Do you know what your Customers Need?

Then what are you buying?

A recent survey of procurement professionals conducted by NLPA revealed the need to understand the dynamics of customer requirements. It is important to note that organizations exist to create value for their customers and shareholders.

With that said how many of us are focusing our procurement activities and supplier selection processes to deliver on “Customer Requirements?”

A Customer Requirement Matrix is a tool that can provide this level of visibility. We will examine the process and benefits of a CRM Matrix.

A Customer Requirements Matrix is the formulation of a comprehensive prioritization of the most critical external customer requirements. These requirements are prioritized by the degree of importance to external customers and relative performance gaps. This practice results in an External Improvement Prioritization Index (E) IPI which enables the prioritization of requirements improvement projects.

The following is the CRM for a company that retails soup:

The formulation of a Customer Requirement Matrix:

     Step 1: Determine the Top 3, 5, or 7 External Customer Requirements.

     Step 2: Create descriptions of each requirement.

     Step 3: Determine what to measure or appropriate metrics.

     Step 4: Determine external customer expectations.

     Step 5: Determine the key drivers.

     Step 6: Determine the importance of the requirements to External Customers.

     Step 7: Determine the current performance levels.

     Step 8: Determine the current gap.

     Step 9: Determine the (E) IPI.

     Step 10: Prioritize requirements by largest (E) IPI to smallest.

Benefits:

1. It facilitates the capture and understanding of the Voice of the Customer (VOC).
2. It creates a framework for value creation.
3. It creates a focal point for Corporate Strategy, Tactical, and Operational Planning.
4. It provides the impetus for Corporate & Departmental Missions, Visions, and Values.
5. It provides information for Cost Reduction Opportunities.
6. It provides guidance on how to design internal processes and departments.
7. It provides guidance on how to allocate limited resources.
8. It provides inputs and data points for Supplier Selection Criteria.

Note: VOC = Voice of the Customer. This can be captured by interviews, surveys, focus groups, and so on.

Recommended Reading

• Procurement Strategy Development

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