Proceeding, International Seminar on Industrial Engineering and Management

Menara Peninsula, Jakarta, August 29-30, 2007

ISSN: 1978-774X

CONSUMER BEHAVIOR, SUPPLY CHAIN MANAGEMENT AND

CUSTOMER SATISFACTION: AN INVESTIGATIVE STUDY IN SMALL
AND MEDIUM ENTERPRISES
Sam PD Anantadjaya1, Astari Walidin2, Egah Sari Waskita3, and Irma M. Nawangwulan4
1

Faculty of Business Administration, Swiss German University

BSD City, Serpong, Indonesia
Email: bmw@bdg.centrin.net.id

Faculty of Business Administration, Swiss German University

BSD City, Serpong, Indonesia
Email: ria.astari@gmail.com

Faculty of Business Administration, Swiss German University

BSD City, Serpong, Indonesia
Email: egah_sari@yahoo.com
4

English Tutorial Center, Bandung, Indonesia

Email: englishtutorialcenter@yahoo.com

ABSTRACT
It has been widely noted in many publications, both in academic subjects and popular references that
supply chain management is important to deliver the products and services to end customers.
However, it appears that the notions on supply chain management may only be indirectly associated
with the issues surrounding consumer behaviors toward maintaining and/or otherwise pushing
customer satisfaction. As referenced in many publications, undoubtedly, the role of supply chain
management is an important factor in boosting the organizational success. On a separate perspective,
consumer behavior is also an essential factor toward organizational viability into years to come.
Qualitatively, preliminary studies have been undertaken concerning the connection between supply
chain management and customer satisfaction, as well as the connection between consumer behavior
and customer satisfaction, in trying to recognize the clear distinctions of each topic toward ensuring
customer satisfaction. This paper attempts to bring out the significance of both issues combined in
relation to customer satisfaction. If the preliminary studies emphasized in automotive and food
industries, this paper attempts to analyze the small and medium enterprises in service industry. It is
expected that the increasing roles of supply chain management and consumer behavior in small and
medium enterprises are able to improve the overall organizational performance.
A cluster sampling methods is incorporated in this study to note the characteristics of those small and
medium enterprises in certain locations. Variables chosen in this study are mainly covered the
traditional SERVQUAL dimensions of tangible, reliability, responsiveness, assurance, and empathy.
Aside from the qualitative analyses, which are based on interviews and field observations, a
combination of statistical software packages are utilized as tools toward building quantitative
analysis of the study. Research is conducted by gathering data from primary and secondary sources
in service industries in Jakarta, and Bandung. As stated, it is expected that such studies would reveal
the significance of supply chain management and consumer behavior in boosting the customer
satisfaction level toward organizations products and services. It is expected that such issues are
mostly true for small and medium enterprises, perhaps.

Consumer Behavior, Supply Chain Management and Customer Satisfaction

(Anantadjaya)
Electronic copy available at: http://ssrn.com/abstract=1013492

Proceeding, International Seminar on Industrial Engineering and Management

Menara Peninsula, Jakarta, August 29-30, 2007

ISSN: 1978-774X

Keywords: supply chain management, consumer behavior, customer satisfaction, SERVQUAL, small
and medium enterprises.

1. INTRODUCTION
The topic of consumer behavior is widely
studied in many educational institutions. The
same is also true for the topic of supply chain
management.
Though the subject of
customer satisfaction may have been
introduced during the discussion of consumer
behavior, however, it may have been more
thoroughly converse in separate classes, such
as, the Principles of Marketing, for instance.
Hence, it has also been noted in various
publications about the benefits of analyzing
consumer behavior, and supply chain
management in trying to reach the ultimate
level of customer satisfaction.
Those topics are superb in trying to provide
managerial tools in decision-making. This
study attempts to draw out the significance of
consumer behavior and supply chain
management in relation to ensuring customer
satisfaction. Particularly, this study focuses
on small and medium enterprises in the city
of Jakarta and Bandung, to reveal such
connections.
2. THEORETICAL BACKGROUND
2.1.

