The customer-supplier chain is defined as the relationship that exists between the beneficiaries of a process or buyers (the customers) and those who create the inputs or deliver the result of said process (the suppliers).
Within this relationship or chain, enter all the activities that give added value to the product or service that the company markets. These products or services go through different phases, from when they are inputs or inputs until they become the final outputs or outputs, which are the final product or service that is purchased by the customer.
Keep in mind that a company can act as both a supplier and a customer. If the products or services that it commercializes are directed to other companies that are the ones that later sell it to the final consumers, in that relationship it would act as a supplier.
However, if to create your products or services you require other inputs, such as raw materials, you must buy them from other companies. In that other relationship, you will be a customer, and the company you buy from will be the supplier.
Therefore, this chain must agree with customers and suppliers on two main issues:
- The results in terms of quality, cost and times to be agreed according to the needs of the clients.
- The actions must be carried out jointly to achieve a continuous improvement of the quality of the process, and consequently, of the product or service in question.
Customer-supplier chain process
In addition to the aforementioned, one of the primary objectives of the relationship between the supplier and the client is that the final consumer receives a good or service with which he is completely satisfied.
To this end, the Japanese chemist and business administrator Kaoru Ishikawa, an expert in quality, enunciated in 1960 ten quality principles for the relationship between customer and supplier:
1-The buyer and the supplier are absolutely responsible for applying the corresponding quality control throughout the process.
2-Both parties are independent of each other and both must respect that independence
3-The buyer must give accurate and adequate information about their exact needs and what they want the supplier to deliver.
4-The contract between both parties must take into account the quality, quantity, price, delivery conditions and the corresponding form of payment.
5-The supplier has to guarantee a quality that satisfies the customer, which is certified with data.
6-Clients and suppliers have to previously agree on the control, evaluation and testing systems.
7-The agreement between both parties must include the procedures to be addressed in case of possible discrepancies in the process.
8-Both parties should exchange the information that is necessary to guarantee a successful quality control.
9-Suppliers and customers have to keep a control of all the activities of the process: orders, production planning and inventories, jobs and processes, so that the relationship is carried out satisfactorily.
10-Both parties must always take into account the interests of the end consumer.
Types
We distinguish two types of customer-supplier chain:
- The customer-external supplier chain: is the one that forms the Supplier-Organization-Customer. The organization can be a customer or a supplier, depending on whether it receives or supplies the product.
- The internal customer-supplier chain: it is made up of the different activities of the organization. Each one generates a result that in turn leads to the beginning of the next activity, and so on.
Process elements
The elements that make up the process are the following:
- Inputs: materials and raw materials.
- Activities that add value and transform inputs.
- Outputs generated by the process and which are in turn inputs to the next, or final outputs.
- Evaluation Method, which has to evaluate the complete process and the level of customer satisfaction.
The parts
The parties involved in the chain are suppliers and customers.
Providers
It is the natural or legal person that supplies organizations with the necessary resources so that they can carry out their activity.
Supplier Management deals with managing the relationship with the service providers on which the organization depends.
customers
They are the natural or legal persons who receive a good or service in exchange for the corresponding payment.
The entire customer - supplier relationship must be based on the focus on the end customer who will consume the product. This is one of the basic principles of ISO 9001 quality control: meeting customer expectations and needs.
To do this, the organization must follow the following steps:
- Identify stakeholders.
- Translate needs into objectives.
- Communicate the necessary objectives and requirements to the entire organization.
- Put the focus on improving processes.
- Evaluate customer satisfaction later, in order to improve in the future.
Example
Let's imagine a company that manufactures and markets glass bottles. Your customers are the ones who then sell your drinks inside these bottles, and your glass supplier is an outside company. Therefore, the process would be as follows:
Glass company (A) - Bottle manufacturing company (B) - Beverage company (C) - Final consumer
Thus, a customer-supplier chain could be the one between company A (glass supplier) and bottle company B (customer), or the one between company B (bottle supplier) and company C (client) and both would be external, since different companies participate in both processes.
In the first relationship (companies A and B), the elements of the process would be the following:
- Inputs: the glass that company A supplies to company B are the inputs, which will then be transformed to become outputs.
- Transformative activities: Once company B has the glass, it must transform it into bottles, for which it will have an internal process for this purpose, based on different activities.
- Outputs: When company B creates the bottles, these become outputs or outputs, which will then be sold to company C.
- Evaluation method: Throughout the process, the effectiveness of the parts must be measured. In addition, once the product is sold, measures must be carried out in order to evaluate how satisfied the customer has been.
Knowing these elements, for the relationship to be successful the ten Ishikawa quality principles mentioned above must be met.
References
- Steve New, Bernard Burnes, (1998) "Developing effective customer-supplier relationships: more than one way to skin a cat", International Journal of Quality & Reliability Management, Vol. 15
- Ospina, Jaime (2017). "Cooperation between companies". Innovation and supplier management.
- Aguilar Surroca, Juan (December 2007). "Technological cooperation as a determinant of business results".
- Andi, Antioquia (2015). "Provider development".
- Sunil Chopra and Peter Meindl (2006). "Supply Chain Management". 3rd Edition. Chapter 1. Understand what the supply chain is.