, validity and reliability of the study.

29
 3.2. Research Approach
The study used qualitative and quantitative research approach through structured questionnaires
with closed Likert type statement; it is a means for testing objective theories by examining the
relationship among variables. These variables, in turn, measured, typically on instruments, so
that numbered data were analyzed using statistical procedures.

3.3. Research Design

The study adopted empirical investigation with descriptive and explanatory research design,
since the major focus of the study was to investigate the effect of logistics management practices
on EABSC Ethiopia customer service performance. Explanatory studies and descriptive survey
designs were used to allow for the gathering of information, summarize, present and interpret it
for the purpose of clarification (Creswell, (2003). Therefore, in order to accurately describe the
effect & relationships between the independent variables and the dependent variable descriptive
and explanatory research studies were employed which helped to use both qualitative and
quantitative data analysis.

3.4. Types and Sources of Data

The study employed both primary and secondary data sources. Primary data was collected from
employees of EABSC (East African Bottling Share Company Ethiopia) Coca-Cola, Addis Ababa
and employees of Agent distributors and retailers (wholesalers) of the company through closed
ended questionnaires. As the secondary data; books, articles, journals, was reviewed to develop
conceptual framework

3.5. Population

The target population of the study was 1452. From total target population 1,152 are employees of
EABSC Ethiopia located at Addis Ababa and 162 distributers and 138 retailers (wholesalers)
from Addis Ababa area.

30
 3.6. Sample size determination

Since the total numbers of employees of EABSC Ethiopia located at Addis Ababa, distributors
and retailers from Addis Ababa area were 1452. Due to time and the nature of the population, the
researcher used sample determination method developed by (J Carvalho, 1984), "Archival
application of mathematical sampling techniques", (1984) (Quoted by national Archive report
Richmond, 2005) to determine a sample size.

Table 3.1: Sample Respondents by Stratum

Population size Small Medium Large

51-90 5 13 20

91-150 8 20 32

151-280 13 32 50

281-500 20 50 80

501-1200 32 80 125

1201-3200 50 125 200

3201-10,000 80 200 315

10001-35000 125 315 500

35,001-150,000 200 200 800

Source: (Carvalho, 1984) as quoted by (national Archive report Richmond, 2005)

From the total numbers of employees 1,152 working in EABSC Ethiopia, 125 were considered
as sample size of the study, from total number of employee 162 working for agent distributers 50

31
were considered as sample size of the study and from 138 retailers and wholesalers 32 were
considered as sample size of the study based on Carvalho ,1984 sample. Therefore, from the total
target population 207 samples were considered as sample size of the study excluding secretaries,
guards, other supportive staffs whom they are insignificant for the study and, through
considering the heterogeneity of sample respondents on the basis of different units/ departments
within the organization and its customers (downstream supply chain).

3.7. Sampling Techniques

For the purpose this study, the researcher used non probability sampling technique since the total
population of the study is large and heterogeneous in type purposive and convenience sampling
techniques were preferred. Therefore, the information required for the study involves selection of
respondents who have enough awareness about the company’s logistics management practices
and customer service performance; purposive and convenience sampling techniques were used to
have the right peoples from every concerned section in the company and its downstream supply
chain. In this case respondents from Logistics and supply chain management, operation
(production), marketing and sales and Warehouse and Inventory management department of
EABSC Ethiopia and Logistics, marketing and sales departments from distributors and retailers
selected employing purposive and convenience sampling techniques.

Table: 3.2: summery of sample respondents with sampling techniques for each category
Organization Total population Sample size
Employees of EABSC Ethiopia 1152 125
Employees of Agent Distributors 162 50
Retailers & Wholesalers 138 32
Total 0 0

3.8. Data Collection Instruments

The data was collected through structured questionnaires with closed Likert type statements
questions. The Likert type scale commonly used in business research, because it allowed
participants to provide their perceptions and opinions both in terms of direction (positive or
negative) and intensity (degree of agreement or disagreement). The questionnaire would utilize a
five point likert scale namely Strongly disagree (SD), Disagree (D), Neutral (N), Agree (A) and

32
Strongly Agree (SA) which was assigned scores of between 1 and 5. This allowed the researcher
to draw conclusions based on comparisons made from the responses.

3.9. Data Collection Procedure

Before collecting the data, the instruments of the data were prepared carefully and permission of
the selected firms was taken. Then the objectives of the study were explained to subjects. Based
on their willingness to participate in filling questionnaire the questionnaires were distributed. To
enhance the response rate, the questionnaires were delivered by hand and collected by hand on a
scheduled pickup date.

3.10. Method of data analysis

The collected data were analyzed through Descriptive, Regression analysis and correlation
analysis. Descriptive analytical techniques were used with the aid of Statistical Package for
Social Sciences (SPSS) version 25. The reliability of the variables was measured by Cronbach
alpha. And also, the collected data were analyzed by Regression analysis and correlation analysis
because it helps to investigate the relationship between the independent variable of logistics
management practice and customer service performance and their effect on the dependent
variables customer service performance. The study also used tables, frequencies, and percentages
to analyze and present the collected data.

Base on the conceptual model of the study expressed by Figure 2.2, mathematically the
relationship between logistics management practices and customer service performance was
expressed in the multiple regression equation as:
Y = X0 +X1 (IFMP) + X2 (TMP) + X3(PDMP) +X4 (IMP) +X5(WMP) + e
Where: Y= Customer Service Performance.
IFMP = Information Flow Management Practices.
TMP = Transportation Management Practices.
PDMP = Physical Distribution Management Practices.
IMP = Inventory Management Practices
WMP= Warehouse Management Practices
e= Error (level of precision)
X0= the constant parameter.

33
 X1= Coefficient of Information Flow Management Practices
X2= Coefficient of Transportation Management Practices.
X3= Coefficient of Physical Distribution Management Practices.

X4= Coefficient of Inventory Management Practices.

X5= Coefficient of Warehouse Management Practices

In accordance with the above mathematical model the constructed research questions were tested
by considering significance level of each constant parameter in multiple regression analysis.

3.11. Ethical Consideration

A formal letter was written from Unity University Adama campus, Department of Business
Administration to EABSC Ethiopia Addis Ababa, agent distributers and outlet retailers. The data
collection was started after getting consent from the parties mentioned above, and all information
gathered were confidentially treated.