Supply Chain Management

The idea of supply chain management

(SCM, or the chain) is to evaluate the
processes of planning, implementing, and
controlling the movement of materials and
finished goods all the way into the end-users.
The interconnected activities of supply chain
begin with a customer order, and complete
when the goods are in the customers hand.
To have those goods delivered to end-users, it
requires a network of contributions from
parties involved; retailers, wholesalers,
distributors, manufacturers, and raw materials
suppliers (Waskita, 2007).
Chopra and
Meindl (2001) defines that the objective of
2

supply chain is to maximize the overall value

on each of the chain. This is in accordance
with what Siem (2005) has stated, SCM
strives to get the right things to the right
places at the right times for maximum profits.
Considering the various definitions above, the
focus of SCM appears to be maximizing the
chains profitability. One presumption states
that as interactions between parties improve,
it is expected that outcomes accelerate.
Perhaps, this is true in turns of better
inventory turnovers, on-time delivery,
responsiveness, quality, price reduction,
efficiency and effectiveness in bringing the
finished goods into the customers hands.
Noting the true gains and potential losses of
such interactions among parties involved are
an important issue in supply chain
management, nonetheless. The core of SCM
focuses on production, inventory, distribution,
and payment cycles.
As a result, the
existence of information technologies, and
thus, the actual information sharing among
parties involved are crucial (Anantadjaya and
Nawangwulan, 2006; Li, 2002; Siem, 2005).
In relation to the information technologies
and information sharing, Lovejoy (2007)
indicates that as the information technologies
and information sharing enter the picture,
bargaining power seems to shift among
different parties in the supply chain
management. A conventional chain may
uphold an assumption that price is negotiated
first, and quantity decisions are to be
followed. Since this is a common assumption
for SCM, these supposedly sound quantity
decisions are potentially distorted from the
profit maximizing objective. One of the
distortions in SCM is in the calculations of
accumulated profits for parties involved in
the chain. The ability to bargain up and down
streams may prove beneficial.
Thus,
inefficiency in chains occurs from failures in
reaching closures in numerous negotiations

Consumer Behavior, Supply Chain Management and Customer Satisfaction

(Anantadjaya)
Electronic copy available at: http://ssrn.com/abstract=1013492

Proceeding, International Seminar on Industrial Engineering and Management

Menara Peninsula, Jakarta, August 29-30, 2007

among parties. Asymmetrical information

may well be the underlying cause for
inefficiency. Information sharing and
transparency may be advantageous toward
reaching and meeting the customers needs.
In this case, intimacy in collaboration is the
key ingredient for successful chain (Johnson,
2002; Johnson and Whang, 2006).
Though the collaborated efforts among
parties represent the basic necessity in
creating value-added in SCM, however,
flexibilities are indispensable.
This is
considerably true for laundry/dry cleaning
services. The demand for such services is
noticeably seasonal.
School breaks and
holidays appear to be the highest seasonal
period for laundry/dry cleaning services.
This calls for supply flexibility, in terms of
volume for soaps and detergent, for instance.
Volatility during the seasonal demand and
difficulty in securing accurate forecasts, the
slack capacity, or the unresponsive suppliers
symbolize important drivers. Perhaps, among
all
mentioned
characteristics,
the
unresponsiveness of suppliers brings about
the biggest hurdles to maintain the optimal
level of deliverables. For large organizations,
this is simply due to the uneasiness of
organizations
to
switch
suppliers
immediately.
For small and medium
enterprises in laundry/dry cleaning services,
however, this may not be truly factual. The
relatively smallness in size signifies the
higher flexibilities in immediate supplier
switching.
Hence, multiple sourcing
strategies (though very much limited in scope
and volume) may have strained small and
medium laundry/dry cleaning services to
consider from the beginning (Anantadjaya, et
al, 2007; Mendonca-Tachizawa and Gimenez,
2005; Nagarajan and Sosic, 2007).
2.2.

