Continuous Improvement: It's All About the Customer

Your company's success is based on your customers. Is that where your continuous improvement efforts are focused?

When I've talked to people about their continuous-improvement (CI) initiatives and asked why they are doing them, I have received all sorts of different answers. Some people want to get lower inventories to reduce capital employed. Others want to improve productivity to reduce costs, and some want to improve quality or improve their floor-space utilization to lower their occupancy costs. I have very seldom heard that they initiated their CI program to focus on customer value creation, but that is really the only valid reason for doing it. It reminds me of Bill Clinton's first run for president when his campaign was associated with the slogan, "It's the economy, stupid!" When it comes to CI programs, "It's the customer, stupid!"

For any business, it is customers that drive the success or failure of the enterprise. That's where the focus of your CI efforts must be. We often get hung up about our products and services and how great they are in relation to our competition, but we forget that customers want a solution to their particular problem, not just a product or service, and your CI efforts must be focused on that. There are multiple places in our organizations where improvements can be made that will help our ability to solve our customers' problems, and most of these are not on the manufacturing floor. Whether it's reducing the response time on new product development or quote requests, customizing products to exactly what customers need to solve their problems, reducing delivery lead time or ensuring that products and services are defect-free from the customer's perspective, your CI efforts need to be focused on what your customer requires, not your perception of what's needed.

In the current economic environment, very few companies are seeing revenue growth from their existing customer base, so new customers are needed to stabilize and increase your revenues. A focus on the customer's needs and using your CI efforts to increase customer value will help your organization attract these new revenue sources. As your sales organization is aware, it's often not the product that is critical to attracting new customers, it's the speed and flexibility of the organization in providing the solution to the problem that results in closing the sale with a new customer. It is here that your CI efforts can be the difference maker in successfully attracting these critical new customers. If your organization can deliver customer-specific solutions faster than the competition, that is often more important than price in closing the sale. That it what your CI efforts should be focused on.

Many of the customer-facing functions of your organization that contribute to fast, flexible and efficient delivery to new customers are in your administrative and engineering areas, not on the factory floor. It is in those areas that your CI efforts will yield the greatest returns in your organization's ability to successfully attract new accounts. Look at areas such as quoting new business, credit checks in accounting, proactive customer service practices and engineering responsiveness to configure-to-order requests as targets for your CI activities. Improvements in these areas can impress new customers and differentiate you from your competitors, allowing your sales force to close new business with new customers. For many organizations in this stagnant economy, that will be critical to revenue growth.

Keep the focus on the customer, both current and potential, for your CI activities to improve the functions that have a real impact on the customer perception of your company. Being fast, flexible and efficient in these areas can make the difference between just struggling along trying to survive in this economy and using them to create a competitive advantage to allow your organization to thrive and grow instead. Just keep the focus on creating value for your customers and delight them with the experience of doing business with your company.

Ralph Keller is president of the AME Institute and former president of the Association for Manufacturing Excellence

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