3.12. Validity and Reliability

3.12.1. Test of Reliability

Reliability has to do with the accuracy and precision of a measurement procedure (A measuring
instrument) is reliable if it provides consistent results. A pilot test was done on 12 respondents
who were specialized in similar field of study. As multiple items in all constructs were used, the
internal consistency/reliabilities of LM Practices and Customer Service Performance were
assessed with Cronbachs Alpha and the reliability values for all constructs are confirmed as
greater than 0.7, which are considered ideal (Pallant 2005). The following table shows the
summary of reliabilities of all constructs.

Table 3.3: Reliability of constructs

Construct Variables Cronbach’s Alpha Result Number of items

34
 Information Flow Management Practices .821 9

Logistics Transportation Management Practices .738 6

Management
Practices
Physical Distribution Management Practices .866 8

Inventory Management Practices .730 7

Warehouse Management Practices .801 7

Customer Service Performance .924 14

Total 0
3.1.1. Test of Validity
Validity is the most critical criterion and indicates the degree to which an instrument measures
what it is supposed to measure. Malhotra (2010) mentioned about three types of validity in his
study: content validity, predictive validity, and construct validity. This study addressed content
validity through the review of literature and adapting instruments used in previous research.

CHAPTER FOUR: DATA PRESENTATION, ANALYSIS AND DISCUSSION

4.1. Introduction
This chapter presents the data analysis and interpretation part of the research. The study
attempted to examine the effect of logistics management practices on customer service
performance of Coca-Cola Company. In order to assess the relationship between logistics
management practices and customer service performance, descriptive, Correlation and regression
analysis were conducted for scale typed questionnaire. In order to collect data questionnaires
were used and collected from employees of EABSC (Coca-cola) Addis Ababa and customers

35
(Agent Distributers and Retailers). The research questionnaire designed using 5 point Likert
scale to collect appropriate responses, in relation to this the respondents indicated the extent they
agree with the statements by choosing: 5-Strongly Agree, 4-Agree, 3-Neutral, 2-Disagree and 1-
Strongly Disagree. A mean (M) score of 0- 1.5 means that the respondents indicated Poor
Performance, between 1.50 to 2.50 means the respondents indicated that as it is Lower
Performance, 2.50 to 3.50 means that the respondents indicated as it is Neither good Nor Lower
Performance, 3.50-4.50 means that the respondents indicated as it is Good Performance and a
mean above 4.50 means that the respondents indicated as perfect performance. Based on the
response of the respondents Mean computed to describe the status of logistics management
practices and customer service performance of the Coca-Cola Company. The collected data were
presented and analyzed using SPSS version 22.0 statistical software. The study also used
correlation analysis, specifically Pearson correlation to measure the degree of association
between different variables under consideration. Regression Analysis was used to test the effect
of independent variable on dependent variable.

4.2. Response Rate

From a total of 207 questionnaires which were distributed to employees of EABSC (Coca-Cola
Company) Addis Ababa and customers (Agent Distributers and Retailers) 142 (68.59%)
questionnaire were obtained and identified as valid and used for analysis. Based on these, the
response rate is 68.59%.

4.3. Demographic characteristics

The demographic profile of the sample respondents were presented and analyzed below. The
purpose of assessing respondents’ age was to determine whether the researcher considered
As it is shown in the figure 4.1, from the age of
heterogeneity of sample units. On the other hand assessing the work experience and education
the respondents below 25 years covers 5%, from
level of the respondents’ was that, when the respondents are more experienced and educated they
age of 26 up to 35 years covers 24%, age of 36
have better opportunity to understand the case and give better response than else.
up to 45 covers 46%, and above 46 are 25% of
respondents. Therefore, 134 respondents (95%)
Figure 4.1: Respondents’ frequency distribution of Age
of respondents were above age of 26 years.
therefore, it can be concluded that 36
the
respondents were matured enough which can
ensure the value of the study, and the responses
 Respondants age

6%

25% Below 25 years

24%
26-35 years

36-45 years

Above 46 years

46%

Source: Own Survey data, (2020)

Figure 4.2 Respondents’ frequency distribution of Educational Qualification

120 Figure 4.2 depict educational qualification
100 of respondents. From the total respondents,
80 127 respondents (87.4%) were 1st and 2nd
60 degree holders. According to the response,
40 the respondents can provide relevant and
20 reliable information needed for the study
0 and they are fit in line with the response of
ee

...
a
om

or

the questionnaire.
gr
De
pl

BA
Di

/M
st
ge

Fir

SC
lle

M
Co

A/
M

Source: Own Survey data, (2020)

From the total respondents, 57 respondents
(40.1 %) fall at a work experience level of 2-5
Figure 4.3: Respondents’ frequency distribution of Work Experience
years, 54 respondents (38%) were with 6-10
years experience and 17 respondents (12%)
were at a work experience of more than 10
years. From this it can be concluded that the
majority of respondents, 128 respondents
(90.1%) fall at a work experience above two
years. This implies that most of the respondents
37
have sufficient knowledge and experience about
their firm and can provide relevant information
for the study.
 60

50

40

30

20

10

e
s
s

s
ar

ar
ar

ov
ye

ye
ye

ab
5

10
2

d
2-
n

an
6-
ha

s
st

ar
les

ye
10

Source: Own Survey data, (2020)

4.4. Descriptive Analysis

The research questionnaire designed using 5 point Likert scale to collect appropriate responses,
in relation to this the respondents indicated the extent they agree with the statements by
choosing: 5-Strongly Agree, 4-Agree, 3-Neutral, 2-Disagree and 1-Strongly Disagree. A mean
(M) score of 0- 1.5 means that the respondents indicated Poor Performance, between 1.50 to 2.50
means the respondents indicated that as it is Lower Performance, 2.50 to 3.50 means that the
respondents indicated as it is Neither good Nor Lower Performance, 3.50-4.50 means that the
respondents indicated as it is Good Performance and a mean above 4.50 means that the
respondents indicated as perfect performance. Based on the response of the respondents Mean
computed on the following tables.

4.4.1. Logistics Management Practices

4.4.1.1. Information Flow Management Practices

Information sharing was a key to success of logistics performance (Whipple, Lambert,

Vermeersch., 2002). Bowersox, Closs, & Cooper, (2010) named four reasons why timely and

38
accurate information flow had become more critical for effective logistics systems' design and
operations: Customers perceived information about order status, product availability, delivery
schedule, shipment tracking, and invoices as necessary elements of total customer service.
Access to information enables channel members to plan how much to stock for a given period of
time (Fasanghari, Roudsari and Kamal, 2008). In order for information sharing to take place,
chain partners should have a collaborative potential and IT infrastructure (Shore and
Venkatachalam, 2003). In order to collect respondents’ perception towards the information flow
management practices nine questions provided and the result of the findings are provided in the
following table.