Consumer Behavior

The American Association defines consumer

behavior as the dynamic interaction of affect
and cognition, behavior and the environment
by which human beings conducts the
exchange aspects of their lives. Affect

ISSN: 1978-774X

refers to consumer feeling about stimuli and

events, and cognition refers to thinking. In a
much broader sense, affect illustrates
feeling responses where people can
experience four broad types of affective
responses; emotions, moods and evaluation.
Each type of affection involves both positive
and negative responses. Likewise, cognition
consists of mental stage or thinking responses,
which commonly include; understanding,
evaluation, planning, and making decision.
Additional elements to be considered in
consumer behavior that lead to intention to
buy include the following pairs of product
knowledge and involvement, attention and
comprehension, and attitudes and intentions
(Baucell, et al, 2007; Peter and Olson, 2005;
Walidin, 2007).
Consumer behavior tries to define clear
purchasing/procurement objectives along
with the adherent requirements to numerous
factors.
Though the intention is crisp,
customers often face difficulties in making
robust decisions, particularly when qualitative
dimensions are involved in the decision
making processes. The use of multi-attribute
model may increase the preciseness of
approximation of decision making process
under uncertainties. At least, this model is
considered common in consumer research
since 1970s. Nevertheless, despite the degree
of uncertainties, product purchases process is
usually conceptualized in 4 (four) steps; need
recognition, information search/processing,
alternative evaluation, and product choices
(Solak, et al, 2006).
2.3.

Customer Satisfaction

One definition about customer satisfaction

obtained from Kotler and Armstrong (2004)
states that customer satisfaction is the
extent to which a products perceived
performance matches a buyers expectation.
As the term customer satisfaction is generally
dependent on the product or services, there is
another factor that determines the level of
customer satisfaction.
That is, the

Consumer Behavior, Supply Chain Management and Customer Satisfaction

(Anantadjaya)

Proceeding, International Seminar on Industrial Engineering and Management

Menara Peninsula, Jakarta, August 29-30, 2007

expectation of the customer. This is to say

that the higher the customers expectations,
the harder those expectations are satisfied
through any products and services. Thus,
customer satisfaction attempts to match the
level of expectation and perception of
customers. However, it is essential to note
that the degree of expectation of any
customers will depend on their own behaviors
(Walidin, 2007; Waskita, 2007).
One popular measurement for customer
satisfaction is the basic five dimensions of
SERVQUAL (Zeithmal, et al, 1990). They
are;
Tangibles, which covers issues, such as;
appearance
of
physical
facilities,
equipment,
personnel,
and
communication material.
Reliability, which covers issues, such as;
ability to perform the promised service
dependably and accurately.
Responsiveness, which covers issues,
such as; willingness to help customers
and provide prompt service.
Assurance, which covers issues, such as;
knowledge and courtesy of employees
and their ability to inspire trust and
confidence.
Empathy, which covers issues, such as;
caring, individualized attention the firm
provides to its customer.
3. RESEARCH METHOD
A cluster sampling methods is used in this
study to note the characteristics of those small
and medium enterprises in certain locations,
and industries. Research is conducted by
gathering data from primary and secondary
sources in service industries in Jakarta and
Bandung. Variables chosen in analyzing
customer satisfaction in this study are mainly
covered the basic SERVQUAL dimensions of
tangible,
reliability,
responsiveness,
assurance, and empathy. Aside from the
qualitative analyses, which are based on
interviews and direct field observations, a
combination of quantitative inferences will be
gathered to present the statistical results
4

ISSN: 1978-774X

pertinent to this study.

As stated, it is
expected that such studies would reveal the
significance of consumer behavior and supply
chain management in boosting the customer
satisfaction level toward organizations
products and services of small and medium
enterprises.
3.1.

