Chambers Twentieth Century Dictionary defines a customer as a "a buyer, a person accustomed to frequent a certain place for business".

This definition is inadequate for it does not emphasise the importance or the power the customer holds as a buyer of goods or service in the free market. He is all powerful. The vendor is subservient and indeed dependent on him and therefore will make all efforts to satisfy and retain the customer.

Management gurus have been quick to realise the importance of this customer status and adapt it to get results from inter-facing of the various divisions within a firm. They argue that within the business, divisional transactions should also follow the logic of customer-vendor relationship found in the market. They believe that this technique would facilitate the business process.

Let us understandhow this relationship exists within the firm. In a manufacturing company when sales places an indent on manufacturing to produce certain goods, manufacturing in turn indents on purchase to buy the required amount of material and purchase requests accounts to issue the necessary funds to purchase the material.

In terms of customer-vendor relationship, sales is the customer of manufacturing. Manufacturing the customer of purchase and purchase the customer of accounts. Thus, the customer-vendor relationship is built up. Each vendor is expected to strive to fulfil his customers demand. This way there will be less disputes, less delays, better co-ordination. Or so we are made to believe.

However, our observation suggests that the customer-vendor relationship when applied internally to different functions within a firm offers limited benefits because their behavioural pattern, their authority and their motives are different from the worthy external customer-vendor. Let us examine these differences.

Choice ofpartner

The external customer has the ability to pay for your product if satisfied and if it meets his needs. He can walk away from the deal if the product or the service is not to his expectations and seek another vendor. The internal customer has no such choice.

Power/Motive

External customers, in the aggregate, have the ability to keep you in business or to make you bankrupt. Hence the supplier will do his utmost to woo him and retain his custom. This is not so in the functional vendor-customer relationship. The vendor's chief motivation (unlike what the management would want you to believe) is to hang onto the job with as little effort as possible. His salary is assured and at best he may increase his efforts at the time of the annual assessment for promotion or increment.

Choice of Product

With cut-throat competition in the market the customer has very many choices to select from. Not so with the internal customer. He has to get his goods from his given internal vendor (the nextdownstream function) even when his previous experience has made him utterly weary of this vendor.

Status

As the Mahatma said "Customer is the Boss, we are dependent on him" and we may add, irrespective of his status in life as long as he has the money to purchase. Not so with the internal customer. If he happens to hold a lower hierarchic position in his firm vis-a-vis the internal vendor this vendor will not give him the respect due to the customer. Fulfilment of the order takes place only due to the system and not in any way by will or appreciation of the customer. In this situation the vendor does not give off his best to the customer.

In a reverse situation the internal customer orders around his vendor by throwing his weight about and looks down at him because of his "service status". The vendor tolerates this simply because there is nothing he can do about it. The situation is very different with the external customer-vendor.

Self interest

Each divisional head has the option ofarguing and debating the issue so that his division comes out the best, in terms of the division targets, and not for a moment in consideration of his customers needs, which if met in the process will be a feather in his cap.

With so many differences between the internal and the external customer it is hardly surprising that the benefits of treating the customer as the most important person does not work in the inter-functional situation within the firm.

Do we then have to abandon this approach altogether? No, it needs to be applied with a changed environment.

The shortcomings in the inter-functional relationship can be improved upon by using the principle of Customer Satisfaction Index (CSI) and the HRD policy needs to be driven by this principle.

An increasing number of companies are attempting to use CSI to benchmark promotions, pay hikes and rewards for their employees. This is more pronounced in the service sector though some manufacturing companies like Ashok Leyland have taken up the lead andare using CSI to reward their dealers. Mahindra Ford has started preparing CSI. But preparing a CSI is a massive task and may take time and the management's full support. It may have to be tailor-made to suit a specific business.

What is sure however is that this is one of the ways in which the employees can be brought closer to the ultimate customer and feel the effects of their good or bad performance. They will appreciate that the beginning and end of the supply chain is the customer and meeting his demands is what the game is all about.