No matter which industry, or what company; regardless of the product or service for sale; one of the primary elements of any business’ success is the customer. To be sure, while some of the fundamental goals of management is how to help make a company more effective, productive and profitable; whatever decisions that are made, the customer’s perspective should always be taken into consideration. Indeed, without customers, it is unlikely that any company, regardless of how well it is managed, will survive for long. Consequently, one of the best ways to better understand how a company can become more effective is to look at the process of doing business from the perspective of the customer.
Like almost every aspect of living and working, global market forces, or the globalization of business, also affects the customer (Nezakati & Akhoundi, 2013). Indeed, one of the most important effects of global market forces on the customer is the increase of choices that it provides. Nowadays, no longer does a customer have to accept that what is available locally or even nationally as the extent to what it available for consumption. If a customer is not satisfied with a product or service, for example an Apple iPhone priced at U.S. $600; she can just as easily buy a comparable phone online from China’s Xiaomi for under U.S. $200. In essence, the emergence of global market forces is a benefit for customers in that it allows for greater decisional flexibility. On the other hand, the increase in choices that globalization has provide to customers does not always mean better quality. Accordingly, customers can suffer from decreases in quality and a potential lack of redressability as doing so might require understanding the regulations of the product makers home country.
The centrality of the customer also has a significant effect on risk management. As mentioned, if a customer does not like the product or service, then they are not likely to buy it. Accordingly, one of the main risks to control is understanding the customer. Understanding a customer requires a number of actions including learning: (1) who they are, (2) what they do, (3) what they need, (4) how a product or service helps them, and (5) why a company’s product and service can help them. Achieving this level of understanding of a customer helps manage risk by giving insight into a number of aspects of production. For instance, if most people tend to use one hand when operating their smartphones, producing a phone that requires two hands increases the risk that the product will not sell. Understanding customers also helps risk management in cases were a problem or issue emerges after the service or product has been introduced to the market. For example, if in the past, a company comes to the understanding that customers in in certain markets might be offended by or restricted from using certain content; they could work on upgrading their product for those markets in question to restrict or eliminate the offending content. Conversely, the company could decide that selling in that market is not worth the trouble.
In spite of the importance of the customer, supply chain considerations almost always seem to be based on the company’s or management’s perspective. While on the one hand, the supply chain appears to be an aspect of the business process that completely internal and only customer facing in how it affects the finished product or service. Naturally, how can the company benefit from the supply chain is a fundamental consideration. On the other hand, simply asking this question misses the equally important consideration of how can the customer realize value from the supply chain. Not all customers are the same. Accordingly, perhaps some customers may need services that others do not. A supply chain for a product might include suppliers from all over the world because the customer does not invest much value in the parts but rather the finished product. However, for another product it might be different. For instance, customers that resist purchasing products that contain parts produced in a country whose government they oppose creates problems for the manufacturer. Rather than continue getting supplies from that country, the company should have alternative suppliers from “acceptable” countries. In addition, some products can achieve increased favorability in the eyes of the customer based on the suppliers that are used by the company. For instance, one of the selling points for a number of craft beer breweries, is the fact the ingredients that go into making a beer were supplied by local farmers or were produced by suppliers that used environmentally friendly practices. Third, and perhaps most importantly, companies need to think of building supply chains that lower costs and increase efficiencies felt by the customer. For instance, understanding the supply chain “red-tape” of dealing with government officials for products locally produced for the Chinese market, a company might think of creating a special China-specific supply chain based in Hong Kong or Taiwan. This would provide speed and understanding of the local environment that might not be realized with a more extensive supply chain.
Lastly, as all products and services begin with or in the development chain, it is also important that the customer is also central in that process. By making the customer a factor in the development of the product or service, a company can better focus the supply chain, manage the risks, and provide a product or service that is competitive in a global market place. To be sure, the inclusion of consideration of the customer so early in the development process, perhaps even offering a “beta” product or service for testing by a small part of the customer base, will offer deep insight into whether the company is on the right track in developing the product or service. Moreover, it will also offer the ability for the company to get the product right before it goes to market. This would decrease or eliminate that chance that further adjustments will need to be made at some point later in the product cycle or prior to a new version of the product is developed.
References
Nezakati, H. & Akhoundi, M. (2013. Jan.). Globalization and consumer behavior: Global marketing strategies implication-homogeneity and heterogeneity. Journal of Social and Development Sciences, 4 (1), 1-5.