Model

The framework of thinking in this study is as

illustrated in the following diagram.
Affect &
Cognition

suppliers
manufacturers
distributors

Product
Knowledge &
Involvement

retailers

Supply Chain
Management
(SCM)

Perceived
Services

Intention to Buy
(ITB)

End-Users
(Customers)

Customer
Satisfaction

Attention &
Comprehension

Actual Services
Attitude &
Intentions

Pic 1. Framework of Thinking

The diagram illustrates that it is expected to
see some forms of supply chain management
in small and medium enterprises. Though the
supply chain management may be relatively
simple and straight-forward, it is probable
that such an existence influences the
consumer behavior toward products and
services of small and medium enterprises.
The correct ingredients of consumer behavior
may likely lead to the higher level of
intention to buy. Thus, the level of customer
satisfaction may also be heightened
accordingly.
4. RESULT AND DISCUSSION
4.1.

Overview of the Study

Based on the previous studies by Yogaswara,

et al (2005; 2006), the original sample
consists only 50 (fifty) respondents, whose
businesses are still relatively young, and
operate in the service industries in Jakarta and
Bandung. Those respondents are chosen due
to previous acquaintances during prior studies.
Though the products and services sold in
those establishments range from bakery/cakes,
hair-dressers,
barbershop,
laundry/dry

Consumer Behavior, Supply Chain Management and Customer Satisfaction

(Anantadjaya)

Proceeding, International Seminar on Industrial Engineering and Management

Menara Peninsula, Jakarta, August 29-30, 2007

cleaning, delivery/courier, copy center, phone

booths/kiosks (wartel), computer/internet
rentals (warnet), cellular phone vouchers,
snacks, garment, textile, and tutorial centers
for computer and language training
(kursus/bimbel), for the purpose of this study,
laundry/dry cleaning services are focused. In
this study, laundry/dry cleaning services
include agents of those laundry/dry cleaning
services, which are a bit more spread-out
around the cities of Jakarta and Bandung.
Since, the total respondents for laundry/dry
cleaning services are insufficient from the
previous studies, additional data gathering is
performed (Anantadjaya, et al, 2007;
Nawangwulan, et al, 2007; Yogaswara, et al,
2007).
About 57% (fifty-seven percent) of those
respondents are located in Jakarta, and the
remaining 43% (forty-three percent) is in
Bandung.
There were no significant
differences in the demographic or responses
regardless of the city. Thus, despite of the
specificity of the business forms of those
respondents in laundry/dry cleaning services,
as mentioned above, their responses are
combined. The preliminary studies have been
conducted since 2005, but without the
development of analytical papers on
consumer
behavior,
supply
chain
management, and customer satisfaction, such
studies are documented and used as
references on this paper.
4.2.

percent) reliable.
Since the descriptive
statistics indicate that there are large
variations i in terms of the scaling on the
original data, a standardization process on
scaling is deemed necessary. Standardized Zscores are used in further analysis.
Table 1. Case Processing Summary
Case Processing Summary
N

The reliability analysis on the data indicates

that out of 130 (one hundred and thirty)
respondents in the studies, about 100% (one
hundred percent) of the data are considered
valid. The reliability statistics indicate that
the data are considered 89% (eighty-nine

Cases

Valid
130
100.0
(a)
Excluded
0
.0
Total
130
100.0
(a)
Listwise deletion based on all variables in the procedure.

Table 2. Reliability Statistics

Reliability Statistics
Cronbach's
Alpha

Cronbach's Alpha
Based on
Standardized Items

.696

N of Items

.889

71

Based on the studies and the numbers of

variables used, the communalities table
indicates that the variations on each of the
variables appear to be significant. This
means that significant amounts of variations
are explained by the formation of factors.
The KMO and Barletts Test indicates an
adequacy measurement of 0.676. Though the
result does not indicate a substantially high
adequacy level as expected, this implies that
the sampling was adequate for further testing.
Table 3. KMO and Bartletts Test
Kaiser-Meyer-Olkin Measure of Sampling
Adequacy.
Bartlett's Test of
Approx. Chi-Square
Sphericity
df

Design and Procedures of the Study

All participants were distributed a set of

questions regarding the SERVQUAL
dimensions
of
tangible,
reliability,
responsiveness, assurance, and empathy.
Few preliminary statistical analyses are
processed using SPSS 12.0.