Table 4.1: Descriptive statistics on Information Flow Management Practices

Item Information Flow Management Practices

no
& Std.
code In my company: N Mean Deviation

IF1 There is frequent face-to-face planning /communication meetings

142 3.77 .805
with distribution staffs/employees.

IF2 the departments involved in production, sales and distribution of

142 3.91 .841
products Share ideas, logistics information and resources

IF3 information flow between departments and partners is managed

142 3.81 .780
through ICT in order to plan logistics processes

IF4 Logistics management process is monitored using information flow

142 3.88 .679
through ICT.

IF5 Provided employees with any logistics information that might help
142 3.60 .772
them improve logistics performance.

IF6 company the Information flow between functional units and trading
142 3.28 .886
partners is Timely

39
IF7 Information flow between functional units and its trading partners is
142 3.98 .647
adequate

IF8 The company has frequent interaction with its customers to determine
142 4.08 .642
the future customer expectations of services.

IF9 share demand forecasts and related information across its distribution
142 3.81 .583
chain partners

Valid N (listwise) 142

Source: Own Survey data, (2020)

As it is indicated on Table 4.1, for information flow management practices, the highest mean
value is observed for as a company has frequent interaction with its customers to determine the
future customer expectations of services, as there is adequate information flow between
functional units and with trading partners (customers), as functional unites Share ideas, logistics
information and resources, as Logistics management process is monitored using information
flow through ICT and information flow between departments and partners is managed through
ICT in order to plan logistics processes, as company share demand forecasts and related
information across its distribution chain partners, as there is frequent face-to-face planning
/communication meetings with distribution staffs/employees with a mean and SD value of
(mean=4.08 with S.D=0.642), (mean=3.98 with S.D=0.647), (mean=3.91 with S.D=0.841),
(mean=3.88 with S.D=0.679), (mean=3.81 with S.D=0.780), (mean=3.81 with S.D=0.583),
(mean=3.77 with S.D=0.805), respectively. This indicated that the information flow within the
company and between its trading partners were good. However, the rest mean results indicated
lower performance for in the company (between functional units) and with trading partners
(customers) as there is no timely information flow with a (mean=3.28 and S.D=886). Timely and
accurate information flow between functional units and with trading partners (customers) help to
get information about customers order status, product availability, delivery schedule, shipment
tracking, and invoices which all these are elements of customer service. Access to these

40
information enables channel members to plan how much to stock for a given period of time
(Fasanghari, Roudsari and Kamal, 2008).

Therefore, the company should have to work with the observed gap in order to improve overall
information flow management practices.

4.4.1.2. Transportation Management Practices

Transportation can be defined as the act of moving goods or people from an origin to a required
destination. It also includes the creation of time and place utilities. Transportation plays a key
role in the supply chain, because without the efficient movement of finished goods and raw
materials the entire system would not be able to work at its full potential (Randall et al., 2010).
Transporting is required in the whole production procedures, from manufacturing to delivery to
the final consumers and returns. Only a good management and coordination between each
component would bring the benefits of logistics to a maximum. A good transport management in
logistics activities could provide better logistics efficiency, reduce operation cost, and promote
service quality on firms (Bowersox, et al., 2010). In order to collect respondents’ perception
towards the transportation management practices six questions provided and the result of the
findings are provided in the following table.

Table 4.2: Descriptive statistics on Transportation Management Practices

Item Transportation Management Practices

no
& Std.
code In my company: N Mean Deviation

TP1 Through transportation management products are made available to the

142 3.51 .788
customer desire location

41
TP2 The transportation management practices of the company enable timely
142 3.73 .946
delivery of products and services to customers

TP3 is practicing joint transport planning, management and control processes for
142 4.05 .784
product distribution with other logistics firms.

TP4 is improving customer satisfaction and service delivery by reducing the

distribution costs through collaboration with 3PLs 142 3.91 .874

TP5 has a mechanism to ensure transported products are being damage free 142 3.84 .896

TP6 The transportation system of the company like timely delivery and
142 3.93 .872
safely satisfy your customer

Valid N (listwise) 142

Source: Own Survey data, (2020)

Table 4.2 shows that, all variables mean is higher than 3.5 which indicated that majority of
respondents agreed on transportation management practices of the company. The mean ranged
from the highest 4.05 for The Company is practicing joint transport planning, management and
control processes for product distribution with other logistics firm’s .to the lowest 3.51 for the
company through transportation management products are made available to the customer desire
location. Therefore, most of the respondents agreed on transportation management practices of
the company are in good performance stage.

4.4.1.3. Physical Distribution Management Practices

Physical distribution is a whole process that concern also materials and finished product, a
physical movement of goods from the manufacturers to intermediaries and finally to the ultimate
consumer. Distribution accomplishes this by providing time and place utility, in other words,
availability and its goals are like any other marketing goals: consumer’s satisfaction and profit
42
for the firms (Muhscina, 2008). Therefore, Distribution is an integral part of the marketing mix.
With the right distribution strategy in place that is with the right mode of delivery the right speed
of delivery to the appropriate place of purchase, customer satisfaction can be significantly
increased. Failure to deliver these practical points will result in the loss of orders and income to
the company and long-term customer loyalty will decline (Drummond and Ensor 2001). In order
to collect respondents’ perception towards the distribution management practices eight questions
provided and the result of the findings are provided in the following table.

Table 4.3: Descriptive statistics on Physical Distribution Management Practices

Item Distribution Management Practices

no
& Std.
code The company: N Mean Deviation

PD1 Realizes that distribution channels accessibility is good in customer service

142 4.23 .856
delivery.

PD2 Works to make distribution channels are in a way to fulfill customer

142 3.46 1.036
demands at right time.

PD3 Works to make distribution channels are in a way to fulfill customer

142 3.20 1.112
demands at the right place.

PD4 The company checks that distribution channels availability is good in

142 4.01 .859
customer service delivery.

PD5 Distribution channels adopted has enhanced the ability of the company to
generate, disseminate, and respond to market changes so as to remain 142 4.04 .906
competitive in the market

PD6 strategy for distribution channel is based on understanding of customer’s

142 2.93 1.213
needs so as to satisfy them

PD7 products and services are delivered using the right mode of distribution 142 3.25 .991

43
PD8 share shipping processes and resources (trucks, equipments and
142 3.46 1.140
employees/staffs) in product distribution

Valid N (listwise) 142

Source: Own Survey data, (2020)

According to the above Table 4.3, approximately 62.5% of the mean score is below 3.5 which is
considered as high lower performance and the remaining 33.5% of the mean score is above 3.5
which is considered as higher level of performance. Therefore, according to the data in the table
above we can understand that, the company realizes its distribution channels accessibility for
good in customer service delivery and checks their availability. Thus, in turn the adopted
channels enhanced the ability of the company to generate, disseminate, and respond to market
changes so as to remain competitive in the market. In spite of the other five variables the result
in the table shows as lower performance indicating that distribution channels were not in line to
fulfill customer demand at the right time and place. And also it indicated as the company has
some gabs in terms of the strategy it have, it is not designed understanding customer needs and
doesn’t share shipping processes and resources (trucks, equipments and employees/staffs) for its
product distribution.

