Customer Perspective. Improving Organizational Quality

December 20, 2023
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Would it surprise you to learn many high-quality customers communicate a different perspective on supplier quality? These customers have a high awareness of “Organizational Quality” from suppliers because they contribute to greater profit margins.

These customers realize exceptional suppliers provide goods and services with less internal dysfunction and expense. The fact is exceptional suppliers consistently provide superior goods and services nearly 100% of the time.     

“Respectfully, to suppliers not approaching the 100% level, you don’t know, what you don’t know.”

Organizational Quality

Organizational Quality is focused on effective management leadership, healthy cultures, and sound strategies of the entire organization. Customers expect superior relationships, consistent communication, and timely challenge resolution. They expect innovation for new income streams.

“Is your business adapting fast enough to survive?”

If a supplier isn’t delivering organizational quality, they’re simply irrelevant in today’s business environment.

Average is Inconsistent Performance

Average is an acceptable performance level for many companies and employee ratings. What average really means is inconsistent performance. Average is the result of blending the highs and lows. The highs are great, and the lows are inconsistent performance. Everyone remembers the lows.

What we often find is the vast majority of companies rate their employees as average. Inconsistency means both management and employee performance varies from day to day.

“Employees in average companies often rate their management as average.”

Leadership and management practices vary from situation to situation. Quality communication varies from day to day. This also means strategies and objectives are inconsistently achieved. Customer satisfaction varies from order to order.

Average and inconsistency creates an environment of chaos and dysfunction. Financial management, risk management, and sustainability are influenced by average performance.

Customer Perspective

Customers realize quality suppliers don’t magically happen. It’s a result of supplier management and employees effectively performing their jobs.

Customers expect engaged relationships and communication from suppliers. They expect 100% order, fill, and ship metrics with every transaction. They expect the product quality or service quality to consistently meet specifications. Finally, they expect innovation from suppliers to remain relevant.

Customers are realistic. It’s not a perfect world in manufacturing or service. It’s how the supplier manages their challenges which make the difference.

Customers expect corrective action when product or service levels go off course. Customers expect a positive outcome despite “occasional” adversity. The operational word here is occasional. Ultimately customer satisfaction through each transaction determines customer loyalty. This is competitive advantage.

“Organizational quality doesn’t cost, it pays.”

High quality customers realize you get what you pay for. Low price often means challenged organizational quality along with inconsistent products and communication.

These customers have learned through experience, it’s better to pay a fair price and receive predictable value.

Customer Attrition

Quality customers choose gold standard suppliers because they consistently perform as quality organizations. Gold standard suppliers are focused on key performance indicators (KPI’s). These KPI’s benchmark performance metrics of management, sales, operations, production, distribution, and other departments.

“Price is often simply an excuse by customers to eliminate poor performance.”

Average and inconsistent companies seem to attract average and inconsistent customers. As a result, profit margins, innovation, and growth are average and inconsistent. Self-inflicted, the business devalues itself.

Contrary to some, customer attrition is often a consequence of average and poor performance, not price.

Customer relationships generally flourish with suppliers who are engaged with their business. High-capacity suppliers deliver both quality relationships and deliverables.

“The mantra of superior organizational quality is 100% performance from top to bottom.”

When customer attrition exceeds the ability of the sales department to replenish the customer base, sales growth declines. The leaky bucket metaphor is a result of primary management inconsistency, not sales.

For example, management can add its customer attrition values to sales goals and determine what the true growth rate needs to be. If customer attrition is 5% and the company growth expectation is 5%, sales needs to grow at 10%. So, managing customer retention should be a top priority for management at all levels.

From a customer perspective, inconsistency means the supplier is unpredictable and potentially toxic. It’s toxic because quality customers recognize average contaminates their organization.

Customer supply chains filled with dysfunctional suppliers creates internal havoc. Internally, customers experience employee burnout from toxic suppliers. Respectfully, it’s difficult to defend an 80% order, fill, and ship rate to a quality customer.

Supplier Culture

Customers evaluate supplier culture. Supplier perception is reality. Supplier culture is based on employee perception, not management. Reality is culture is transmitted to customers via their purchase transactions.

Internally, average performance is a primary contributor to toxic cultures. This toxicity breeds through poor communication and expectations from both management and unhappy employees.  

I always find it interesting when an average company makes a high-performance hire. Frequently in the course of 6 months, the high-performance employee is performing at average levels, or has found a different employer out of frustration.

“Perception is reality. Employees communicate culture with every transaction”.

High-capacity managers and employees value culture. Cultural Assessments benchmark cultural quality. Assessments allow management to maintain a top-to-top relationship with all employees. Simply stated, effective leaders recognize culture management delivers tremendous value.

Leadership – The 80/20 Performance Rule

Sales revenue is a result. Customer loyalty is a result. Effective goals, strategies, and tactics are a result. Most importantly, execution and accountability is a result of quality leadership.

Equal accountability means everyone in the organization is held equally accountable. If average and inconsistent is the expectation, that’s what happens. If the benchmark is greater than average,  that’s what happens.

Does the common 80/20 rule apply to your organization? That is, where 20% of the employees consistently achieve 80% of the objectives.

What is the financial burden of  80% of employees not consistently achieving objectives?

Whatever the ratio is for your business, there are financial liabilities for poor performance.

Innovation – Remaining Customer Relevant

Superior leadership, healthy cultures, and effective strategies allow enterprises to focus resources on innovation. Rather than constantly being in firefighting mode, they are able to collaborate with customers on new goods and services.

“Innovation allows suppliers to collaborate and build relationships with customers.”

New income streams build company financial stability. Innovation adds to the value customers expect.

The Technology Conundrum

Technology is a platform to collect, store, organize, and communicate information. Production facilities use robotics for task-based functions. Technology drives your car. And your phone is an information and communication resource that can direct you to drive off a cliff.

“Technology can help companies become more efficient. But not necessarily more effective.

Technology effectiveness is determined by the quality of management and employees contributing, interpreting, analyzing, and communicating information. Average performance companies are generally average in technology effectiveness.

Quality leadership, culture, and strategy creates effective technology. There are many companies spending 2-3% of their resources yearly on technology. What if the investment shifted to developing their human resources?

Summary

Tacticware Business Systems focus on organizational growth and management development. We are a provider of management systems, cultural systems, and strategic systems. Each provide critical thinking and processes necessary to develop gold standard organizations.

We train, support and guide organizations to success. Learn more about transforming your business by contacting Paul Fournier

Article Author

Paul R. Fournier is President of Tacticware Business Systems. He provides and supports business systems in Management, Culture, and Strategy.

Our systems allow organizations to go faster and further. Systems training, cultural assessments, and consistent support allow us to achieve your vision.

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We do not discriminate against race, gender, ethnicity, religion, age, veterans, and people with disabilities. As a matter of policy, we remain apolitical, and respectful of local customs.

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