ISSN: 1978-774X

.676
5849.164
2485

Sig.

.000

The component transformation matrix,

however, suggests that the data cannot be
reduced into 5 (five) factors, which in essence
does not seem to be following the initial
expectation to relate to the basic 5 (five)
dimensions of SERVQUAL; tangibility,
reliability, responsiveness, assurance, and
empathy. Since the statistical results do not
show substantial/acceptable supports on the
i

The minimum value is 0.0844, the maximum value is 76.3124, and

the average value is 3.3647

Consumer Behavior, Supply Chain Management and Customer Satisfaction

(Anantadjaya)

Proceeding, International Seminar on Industrial Engineering and Management

Menara Peninsula, Jakarta, August 29-30, 2007

formation of 5 (five) factors, as described

above, the pre-determined connections and
influences are not supported as well. This
means that statistically, there is no connection
and influence of consumer behavior toward
intention to buy to SERVQUALs
dimension.
Therefore, the following
inferences can be drawn;
Statistically, there is no connection and
influence of consumer behavior toward
intention to buy to tangibility.
Statistically, there is no connection and
influence of consumer behavior toward
intention to buy to reliability.
Statistically, there is no connection and
influence of consumer behavior toward
intention to buy to responsiveness.
Statistically, there is no connection and
influence of consumer behavior toward
intention to buy to assurance.
Statistically, there is no connection and
influence of consumer behavior toward
intention to buy to empathy.
Since statistically there is no connection
and influence of consumer behavior
toward
intention
to
buy
to
SERVQUALs dimension, it can be
inferred as well that statistically there is
no connection and influence of both
perceived intention to buy and actual
intention to buy to the SERVQUALs
dimension.
Therefore, as the statistical results fail to
provide sufficient basis toward justifying the
formation of the expected factors, the data set
are incorporated into another approach, using
the available formulas in consumer behavior
to calculate the respondents attitudes toward
intention to buy. The first illustrates the
multi-attribute model, which measures
respondents attitude towards an object. The
model is to measure the belief towards an
object and evaluation using a scale
measurement. The second formula illustrates
the theory of reasoned action, which
measures consumers consideration on
consequences when taking an action. This
theory shows how much the consumer care
about other people opinions and perceptions
6

ISSN: 1978-774X

in their action (Baucell, et al, 2007; Peter and

Olson, 2005; Solak, et al, 2006).
n

i=1

biei

(1)

The cumulative results from the first formula

show that the highest attitude is toward
laundry, instead of dry cleaning. This means
that respondents have a stronger belief
towards laundry services than dry cleaning.

B ~ BI = Aact ( w1 ) + SN ( w2 )

(2)

The cumulative results from the second

formula show that respondents whose
attitudes are more positive towards laundry
services are the respondents who care more
about other people opinions and perceptions.
It simply means that these respondents
consider opinions and perceptions of others
rather heavily as their basic foundation
toward actions.
This study attempts to measure 2 (two) sides
of customer satisfaction; actual customer
satisfaction, which is the category for those
respondents who already have experienced in
dealing with the laundry/dry cleaning services,
and perceived customer satisfaction, which
is the category for those respondents who
have not experienced the laundry/dry
cleaning services.
To measure the customer satisfaction, 5 (five)
variables of SERVQUAL, as mentioned
previously, are integrated
into
the
calculations. Though the original responses
are vary, from 1 to 5, to indicate the level of
respondents agreementsii toward each of the
questions, such responses are averaged. The
averages show the results of 3.47 for actual
customer satisfaction, and 3.13 for
perceived customer satisfaction. In order
to test whether the results are significantly
different between the actual customer
satisfaction
and
perceived
customer
ii

The levels of respondents agreements follow Likert Scale of 1

(strongly disagree) to 5 (strongly agree).