Distribution accomplishes physical movement of goods from the manufacturers to intermediaries

and finally to the ultimate consumer by providing time and place utility. According to
(Drummond and Ensor 2001) Failure to deliver these practical points will result in the loss of
orders and income to the company and long-term customer loyalty will decline. Therefore,
EABSC (Coca-Cola Company) has to give due attention and improve the observed gabs.

4.4.1.4. Inventory Management Practices

The overall objective of Inventory Planning and Management is to determine and maintain the
lowest inventory levels possible that will meet the customer service policy requirements

44
stipulated in the CSP. According to Vergin (2012), organizations use inventory management
practices such as automatic replenishment, ABC inventory model, just-in time (JIT) inventory,
economic order quantity (EOQ) and vendor managed inventory. In addition, the use of inventory
management has also helped organizations become competitive in the market. Also Etienne
(2005) lists factors such as speed to the market for new products, responsiveness to market
niches, and feedback time for quality issues. Harrison and Van (2008) have put forward
inventory reduction strategies such as: reduction of production lead times, product
postponement, total cycle time, compression, centralization of inventory and the virtual
warehousing concept. Therefore, Inventory management is a strategic area in logistics operation
and has an impact of efficiency and effectiveness of the overall supply chain system. In order to
collect respondents’ perception towards the inventory management practices seven questions
provided and the result of the findings are provided in the following table.

Table 4.4: Descriptive statistics on Inventory Management Practices

Item Inventory Management Practices

no
& Std.
code In my company: N Mean Deviation

IM1 uses the right inventory management technique (JIT, Kaizan,

142 3.55 .730
ABC analysis etc) to manage it inventory

IM2 The inventory model used to determine the quantity ordered is based
142 3.13 .906
on real demand analysis

IM3 The inventory model used target to minimize overall total inventory
142 3.72 .925
costs like holding, ordering, and stock out

IM4 uses Enterprise Resource Planning system (Barcode) to track its inventory 142 3.11 .868

IM5 The company provided external customer with the required inventory level
142 3.69 .969
with its inventory management practices

45
IM6 The inventory management practices enable the company to avoid inventory
142 3.63 .838
bottleneck in production

IM7 The procurement policy of the company is in line with customer service
142 3.70 .865
policy of the company

Valid N (listwise) 142

Source: Own Survey data, (2020)

As it is indicated on the table 4.4, based on the mean value, the variables for Inventory
Management Practices of EABSC of Ethiopia Company vary from the highest (3.72), to the
lowest (3.11). The highest respondents’ agreed on The inventory model used in EABSC of
Ethiopia target to minimize overall total inventory costs like holding, ordering, and stock out
with the mean and standard deviation score of (Mean= 3.72, S.D = 0.925), The procurement policy
of the company is in line with customer service policy of the company with mean and standard
deviation score of (Mean= 3.70, S.D = 0.865), The inventory management practices used in EABSC
of Ethiopia enabled the company to avoid inventory bottleneck in production (Mean= 3.63, S.D =
0.838), and as the company uses the right inventory management technique (JIT, Kaizan,
ABC analysis etc) to manage its inventory with (Mean= 3.55, S.D = 0.730). However, they are
neutral on the inventory model used in EABSC of Ethiopia to determine the quantity ordered is
based on real demand analysis and for The Company using Enterprise Resource Planning system
(Barcode) to track its inventory with a (Mean= 3.13, S.D = 0.906) and (Mean= 3.11, S.D = 0.868)
respectively, indicating lower performance for these variables.

Therefore, the finding has shown as EABSC of Ethiopia has to revise its inventory models and
use for real time demand analysis in order to reduce its inventory holding costs and improve
overall inventory management Practices.

4.4.1.5. Warehouse Management Practices

46
Warehousing refers to the activities involving storage of goods on a large-scale in a systematic
and orderly manner and making them available conveniently when needed. In other words,
warehousing means holding or preserving goods in huge quantities from the time of their
purchase or production till their actual use or sale. Thus, Warehousing is an important part of a
firm’s logistics system that stores products (raw materials, parts, goods-in-process and finished
goods) at and between points of origin and points of consumption. Warehousing can be provided
by either warehouses or distribution centers (Murphy & Wood, 2008). Warehouse layout is also
important in achieve greater efficiencies. Minimizing travel time between picking locations can
greatly improve productivity. In order to collect respondents’ perception towards the warehouse
management practices seven questions provided and the result of the findings are provided in the
following table.

Table 4.5: Descriptive statistics on Warehouse Management Practices

Item Warehouse Management Practices

no
& Std.
code In my company: N Mean Deviation

WM1 The design of the warehouse is easy to access items, free from
142 3.75 .818
damage of items and convenient to load and unload

WM2 The design of the warehouse system is properly done to improve

142 3.75 .748
customer service and eliminate errors in warehouse operation

WM3 The company realizes that distribution channels have enough warehouses 142 3.57 .588

WM4 delivered its Products in the right quantity to the customer 142 3.77 .748

WM5 Products leave the warehouse clean and damage free for customer 142 3.87 .633

WM6 share order-picking resources in product distribution through

142 4.14 .720
centre/warehouse management.

47
WM7 The firm warehouse is close to the proximity of the customer 142 3.77 .992

Valid N (listwise)
142

Source: Own Survey data, (2020)

According to the data in the Table 4.5 all respondents state their agreement to all warehouse
management practices of the company with the mean score of greater than 3.5. This shows that
EABSC (Coca-Cola Company) of Ethiopia designed its warehouses for easy to access items, free
from damage of items and convenient to load and unload and it eliminates errors in warehouse
operation and the allocation of warehouses ware convenient to its customers which makes its
products easily accessible by its customers. In general, the company is effectively managing its
warehouse in order to improve its customer service performance as well as organizational
efficiency.

