A customer can be defined as a person, company, or other entity that purchases goods and/or services from a supplier based on agreed means of exchange (Lyons & Coronado, 2007). There are two categories of customers. They include intermediate customers who buy goods to resell and ultimate customers who are the actual users. Suppliers of goods and services understand the value of their customers and the contributions they make to success of their businesses. This is because companies cannot grow unless they learn to recruit new and retain their existing customers.
A Customer and Supply Chain Management
Customers play a very critical role in supply chain management. This is because without customers a product chain is incomplete. Therefore, suppliers must always be very critical of the quality of goods and services that are issued for purchase by customers. According to Blythe (2008), customers are always very strict with how service providers handle their transactions. A customer expects a service provider to always be reliable, assuring, responsive, and empathetic. It means that service providers should be as accurate as possible to deliver services they promised without any inconsistencies. It increases customer dependability on the service provider in subsequent transactions thereby boosts customer loyalty and enhances sustainability and durability of the product chain management processes.
In appreciation of the significant role of customers in supply chain management processes, many companies have organized themselves in such a way that they are customer- centered. Products are also aligned with demand in the market (Lyons & Coronado, 2007). They use technology-enabled services to help them track every transaction with every customer in order to understand their different needs (Hayes, 2008). It, in turn, enhances the possibility of addressing any shortcomings in a bid to maintain their customers.
The Effects of Unexpected Customer Demand on Supply Chain Management
With advancements in technology, customers today are prone to have more information about products the market supplies (Lyons & Coronado, 2007). This opportunity has brought about a lot of uncertainties in customer preferences since they can change at any time. It, in turn, causes unexpected changes in customer demand thus affecting a supply chain in many ways. These changes in consumer demand generally have an effect on logistics of a product supply. For example, when demand on a product rises, the supply chain is affected since supply will also increase until the market equilibrium is reached.
One of the areas that are highly affected is costs. The supply chain uses transportation instruments like trains, vehicles, cargo ships, and planes. Whenever there is a change in demand for any product, costs are affected. The unpredictable changes in demand have also given manufacturers a hard time in forecasting. Research shows that the most advanced forecasting tools are not necessarily a guarantee of knowing how demand for a given product will change in the future (Lyons & Coronado, 2007).
Fluctuations in product demand complicate the supply chain management processes. Generally, changes in product demand are proportional to the fluctuations in product supply. Some of the tactics that suppliers use to match the changes in demand included outsourcing, lean manufacturing, and offshoring. Although these supplies help in reducing costs and enhance quick delivery, they are also prone to being affected by both natural and man-made disasters due to the diversity of geographic positions.
In conclusion, a customer remains essential for completion of the supply chain. Changes in customers’ demand for products often lead to fluctuations in the supply chain. This trend has left manufacturers and suppliers to operate in uncertain environment. This is particularly because of the challenges in having a continuous control over inventories.