1. Quality in Customer-Supplier Relationships
Chapter 4
Quality in Customer-Supplier Relationships

2. The Value of Customers
“The only value your company will ever create is the value that comes from customers—the ones you have now and the ones you will have in the future. Businesses succeed by getting, keeping, and growing customers. Customers are the only reason you build factories, hire employees, schedule meetings, lay fiber-optic lines, or engage in any business activity. Without customers, you don’t have a business.”
– Don Peppers and Martha Rogers

3. Deming’s Emphasis on Customers

4. The Customer-Supplier Chain

5. Business Case for Customer Focus
“Satisfaction is an attitude; loyalty is a behavior”
Loyal customers spend more, are willing to pay higher prices, refer new clients, and are less costly to do business with.
It costs five times more to find a new customer than to keep an existing one happy.
A firm cannot create loyal customers without first creating satisfied customers.

6. The Importance of Suppliers
Quality of the supply chain affects the quality that customers receive
“Superior quality, consistent service, and competitive pricing are just the price of entry to get into the game.”
Suppliers must continually improve and align their operations with customer needs.

7. Principles for Customer-Supplier Relationships
Recognition of the strategic importance of customers and suppliers
Development of win-win relationships between customers and suppliers
Establishing relationships based on trust

8. Practices for Dealing With Customers
Collect information constantly on customer expectations
Disseminate this information widely within the organization
Use this information to design, produce, and deliver the organization’s products and services.
Manage customer relationships
Exploit CRM technology
Don’t ignore internal customers

9. Collect Customer Information
Comment cards and formal surveys
Focus groups
Direct customer contact
Field intelligence
Complaint analysis
Internet monitoring

10. Understand Customer Needs – the Kano Model
Dissatisfiers: expected requirements
Satisfiers: expressed requirements
Exciters/delighters: unexpected features

11. Disseminate Customer Information
Share information with employees
Provide data to product designers and service managers

12. Use Customer Information

13. Manage Customer Relationships
Develop close relationships
Provide convenient access to information and to employees
Train customer contact employees
Develop good service standards
Deal with complaints
Exploit CRM technology
Don’t ignore internal customers

14. Moments of Truth
Every instance in which a customer comes in contact with an employee of the company.
Example (airline)
Making a reservation
Purchasing tickets
Checking baggage
Boarding a flight
Ordering a beverage
Requests a magazine
Deplanes
Picks up baggage

15. Exploit CRM Technology (1 of 2)
Segmenting markets based on demographic and behavioral characteristics.
Tracking sales trends and advertising effectiveness by customer and market segment.
Identifying and eliminated non-value-adding products that would waste resources as well as those products that better meet customers’ needs and provide increased value.
Identifying which customers should be the focus of targeted marketing initiatives with predicted high customer response rates.

16. Exploit CRM Technology (2 of 2)
Forecasting customer retention (and defection) rates and providing feedback as to why customers leave a company.
Studying which goods and services are purchased together, leading to good ways to bundle them.
Studying and predicting which Web characteristics are most attractive to customers and how the Web site might be improved.
Streamlining processes around customers rather than traditional functions, resulting in improved flow of information and cycle times.

17. Guiding Principles in Supplier Relationships
Recognizing the strategic importance of suppliers in accomplishing business objectives, particularly minimizing the total cost of ownership,
Developing win-win relationships through partnerships rather than as adversaries, and
Establishing trust through openness and honesty, thus leading to mutual advantages.

18. Practices for Dealing With Suppliers
Base purchasing decisions on quality as well as cost
Reduce the number of suppliers
Establish long-term contracts
Measure and certify supplier performance
Develop cooperative relationships and strategic alliances

19. Relationships to Organization Theory
Roles for customers
Resource
Worker (or coworker)
Buyer
Beneficiary (or user)
Outcome or product of value-creating transformation activities
Resource dependence perspective
Integrative bargaining