4.4.2. Customer Service Performance

Doctker (in Ballou 2004), defined customer service in terms of a fulfillment process, as ‘… the
entire process of filling the customer’s order. This process includes the receipt of the order
(either manual or electronic), managing the payment, picking and packing the goods, shipping
the package, delivering the package, providing to the customer for the end user and handling the
possible return of the goods.’ Therefore, Customer service performance is achieved through
being flexible in providing goods and services, delivery of goods and services to customers in a
way that meet and even going beyond the expectation of the customers, being responsive for
customers and time to market. In order to collect respondents perception towards the customer
service performance of EABSC (Coca-Cola Company) of Ethiopia fourteen questions provided
and the result of the findings are provided in the following table.

Table 4.6: Descriptive statistics on Customer Service Performance

48
 Customer Service Performance
Item
no & Std.
code The company: N Mean Deviation
has Just-in-time (JIT) delivery arrangements

CSP1 142 3.93 .805

The company always meets delivery committed /promised date to
customers
CSP2 142 3.62 .769
Always delivers customer orders at accurate locations.

CSP3 142 3.94 .947

Fulfilled Customer orders accurately in terms of quantity and type of
product.
CSP4 142 3.75 .794

CSP5 have time-to-market lower than industry average 142 3.92 .767

CSP6 Is flexible in delivery schedule to accommodate changes earlier/later

142 3.99 .803
than the delivery schedule.

CSP7 received minimum complaints on quality 142 4.01 .934

CSP8 There is a feedback mechanism from the Distribution centers

142 3.65 .705
towards the company and vice versa

CSP9 Products and services are delivered to customers on time thus

142 4.13 .676
meeting the customer requirements

CSP10 Improved the utilization of the channels storage capacity across its
142 3.74 .787
network

CSP11 Time to solve customer complaints is short. 142 4.01 .748

CSP12 The company order cycle time is reliable 142 4.01 .785

CSP13 The company achieved Short lead-time(from order) 142 4.03 .899

49
CSP14 Customers are very satisfied with the logistics services provided. 142 3.80 .792

Valid N (listwise)
142

Source: Own Survey data, (2020)

According to the survey result in Table 4.6, all variables mean is greater than 3.5 which indicates
that majority of respondents agreed on as customer service performance of the company is good
in terms of JIT delivery arrangements, commitment in promised delivery date of products to their
customers, handling complaints, responsiveness, time to market, short lead-time and customer
satisfaction with the mean value of greater than 3.5. Therefore, most of the respondents agreed
that customer service performance of the company is good.

4.5. Inferential Statistics for LMPs and Customer Service Performance

4.5.1. Correlation Analysis
Correlations are the measure of the linear relationship between two variables. A correlation
coefficient has a value ranging from -1 to 1. Values that are closer to the absolute value of 1
indicate that there is a strong relationship between the variables being correlated whereas values
closer to 0 indicates that there is little or no linear relationship. The sign of a correlation
coefficient describes the type of relationship between the variables being correlated. A positive
correlation coefficient indicates that there is a positive linear relationship between the variables:
as one variable increases in value, so does the other.

According to (Andy, 2006) the value and sign of the coefficient shows the strength of the
association

Table 4.7 Correlation coefficient

Strength of association Coefficient (r)
Positive Negative
Small 0.1 - 0.3 -0.1 to -0.3

50
 Medium 0.3 – 0.5 -0.3 to -0.5
Strong 0.5 – 1.0 -0.5 to -1.00

To explore the relationship between logistics management practices and customer service
performance, a correlation analysis was conducted. The results of the correlation between LMPs
and customer service performance are summarized in Table 4.8 below.

Table 4.8 Correlation matrix between constructs of LM practices and CSP

IFMP TMP PDMP IMP WMP CSP

Pearson Correlation 1
IFMP

Sig. (2-tailed)

Pearson Correlation .451** 1

TMP

Sig. (2-tailed) .000

Pearson Correlation .346** .527** 1

PDMP

Sig. (2-tailed) .000 .000

Pearson Correlation .357** .633** .702** 1

IMP

Sig. (2-tailed) .000 .000 .000

Pearson Correlation .275** .476** .539** .696** 1

WMP

Sig. (2-tailed) .001 .000 .000 .000

Pearson Correlation .554** .767** .660** .751** .657** 1

51
 Sig. (2-tailed) .000 .000 .000 .000 .000
CSP

**. Correlation is significant at the 0.01 level (2-tailed).

b. Listwise N=142

Source: Own Survey data, (2020)

The correlation table revealed that there was a positive significant relationship between
information flow management practices, transportation management practices, physical
distribution management practices, inventory management practice, warehouse management
practices and customer service performance (0.554**, p=0.000), (0.767**p=0.000),
(0.660**,p=0.000), (0.751**,p=0.000), (0.657**,p=0.000), respectively. This implies that the five
independent variables have the potential to influence customer service performance of EABSC
Ethiopia.

4.5.2. Regression Analysis

The collected data from the employees of EABSC (Coca-Cola) Ethiopia, Distributers and retail
outlets (wholesalers) were used to make the inferential analysis of the study. The researcher
conducted a multiple regression analysis so as to test their relationship among independent
variables and dependent variable also to know how much the independent variable explains the
dependent variable. The regression was conducted between logistics management practices
(independent variables) and customer service performance (dependent variable). The results of
the regression analysis are presented as follows:

4.5.2.1. Multi-co linearity Test

52
The multi- co linearity test is a test to identify a strong correlation between two
or more predictors in a regression model. This assumption can be assessed by examining
tolerance and the variance inflation factor (VIF). VIF values well below 10 and the tolerance
statistics well above 0.2 can safely to conclude that there is no co linearity within the data (Field,
2009). A small tolerance value indicates that the variable under consideration is almost a perfect
linear combination of the independent variables already in the equation and that it should not be
added to the regression equation. A good regression model must not have a strong correlation
among its independent variables or must not have a multi-co linearity problem and that the value
of variance inflation factor (VIF) must have a value between 1 and 10 and the tolerance level
should be more than 0.2 (SPSS Inc., 2017) .

Table 4.9: Multi co linearity test of independent variables

Collinearity Statistics

Model Tolerance VIF

1 IFMP= Information Flow Management Practices .779 1.283

TMP= Transportation Management Practice .533 1.877

PDMP= Physical Distribution Management Practices .487 2.055

IMP= Inventory Management Practices .318 3.145

WMP= Warehouse Management Practices .509 1.963

a. Dependent Variable: CSP

Source: Own Survey data, (2020)

53
The result in table 4.9 showed that the co linearity between independent variables has no series
problem since the value of tolerance for all independent variable is greater than 0.2 and all VIF is
less than ten (VIF<10) (Pallant 2005). From the above table hence, we can conclude that there is
no co linearity within the data of the study.

