Customer Concept and Supply Chain Management
According to Kumar (2010), the customer concept- a philosophy that was introduced in the 1950s, is concerned with the study of customer needs, wants and desires which leads to the creation of a model enterprise that starts with a customer and ends with a product. Assertively, the customer concept, canonically referred to as the concept of customer emphasizes the need for a business firm to conduct market research before the launch of a product and is centrally based on the assumption that the “consumer is the king”, the information obtained from market research is essential for understanding the needs of the customer as well as the assumption that the profit maximization and consumer satisfaction should always be kept in focus (Kumar, 2010). All the same it should still be noted that, the essence of business, according to Peter Drucker, is to create a customer, hence business strategies should be shaped in such a way that they help the business create a customer.
Satisfying the customer’s need is one of the major areas of interest in business hence is the most widely considered facet in most marketing strategies. Often defined as the degree to which the consumers’ expectations have been fulfilled or surpassed (Tikkanen & Alajoutsijarvi, 2002), consumer satisfaction greatly influences supply chain management. Tikkanen & Alajoutsijarvi, (2002) assert that with the emergence of rationalism, focus has shifted from the traditional emphasis of discrete and short-term transactions to long term value creation that concentrate on customer relationship. Nonetheless, the hotly contested and volatile business environment has also led to the egression of customer driven supply chains founded on the notion of synchronization and concerned with analyzing and improving the process of supply chain in a bid to amicably respond to changes in customer requirements.
The adoption of customer driven supply chains affects the supply chain management in a number of ways. According to Hines (2004), the customer concept influences supply chain management in that the processes in supply chain management have to be framed in a way that the customer’s needs are met at the end of the supply chain. Lyons et al. (2012) affirm that the processes strive to eliminate waste, align production with demand, integrate suppliers and promote the creation of mechanisms of creative involvement of the workforce in processes that are aimed improving supply chain activities. For instance, elimination of wastes involves the organization of production and service activities in an efficient process marked with less interruption hence the production of quality assured products (Lyons et al., 2012). Alignment of production with demand, on the other hand, involves the supply of goods and services whose production have taken into consideration the need of the customer. It is notable that the customer, according to Kelly (2006) is currently considered as an information “triggering and transmitting” device from which information about the needs of the customer can be easily obtained. Kelly (2006) further documents that the customer has gradually climbed to higher levels of Maslow hierarchy hand now demands recognition; a need that can only be met with the delivery of goods and services that showcase the simple fact that the needs of the customer have been met.
How unexpected changes in customer demand effects supply chain management
Even as customer demand is one of the major factors that regulate supply chain management, customer demands are at times very unpredictable as a result of variant factors. Although Kelly (2006) notes that customers have a totally predictable conditioned response thence any effort to study customer behavior are rendered sleeveless efforts, a plethora of researchers contend to the fact that customer demand is subject to unexpected changes with direct or indirect effects to supply chain management. In this light, it is indubitable that supply chain management requires a continuous flow of information. Brewer, Button, & Hensher (2001) are opinionative that achieving a good customer focused system is attainable with an accurate processing of information in a timely manner as well as the creation of a sound system that has the ability of responding to customer needs in a quickly manner. Even still, there must exist a balance between the demand management process and the customer requirements as well as the firm’s supply ability.
In light of the unexpected demand, most firms prefer to have a lean supply system that can easily be changed in response to the unanticipated change in customer demand. The concept of lean supply system should not be misconstrued to mean high speed, low cost supply chains. Besides several researches point to the fact that high speed, low cost supply chains are always unable to respond effectively to sudden changes in demand. A lean supply chain is one that is adaptable, aligned and is highly agile; ideally, supply chains are considered agile if they are able to recover very fast from fulminant setbacks emanating from unexpected changes in demand (Harvard Business School, 2006).
Brewer, A., Button, K. J., & Hensher, D. A. (2001). Handbook of logistics and supply-chain management. Amsterdam: Pergamon.
Harvard Business School. (2006). Harvard business review on supply chain management. Boston: Harvard Business Review.
Hines, T. (2004). Supply Chain Strategies Customer Driven And Customer Focused. Oxford: Butterworth-Heinemann.
Kelly, S. (2006). Customer Intelligence: From Data To Dialogue.. Chichester: John Wiley and Sons.
Kumar, P. (2010). Marketing Of Hospitality and Tourism Services. New Delhi, India: Tata McGraw Hill Education.
Lyons, A. C., & Mondragon, A. E. (2012). Customer-Driven Supply Chains From Glass Pipelines to Open Innovation Networks (ed.) (2012). London: Springer London.
Tikkanen, H., & Alajoutsijarvi, K. (2002). Customer Satisfaction in Industrial Markets. Journal of Business and Industrial Marketing, 17(20), 25-42.