Relationship between customer needs and key processes

Relationship between customer needs and key processes

Relationship between customer needs and key processes

• Customer needs

The concept of customer needs is often associated with a marketing concept, i.e., with some kind of market research to identify what customers require in order to design products or services to meet that need.

From an operational point of view, the concept does not aim to identify what customers need in terms of new products or services, but rather what customers demand, or rather, what they value in the products and services they currently consume. More precisely, of those products and services that our company sells them.

In other words, just as marketing is concerned with detecting new potential customer needs in order to design new products and services, operations should be concerned with knowing and understanding what customers value about the products and services we are currently selling them.

For products and services oriented to mass consumption, it may be necessary to resort to a general survey tool to discover these attributes or needs. But in the world of B2B services (business-to-business), this survey should arise from the day-to-day relationship with customers, determined by a genuine interest in identifying these needs.

For this, it is necessary to know the operation of the customers, their processes, problems and criticalities, in order to understand the next link in the value chain, and thus strategically adapt our processes, services and eventually products to those requirements.

In this analysis, the tool called CTQ2 (Critical to Quality), which refers directly to the elements of the product or service that our customers consider critical, stands out.

Note that we are not referring to the customers’ rating of a given supplier’s products or services, but to the valuation attributes that customers in the market establish in general for a type of product or service.

To go deeper into the subject through examples, we could think: what does a private customer value in a banking service? What does a company value in a service provided by a logistics operator that executes the distribution of its products? And what does a company value in a logistics operator that is in charge of the supply of raw materials and components?

Sometimes it is practical to think in pre-determined dimensions of customer valuation, such as cost, quality, delivery time, speed, compliance, solution generation, flexibility, innovation, etc.

When we read this list, we would have the feeling that all customers demand all these attributes. However, upon further study, and with rational and technical justifications, we realize that all customers and consumers consciously or not apply a scale of prioritization in the valuation attributes of the services and products they consume.

In B2B services, it is necessary to determine this “weighting matrix” in order to be precise in the service development strategy and thus establish long-term strategic links with client companies.

• Key processes and activities

The term “process” or “key activity” is commonly used in the business world in many ways. However, in this chapter we would like to develop a sufficiently rigorous analysis and definition so that it can serve as a tool for improving our operations.

Although we first associate the term “key” with “importance”, the first question we should ask ourselves is: by what criteria are we going to determine the importance of an activity or process? Immediately after asking this question, another one arises: is the term “key” an absolute or relative term, and if relative, relative to what? This second part of the questions would aim to resolve the issue of whether a process or an activity is key due to its own nature, or whether we should evaluate its relationship to the context in which it is developed.

In the analysis we are proposing, we will follow this second path, i.e., we will not consider a process or activity in a company as key for its nature or complexity in itself, but rather from the point of view of its relationship or impact with its environment. And in our case, we will focus more precisely on the relationship with the needs or valuation attributes of our customers, as we saw in the previous point.

As an example, we could imagine that in an industrial operation, production scheduling is a key activity. However, we might ask ourselves whether it has the same level of criticality when serving customers who value flexibility and meeting deadlines compared to serving customers who value innovation and product quality.

Therefore, we define “key process or activity” as those with the greatest impact on the attributes valued by customers.

Taken to a methodological approach, we could imagine rating the activities of a particular process or an entire operation according to their impact (High, Medium or Low) on customer attributes or CTQs, as shown in the table below:

This analysis would allow us to focus the areas of improvement on those activities that have an impact on the customer dimensions we are seeking to improve, or on those in which we seek to differentiate ourselves.

Management of key processes and activities

The identification of key processes and activities is a bold gesture, since the final result of this categorization means that we will make a greater management effort in those key activities with respect to others that are not classified in this category.

But then this would lead us to ask: could we argue in a company that some activities are not so important?

Undoubtedly, this decision will have to be based on a rational and, if possible, even quantitative analysis, but it is important to underline that we are not asserting that those activities that are not identified as key are not important or necessary for the production of the service. Therefore, it would also be important that they are well performed.

And if this is so, then what is the difference between a key activity and one that is not?

In the management.

We are simply referring to the management effort that we are going to make in the activities of an operation, understanding by management its planning, the preparation of resources, the evaluation of how it is developed, its measurements, and the improvement actions. The circle composed by these activities, which we call integrally “management”, is what will differentiate the key processes and activities from those that are not.

Key processes and activities will then require more sophisticated, more continuous and more dynamic (continuously evolving over time) mechanisms than those activities that are not.

Some actions related to management that will differentiate key activities from those that are not, would be:

• Planning: this does not refer exclusively to drawing up a plan of product or service quantities, but to planning resources on a weekly, biweekly or monthly basis, and also to planning the next projects to be launched related to this key activity. Within the planning action, we also consider the definition of the working methods of this activity and the preparation of personnel.
• Measurement: consists of establishing a continuous measurement scheme to evaluate the main variables of the activity, defining a hierarchical scheme by day, week and month, so that alerts can be identified to correct course or avoid significant deviations.
• Improvement: means defining improvement actions and structuring them in the form of projects (of short duration, but organized as such), in order to ensure their correct implementation.

The formality, frequency and emphasis to be assigned to these actions, will be the distinctive character and the final object of why and for what we did the previous work of knowing the customer’s CTQs, and identifying the key activities and processes of our operation: the prioritization of the emphasis of our management system.

In summary:

• We must know what our customers value, express these dimensions in quantitative terms, and make them known to all personnel in our operation.
• We must identify in our operation those processes and activities with the greatest impact on these dimensions valued by our customers, which will be the key processes and activities.
• We must develop a special management scheme for these activities in order to guarantee a service that meets the highest market standards and is in line with the company’s strategy.