4.5.2.2. Model Summery

A multiple regression model R-squared is determined by pair wise correlations among all the
variables, including correlations of the independent variables with each other as well as with the
dependent variable. The multiple correlation coefficients (R) are a measure of the strength of the
relationship between customer service performance and the five construct variables (logistics
management practices i.e. IFMP, TMP, PDMP, IMP and WMP). Large values of the multiple R
represent a large correlation between the predicted and observed values of the outcome.

Table 4.10: Regression Model between LM Practices and Customer Service Performance

Model R R Square Adjusted R Square Std. Error of the Estimate

1 .883a .780 .772 .24343

a. Predictors: (Constant), WMP, IFMP, PDMP, TMP, IMP

Source: Own Survey data, (2020)

As shown in the table 4.10, there is causal relationship between Logistics Management Practices
and Customer Service Performance. R represents the correlation between the observed values
and the predicted values of dependent values and the value of R produced by the regression
procedure range from 0 to 1. The larger the value of R indicates that there is strong relationship
between the observed and predicted values. Consequently, for this particular case the R value is
0.883 which indicates that there is a strong relationship.

54
From the table above, the coefficient of determination (R Square) was found to be 0.780
indicating that LM practices account for 78% of the variability in customer service performance.
This suggests that 22% of the variation is not explained by logistics management practice.

Second, the ANOVA output was examined to check whether the proposed model was viable.
Results shown in Table 4.11 reveal that the F-statistic was highly significant (F= 96.473 at
p<0.05), this shows that the model was valid.

Table 4.11 ANOVA Result between constructs of LMPs and Customer Service Performance

Model Sum of Squares df Mean Square F Sig.

1 Regression 28.583 5 5.717 96.473 .000b

Residual 8.059 136 .059

Total 36.642 141

a. Dependent Variable: CSP

b. Predictors: (Constant), WMP, IFMP, PDMP, TMP, IMP

Source: Own Survey data, (2020)

Table 4.11 showed the ANOVA results of the multiple regression analysis. F-statistic 96.473 at
p<0.05 (The significance value of 0.000) indicates that the regression relationship is significant

55
in predicting the effect of the five constructs of the independent variables or LMPs (information
flow management practices, transportation management practices, physical distribution
management practices, inventory management practice, and warehouse management practices)
on customer service performance of the company. Thus, the model significantly improved the
ability to predict performance of EABSC (East African Bottling Share Company Ethiopia).

4.5.2.3. Coefficients of Regression Analysis

In this section, Regression analysis conducted in the light of each research objectives. In order to
know which of the predictors’ (constructs) i.e. information flow management practices,
transportation management practices, physical distribution management practices, inventory
management practice, and warehouse management practices has contributed significantly to our
understanding of customer service performance, the following table shows Coefficients when we
explore each predictor’s beta (i.e., standardized regression coefficient) and its level of
significance.

Table 4.12 Regression Coefficients between LMPs and Customer Service Performance

Unstandardized Standardized
Coefficients Coefficients

Model B Std. Error Beta t Sig.

1 (Constant) -.290 .216 -1.342 .182

Information Flow Management Practices .240 .052 .208 4.568 .000

Transportation Management Practice .337 .049 .377 6.845 .000

Physical Distribution Management Practices .127 .053 .140 2.422 .017

56
 Inventory Management Practices .184 .068 .193 2.713 .008

Warehouse Management Practices .227 .061 .210 3.731 .000

a. Dependent Variable: CSP

Source: Own Survey data, (2020)

Based on the research model developed in chapter two the mathematical relationship between
LM Practices and Customer Service Performance was expressed in the multiple regression
equation as:

Y = X0 +X1 (IFMP) + X2 (TMP) + X3(PDMP) +X4 (IMP) +X5(WMP) + e

Y= .208 (IFMP) + .377 (TMP) + 140 (PDMP) +.193 (IMP) +.210(WMP) + 0.05 (level of error or at
95% confident level) all LM Practices i.e. Information Flow Management Practices, Transportation
Management Practice, Physical Distribution Management Practices, Inventory Management Practices and
Warehouse Management Practices significantly and positively influenced customer service performance
of the company (Coca-Cola Ethiopia).

4.5.2.4. Discussion on Research Question

In accordance with the this mathematical model the constructed research questions has tested by
considering significance level of each constant parameter and Regression Coefficients in
multiple regression analysis. The result of Regression Coefficients indicated in the table above
interpreted as follows:

Information Flow Management Practices and Customer Service Performance

57
Based on the result in table 4.12, standardized coefficients β-value and p-value for Information
Flow Management Practices on Customer Service Performance were β= 0.208 and the t- statistic
value was calculated to be 4.568 at p=0.000 respectively; these values show that Information
Flow Management Practices had positive and significant influences on Customer Service
Performance. Since the p-value 0.000 which is less than level of coefficient 0.05. This indicates
that when other variables are held constant, from the standardized coefficient 0.208 as one unit
of Information Flow Management Practices increases 20.8% increases on Customer Service
Performance.

Transportation Management Practices and Customer Service Performance

From the data given in Table 4.12 above, the standardized coefficients of β-value and the p-value
for Transportation Management Practice on Customer Service Performance were β=0.377 and
the t- statistic value was calculated to be 6.845 at p=0.000 respectively. These values showed that
Transportation Management Practice had strong significant influences on Customer Service
Performance because, according to this data, the p-value, which is p=0.000, is less than level of
coefficient indicated by 0.05. This, in turn indicated that from the standardized coefficient of β=
0.377 that holding other variables constant as one unit of Transportation Management Practice
increases, there would be 37.7% an increase on Customer Service Performance.

Physical Distribution Management Practices and Customer Service Performance

Based on generated data in the above table, Physical Distribution Management Practices had
positively and significantly influenced the customer service performance, where the t- statistic
value was calculated to be 2.422 at p value < 0.05. The value of the coefficient of Physical
Distribution Management Practices was also found to be β=0.140 which means that, keeping
other variables constant, a unit change in Physical Distribution Management Practices cause 14%
increase in customer service performance of the company.

Inventory Management Practices and Customer Service Performance

58
The coefficient of Inventory Management Practices was β= 0.193, which means that as a unit
change in this variable increases Customer Service Performance by 19.3%, keeping other
variables constant. The t-statistic value of Inventory Management Practices was 2.713 significant
at p value < 0.05, which makes the Inventory Management Practices and Customer Service
Performance positive and statistically significant relationship.