Consumer Behavior, Supply Chain Management and Customer Satisfaction

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Proceeding, International Seminar on Industrial Engineering and Management

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satisfaction, the following hypotheses are

used.
H0 : = 3
H1 : 3

equals to 3 is used since this figure

represents the average of the Likert scale.
Using at 10%, the following table suggests
to reject H0. This means that there is a
significant difference between actual
customer satisfaction and perceived
customer satisfaction. As the averages of
those variables are statistically different from
the 3, which represents neutral in the
questionnaires, it can be concluded that the
respondents perceptions on laundry/dry
cleaning services are actually satisfied with a
standard deviation of 0.564. A closer look
into the figures of both actual customer
satisfaction of 3.47 and perceived customer
perceived of 3.13, it is evident that those
figures are only marginally lie inside the
lower and upper limit of 90% confidence
interval.

ISSN: 1978-774X

inadequacy is simply due to the respondents

answers that small and medium laundry/dry
cleaning services do not seem to have
established chains (Anantadjaya, et al, 2007).
Though it was expected in the beginning of
the study that at least a relatively simple and
straight-forward chain interactions should be
feasible, unfortunately, it was not clearly the
case. For those small enterprises, SCM is just
too difficult to comprehend and implement in
routine activities. Respondents indicated that
they were not looking at the purchasing and
distribution activities as potentially profitable
chains. Respondents indicated that such
activities are just basic necessities to be
performed to carry-out necessary tasks in
order to get the job done.

Supply flexibilities (Mendonca-Tachizawa

and Gimenez, 2005), on the other hand, are
sufficiently comprehended, in that supplies
for laundry/dry cleaning services are widely
available
in
various
supermarkets.
Respondents indicated that the most common
supplies are plastics, and soaps/detergent.
Hangers seem to be the only basic supplies,
which are not available in supermarkets.
Table 4. One-Sample Test
It means that if one supermarket appears
(90% Confidence Interval)
to be out-of-stock for a particular
Test Value = 3
ingredient, respondents will go to another
90%
Confidence
Sig.
location for similar purchases. At least a
Interval of the
(2Mean
very minimal degree of supply
t
df tailed) Difference
Difference
flexibilities are in-existence for the small
Lower Upper
Customer
and medium laundry/dry cleaning
6.884 129
.000
.34038
.2585
.4223
Satisfaction
services.
These statistical findings are also supported
by respondents concerning the perceived and Hence, it is safe to conclude that despite of
actual customer services. The respondents minimal SCM, small and medium
indicated that brief interviews with customers laundry/dry cleaning services attempts to
were often engaged to note the perceived ensure the highest level of customer
satisfaction. The actual satisfaction level was satisfaction (Anantadjaya, et al, 2007;
usually analyzed through the repeat orders Nawangwulan, et al, 2007). This is done
following any services rendered, either in through whatever means possible to secure
terms of laundry or dry clean services that the basic elements to complete any
laundry/dry clean orders are abundantly
(Nawangwulan, et al, 2007).
available.
With regards to the SCM of laundry/dry
cleaning services, this study lacks 5. CONCLUSION
quantitative data to support the statistical
analysis on SCM and its related issues. This Statistically, there is insufficient evidence to
Consumer Behavior, Supply Chain Management and Customer Satisfaction
(Anantadjaya)

Proceeding, International Seminar on Industrial Engineering and Management

Menara Peninsula, Jakarta, August 29-30, 2007

conclude that consumer behavior affects the

level of customer satisfaction. However, the
multi-attribute model is able to provide
valuable insights on such a gap; customers
appear to prefer laundry services than dry
cleaning, and customers appear to be more
satisfied with the laundry services than dry
cleaning. On the other side of the coin, there
is also insufficient evidence to conclude that
there is a connection between SCM to
consumer behavior and customer satisfaction.
Since this study is insufficient to provide
statistical evidence on the proposed model,
future studies can incorporate additional
respondents in other industries, including
concentrating on the statistical connections
between SCM, consumer behavior, and
customer satisfaction.

ISSN: 1978-774X

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Proceeding, International Seminar on Industrial Engineering and Management

Menara Peninsula, Jakarta, August 29-30, 2007

ISSN: 1978-774X

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