More and more, customers are dictating shorter lead times, on-time performance, unsurpassable quality and, of course, a good price to round out the value equation. The consequences of noncompliance to these customer demands is, more often than not, lost business.
This trend is not going to go away, which makes management's mission clearly one of total customer satisfaction to maximize revenue and profit. Ask any chief executive officer about the importance of customer satisfaction and the response will clearly rank it as a very important competitive weapon.
That's why I advise CEOs to ask their entire staff to delve into examining the implications of the issues the following questions often raise.
Are we improving fast enough at delivering what our customers really need and want?
Many executives have a tough time accurately answering this question. Many companies operate under false assumptions of how long customers will actually wait for a supplier to improve, sometimes until it's too late.
How can a manufacturer gauge its potential for performance improvement?
Management can gauge their company's performance improvement potential by candidly answering critical business performance improvement questions.
For example, has your company in the last three years:
Decreased order-to-shipment cycle time by 50 percent or more?
Reduced quality costs by 50 percent or more?
Decreased inventory by 50 percent or more?
Increased your on-time performance to 98 percent or more?
Decreased product development time by 50 percent or more?
If you answer ``no'' to any one of these questions it's an indicator that if you are not now experiencing heavy pressure from customers to improve, you will.
If you checked ``yes'' to every question above, then your company is certainly doing better than most. Of course, ``yes'' answers don't guarantee market leadership and profitability.
You can be certain that one or more ``no'' answers means corrective action is essential to ensure your company's competitive success and future profitability.
Customers are rapidly becoming more sophisticated and demanding.
Manufacturers that offer customer-defined quality products, reasonable prices and quick-order turnaround outperform their competitors now and will easily gain more market share in the future as customers clamor for more.
Donovan is an international management consultant based in Natick, Mass.