Warehouse Management Practices and Customer Service Performance

Regarding Warehouse Management Practices and Customer Service Performance the result in
the table 4.12 showed that exploring the standardized coefficients and p-value, were β =0.210
and the t- statistic value was calculated to be 3.731 at p=0.000; these values indicated that
Warehouse Management Practices had a significant and positive influences on Customer Service
Performance. Since the p-value is less than level of coefficient 0.05. This, in turn indicated that
from the standardized coefficient of β= 0.210, holding other things constant as one unit of
Warehouse Management Practices increases, there would be 21% an increase on Customer
Service Performance.

4.5.2.5. Summary of Regression Analysis

To summarize as it is indicated on the above table and the discussion, based on the finding of
this study, all logistics management practices i.e. Information Flow Management Practices,
Transportation Management Practices, Physical Distribution Management Practices, Inventory
Management Practices and Warehouse Management Practices had significant and positive
influence on Customer Service Performance of EABSC Ethiopia plc. Therefore, by improving

59
those, logistics management practices Customer Service Performance of the company as well as
its downstream supply chain could significantly and positively improved.

The finding of this study is consistent with Nyaberi and Mwangangi, (2014) who found logistics
management practices contributes to increase in profit, sales volume, service delivery,
production levels and quality of product which denotes organizational performance. Also (Sbihi
and Eglese, 2010; Genchev et al., 2011, Bienstock et al., 2008) found Customer satisfaction is
affected by warehouse and inventory management solutions and sharing and managing of
common Information Communication Technology (ICT) processes.

And also the finding of this study is in line with Bwari et al. (2016) who found that inventory
control, distribution management, transportation management influenced supply chain
performance to a great extent but warehousing management services influenced supply chain
performance to a moderate extent and supported the finding of Mwangangi (2016) and Nuahn
(2017) inventory management; order process management, and information flow influences firm
performance. And Consistent with (Tseng & Taylor, 2005; Onyango, 2011) who found positive
significant correlation between transport management and organization performance. Effective
Transport management translates to organization’s performance as it relates to its ability to
deliver goods and services in the precise quantities and at the precise times required by
customers.

60
 CHAPTER FIVE: SUMMARY OF MAJOR FINDINGS, CONCLUSION
AND RECOMMENDATION
This chapter presents summary of major findings which are organized as the research objective,
conclusions that are drawn from the findings and recommendations based on the findings.

5.1. Summary of Major Findings

According to the data analysis in the previous section, summary of the findings presented as
follows:

 Information Flow Management Practice and Customer Service Performance were

positively and significantly related. Information Flow Management Practice from
standardized coefficients of regression analysis had β=20.8% contribution on Customer
Service Performance at tolerance level t= 4.568 and significance level at p=0.000.
 Transportation Management Practices had strong, significant and positive influences on
Customer Service Performance at β =37.7%, t=6.845 and significance level p=0.000
which is less than the limit 0.05.
 Physical Distribution Management Practices had positive and significant influences on
Customer Service Performance, at β=14%, t=2.422 and significance level p=0.017 which
is less than the limit 0.05.
 Inventory Management Practice and Customer Service Performance were positively and
significantly related. Inventory Management Practice from standardized coefficients of
regression analysis had β=19.3% contribution on Customer Service Performance at
tolerance level t= 2.713 and significance level at p=0.008.
 Warehouse Management Practice and Customer Service Performance were positively and
significantly related. Warehouse Management Practice from standardized coefficients of
regression analysis had β=21% contribution on Customer Service Performance at
tolerance level t= 3.731 and significance level at p=0.000.

61
5.2. Conclusion

This paper provides empirical justification for a framework that identifies five key dimensions of
Logistics Management practices and describes the relationship among LM practices and
Customer Service performance. The main objective of this study was to examine the effect of
LM practices on Customer Service performance. For the purpose of investigating these issues a
comprehensive, valid, and reliable instrument were developed and these instrument were tested
using rigorous statistical tests. This study provides empirical evidence to support conceptual and
prescriptive statements in the literature regarding the effect of LM practices.

Based on the findings using the data collected and multiple regression analysis, the results of the
study showed that:

From the five logistics management practices i.e. information flow management practices,
transportation management practices, physical distribution management practices, inventory
management practice and warehouse management practices used in this study all variables had
strong, significant and positive influence on customer service performance of EABSC (Coca-
Cola) Ethiopia plc at (β= 0.208, p = 0.000), (β= 0.377, p = 0.000), (β= 0.140, p = 0.017),
(β=0.193, p = 0.008) and (β=0.210, p = 0.000) respectively.

The findings of the survey also showed that 78% of corresponding change in determining
customer service performance of EABSC (Coca-Cola) Ethiopia is the results of the change in
logistics management practices of all the five predictor variables jointly. The test of overall
significance of all the five variables jointly i.e. information flow management practices,

62
transportation management practices, physical distribution management practices, inventory
management practice and warehouse management practices were significant at 0.000 levels
which found out that the model used for this survey was also valid.

5.3. Recommendation

Based on the study results and conclusions drawn above, some recommendations are proposed as
a means of alleviating the problems found.

 Information Flow Management practice of the company (EABSC Ethiopia) should be

improved if the Information flow between functional units and trading partners is done
timely.
 Physical Distribution Management practices of the company (EABSC Ethiopia) should
be improved if the company makes distribution channels in a way to fulfill customer demands
at right time and place and update its distribution channel strategy in line with customer needs in
order to satisfy them.
 Inventory Management practice of the company (EABSC Ethiopia) should be improved
if the company inventory model is used to determine the quantity ordered based on real

63
 demand analysis and if the company integrate & properly use Enterprise Resource Planning
system (Barcode) to track its inventory.
 Finally, improving logistic performance yields numerous benefits, including greater
customer satisfaction, increased delivery speed, more rapid response to demands, order
and delivery flexibility, and faster order completion capability. In order to achieve these
objectives and to be a competitive enough, it is better for the organization to give due
attention on LM practices for more improvement of their customer service performance.
5.4. Limitation and Suggestion for Future Research

Apparently, there is no perfect work. Therefore, a discussion of some aspects that could have
been done better in this research is necessary but also the limitation of this study must be
considered. Potential limitations of this research were not considering or conducting other
performance measures, only taking customer service performance as the performance measures,
and not considering the other contextual factors i.e. type of industry. Based on this, the
researcher suggests researches that the academics and the researchers can conduct in the future

 Studying the scope of the effect of Logistics Management on the general performance of
the manufacturing industry,
 Studying the degree of the integration of supply chains in the light of LM,
 Assessing the performance of manufacturing industry customer service performance in
the light of logistics management.

