Supply Chain response to Customer Quality expectations

Customer needs drive Supply Chain to design its Products & Services. Over the years, customer quality needs have become tighter and tighter. Supply Chain, particularly the Supply side of Supply Chain, has initiated control measures to meet the new standards of performance.(e.g. from "Percentage" to "Parts Per Million" was a dramatic shift)

Consistency of Quality is an extremely important measurement. Consistency in outcome is predominantly a function of "Processes & Systems". In Indian organizations, particularly the SME sector, the customer organizations demand of consistent high quality it often met with Supply side being stressed to meet those expectations.

An example which I bumped into the other day offered a point to reflect on this phenomenon.

A few years ago, when a customer bought an agri product, e.g. Watermelon, customer expectation of the product quality predominantly hinged on the "Appearance" (Red in colour) and Taste (sweet). It is entirely possible that the production process of watermelon doesn't have consistent quality. It also is possible that there is a certain percentage rejection. Being a function of "Nature", the benefit of doubt goes in the Supply Chain. But even under those natural conditions, customers insisted with their expectation of consistent quality. Remember a few years ago, when the customer used to buy a watermelon, he would ask the seller to cut it half open to show the watermelon from inside. This was a quality check to see if the watermelon is "Red" in colour. Customer product quality characteristic of colour was linked with his expectation of Taste. Red equals good taste. Sellers used to have a problem of product rejections as many a times the product used to fail in customer quality check. Seller used to incur a loss. Customer acceptable quality products (sales price of the good ones) used to subsidize the cost of bad (Rejected) ones.

Customers didn't focus on the process, they focused on the outcome. What did the watermelon Supply Chain do to reduce customer rejections? The criteria for success being red in colour, manufacturers of the products found a way to consistently delivery customer approved colour of the watermelon. So now the customer has nothing to complain about the consistency of colour as a quality characteristic. The focus on taste made the manufacturers also alter the production process to improve on the consistency of taste. So now a days, none of the customers need to ask the seller to cut the watermelon half- open to pass the colour check. Its almost a given that all watermelons have consistency on customer quality characteristic of "Taste" too. This also has reduced the sales price of the watermelon as there is very minimal cost of bad (rejected) products which the good (acceptable) products need to absorb. Looks like an excellent Win-Win for both.

Fundamental question is to appreciate the changes made by the Supply side of the Supply Chain to improve on Customer quality parameters. e.g. In case of Watermelon, to deliver the required consistency there is a fundamental change which is externally induced rather than naturally improved. That external intervention offers good quality but in the long term is is detrimental to the Customers health. Does the customer sacrifice long term health? Meeting customer quality expectation is THE single most important goal for the Supply Side of the Supply Chain. Is the customer blindfolded is a question to be pondered upon.

My experience is Quality - expectations, specification definition, processes implemented to achieve - needs an integrated perspective beyond only outcomes. Else the short term gain in Sales Price may Cost a lot over a longer period of time.


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