In business, there are suppliers (those that supply products or services) and customers (those that use or approve those items). While most organizations focus heavily on their external relationships, the internal relationships between teams, departments and customers are often overlooked. This is a huge missed opportunity.
When companies have internal alignment, they are able to provide high-quality products and services with ease and value for their customers. They are also able to effectively deal with the complex challenges that come from working with multiple suppliers.
Moreover, their employees tend to be happier, work better together and are high-achieving. All boons to reducing turnover and improving external customers.
In this guide, we’ll take a look at what an ideal internal customer-supplier alignment looks like and how you can implement it within your organization. So let’s first start with what internal alignment really means:
Here's an example of what that alignment looks like
In the internal organizational environment, employees depend on each other for the input of one thing to produce an output of something which may be the input for the next employee. In simple words, both the internal customers and internal suppliers are part of the same company. Here’s a practical example:
Employees in the market research department are the suppliers of up-to-date market information to the management. The management then processes that information and supplies it to the production or R&D department (their internal customers) to make changes to the product according to new market trends. This is how the internal supply chain is structured.
Misalignment in this internal customer-supplier relation can have grave effects on the performance of any organization.
Internal customers and suppliers can be in any department of a company. Anything that can be exchanged between the employees of the same organization, whether tangible or not, makes one party internal supplier and the other internal customer.
Types of internal customer-supplier alignment:
- Two-Way Alignment: It’s when there’s a misalignment between the objectives of an organization. The internal supplier doesn’t meet the internal customer’s needs in a way that supports organizational goals.
- Performance Gap Alignment: It’s when the internal supplier is determined to meet organizational objectives but their capabilities to meet the internal customer’s needs lag behind. This lack of capability causes a performance gap and causes low customer satisfaction.
- Opportunity Gap Alignment: This is when the internal supplier exceeds the needs of the internal customers and supplies more than what’s needed to meet the internal customer’s needs. This waste of resources and efforts from suppliers is known as opportunity gap alignment.
- Ideal Alignment: This is where the capabilities of suppliers, the needs of customers, and organization goals are aligned properly. Every quality organization has this kind of internal customer-supplier alignment.
Why ideal internal alignment is critical for businesses
- Productivity Boost: In an ideal internal alignment, the supplier is capable enough to provide resources that meet the needs of their internal customers. This leads to timely finished work and a productivity boost. Organizations having connected employees have a 20-25% productivity boost.
- External Customer Satisfaction: Since no money is exchanged between the internal customers and suppliers, both are stuck with each other as they cannot just replace the other party on their own. So the quality of material supplied will be what the internal customers have to use to meet organizational needs. If the supplied material is of excellent quality, this will increase the quality of the finished goods.
- Internal Customer Satisfaction: Nearly 28% of employees are not able to deliver work on time because of poor communication. If both parties can communicate well then this leads to reduced delays, faster deliveries, and ultimately increased employee satisfaction. This means excellent customer service from the supplier’s side.
- Faster Organizational Goal Achievement: Ideal internal customer-supplier alignment is built on the basis of mutual understanding and positive communication. If an organization succeeds in establishing ideal alignment, both parties will work in harmony leading to working towards achieving the same thing – organizational goals!
How to boost customer service and alignment
- Improve Communication: For a successful internal customer-supplier alignment, it is imperative that both parties develop a partnership. They are required to hold frequent meetings, discuss operational and production issues, and work towards solutions. The suppliers should have a clear understanding of the customer’s expectations and how it will help meet organizational goals.
- Involve in Strategic Planning: It should be the role of upper management to involve both the internal customers and suppliers when developing or improvising supply chain strategies. Both parties should feel involved, heard, and valued. With their individual inputs and mutual agreements, an effective and perfectly aligned internal supply chain strategy can be developed.
- Take Feedbacks: Internal customers and suppliers are not exchanging money like external ones so it’s not up to them to stop working with each other. This can sometimes cause friction leading to misalignment. The upper management needs to encourage them to send feedback and then hold meetings with the concerned parties based on them. The goal of the management should always be to resolve the conflicts and restore balance.
- Fine-Tune The Process: Sometimes, the misalignment is caused by a few people rather than a whole group of suppliers or customers. Or, it may be because of the ineffectiveness of processes employed for achieving desired goals. The management needs to effectively oversee the processes, and performance of employees in both parties. Once you figure out the cause of misalignment, you can easily fix it either by replacing the employees or processes or optimizing their performance.
Want more tips on a stronger business? Here's how to achieve it in 60 days
Internal customer-supplier alignment is a key factor in delivering value to customers. However, companies often fail to develop the necessary tools and processes to align internal operations. This can lead to a lack of understanding between both internal customers and suppliers that causes a lot of waste and delays in the supply chain.
At Focused Energy, we help businesses locate their shortcomings, fix those flaws, and emerge stronger. Our guide to 60 Days to a Stronger Business covers every critical aspect crucial for the explosive success of an organization, including the ideal alignment of internal customers and suppliers.