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Appendix

UNITY UNIVERSITY ADAMA SPECIAL CAMPUS

71
 DEPARTMENT OF BUSINESS ADMINISTRATION

POST GRADUATE PROGRAM

QUESTIONNAIRE

Dear respondents, the purpose of this questionnaire is to gather data on the effect of logistic
management practices on customer service performance of EABSC. Addis Ababa in order to
fulfill the University’s (Unity University) requirement set for awarding of a Masters Degree in
Business Administration. The study is purely for academic purpose. Your response will be kept
confidential & used only for academic purpose. So, your genuine, frank and timely response is
vital for successfulness of the study. Therefore, I kindly request you to respond to each items of
the question very carefully.

Contact Address

If you have any question, please do not hesitate to contact me and I am available as per your
convenience at (Mobile: 0913-90-03-00 e-mail: ________@gmail.com)

Thank you for scarifying your precious time in advance

General Instructions

 There is no need of writing your name

 Where answer options are available please tick (√) in the appropriate box for all parts
NB:-Trading partner in the questionnaire refers to an external organization that is integral to the
business. This includes suppliers, customers, distributors, wholesalers, retailers, logistic
providers; etc And EABSC indicates the case company Coca-cola factory (Main Office)

PART I: Demographic Information

1. Age: Below 20 years 20-25 years 26-30 years

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 31-35 years 36- 40 years above 40 years

2. Educational Qualification
Certificate College diploma

First Degree MA/MSC/MBA or above

3. How long have you been employee of this company?

Less than 2 year 6 – 10 years

2– 5 years 10 years and above

PART II: In Relation to logistics management practice of Coca-Cola Ethiopia Company.

Section one: Logistics Management Practices

With regard to LM practices of your firm, please tick (√) the appropriate box to indicate the
extent to which you agree or disagree with each statement. The item scales are five-point Likert
type scales with 1 = strongly disagree, 2 = disagree, 3 = neutral, 4 =agree, 5 = strongly agree

eDisagre
yStrongl

y agreeStrongl
Information Flow Practices

Neutral

Agree
1 2 3 4 5
1 There is frequent face-to-face planning /communication meetings with
distribution staffs/employees.
2 the departments involved in production, sales and distribution of
products Share ideas, logistics information and resources
3 information flow between departments and partners is managed
through ICT in order to plan logistics processes
4 Logistics management process is monitored using information flow
through ICT.
5 Provided employees with any logistics information that might help
them improve logistics performance.
6 company the Information flow between functional units and trading
partners is Timely
7 Information flow between functional units and its trading partners is
adequate
8 The company has frequent interaction with its customers to determine
the future customer expectations of services.

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9 share demand forecasts and related information across its distribution
chain partners

eDisagre
yStrongl

y agreeStrongl
Transportation Practices

Neutral

Agree
1 2 3 4 5
1 Through transportation management products are made available to the
customer desire location
2 The transportation management practices of the company enable timely
delivery of products and services to customers
3 is practicing joint transport planning, management and control processes for
product distribution with other logistics firms.
4 is improving customer satisfaction and service delivery by reducing the
distribution costs through collaboration with 3PLs
5 has a mechanism to ensure transported products are being damage free
6 The transportation system of the company like timely delivery and
safely satisfy your customer

eDisagre
yStrongl

y agreeStrongl
Physical Distribution Practices

Neutral

Agree
1 2 3 4 5
1 Realizes that distribution channels accessibility is good in customer service
delivery.
2 Works to make distribution channels are in a way to fulfill customer demands
at right time.
3 Works to make distribution channels are in a way to fulfill customer demands
at the right place.
4 The company checks that distribution channels availability is good in
customer service delivery.
5 Distribution channels adopted has enhanced the ability of the company to
generate, disseminate, and respond to market changes so as to remain
competitive in the market
6 strategy for distribution channel is based on understanding of customer’s
needs so as to satisfy them
7 products and services are delivered using the right mode of distribution
8 share shipping processes and resources (trucks, equipments and
employees/staffs) in product distribution
Neutral
eDisagre

Agree
yStrongl

y agreeStrongl

Inventory Management Practices

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 1 2 3 4 5
1 uses the right inventory management technique (JIT, Kaizan,
ABC analysis etc) to manage it inventory
2 The inventory model used to determine the quantity ordered is based on
real demand analysis
3 The inventory model used target to minimize overall total inventory
costs like holding, ordering, and stock out
4 uses Enterprise Resource Planning system (Barcode) to track its inventory
5 The company provided external customer with the required inventory level
with its inventory management practices
6 The inventory management practices enable the company to avoid inventory
bottleneck in production
7 The procurement policy of the company is in line with customer service policy
of the company

eDisagre
yStrongl

y agreeStrongl
Warehouse Management Practices

Neutral

Agree
1 2 3 4 5
1 The design of the warehouse is easy to access items, free from damage
of items and convenient to load and unload
2 The design of the warehouse system is properly done to improve
customer service and eliminate errors in warehouse operation
3 The company realizes that distribution channels have enough warehouses
4 delivered its Products in the right quantity to the customer
5 Products leave the warehouse clean and damage free for customer
6 share order-picking resources in product distribution through
centre/warehouse management.
7 The firm warehouse is close to the proximity of the customer
Section two: Customer Service Performance
With regard to customer service performance of your firm, please tick (√) the appropriate box to
indicate the extent to which you agree or disagree with each statement. The item scales are five-
point Likert type scales with 1 = strongly disagree, 2 = disagree, 3 = neutral, 4 =agree, 5 =
strongly agree
eDisagre
yStrongl

y agreeStrongl

Customer Service Performance

Neutral

Agree

1 2 3 4 5
1 The company has Just-in-time (JIT) delivery arrangements
2 The company always meets delivery committed /promised date to

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 customers
3 The company always delivers customer orders at accurate locations.
4 The company fulfilled Customer orders accurately in terms of quantity
and type of product.
5 The company have time-to-market lower than industry average
6 The company is flexible in delivery schedule to accommodate changes
earlier/later than the delivery schedule.
7 The company received minimum complaints on quality
8 There is a feedback mechanism from the Distribution centers towards
the company and from the company towards Distribution centers
9 Products and services are delivered to customers on time thus meeting
the customer requirements
10 The company Improved the utilization of the channels storage capacity
across its network
11 Time to solve customer complaints is short.
12 The company order cycle time is reliable
13 The company achieved Short lead-time(from order)
14 Customers are very satisfied with the logistics services we provide.

If you have any comment you well come:

________________________________________________________________________

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