By N. Satishkumar
author of The MRD Concept
All over the world, business management teams count achieving customer satisfaction and profits as their main goals. It is expected that, if they achieve customer satisfaction, they will receive more orders and thereby make more profit. While there is nothing wrong with this approach, a focus on other business related aspects can lead to doubled customer satisfaction and more profits!
How? The MRD (Materials Resources Deployment) Concept requires a focus on the materials resources of the organization. It brings the actual knowledgeable materials resources users to work together and synergize thus creating an efficient process. The materials resources users come together under the MRD department and the MRD head takes charge of this department.
First, the MRD department leads to an efficient business process as all the materials resources users, engineering, operations/manufacturing, materials and sales functions come together to work under one head’s coordination and direction. This unified front now meets the marketing orders and deals directly with the suppliers and the customers.
The MRD concept places utmost importance to the supplier and customer relationships. While it believes that the customer relationship is of utmost importance, it does not believe in working on its improvement by just working with the customer to improve the relationship. The MRD concept believes in starting with the improvement in the supplier relationship first to improve the customer relationship thereafter working on specific areas of customer relationship improvement. The MRD Concept believes that the supplier and the customer relationships are mirror images of each other.
In other words, the facts are these:
If the supplier does not deliver on time, can you deliver to the customer on time?
If the supplier does not deliver quality material, can you deliver quality product to the customer?
If the supplier does not give a competitive price, can you supply to the customer at a competitive price?
If the answers to these questions is “no,” then we must work on the supplier relationship first to get customers, retain them and achieve customer satisfaction.
The MRD Concept goes on to to explain how you can increase your business and profits thru the proper management of the supplier relationship through the Profitability Continuum.
With the establishment of the MRD department, the suppliers and the customers have all the key functions they deal with under one department – for example, engineering, operations/manufacturing, materials and sales.
When this problem is resolved and the MRD department is available to address all the requirements of the suppliers and work with them jointly, it leads to a drastic improvement in the response, attitude and performance of the suppliers.
This results in the supplier supplying materials and components of the right specifications, as they understand exactly now what the manufacturing/operations want leading to supply of good quality inputs. This helps in directly improving the quality of the final products. All rejections and production down time owing to poor input material quality is eliminated saving costs for both: the organization and the suppliers.
With a better coordination and understanding between the MRD department and the suppliers, the order scheduling with the suppliers improve resulting in timely delivery, no stock out and controlled inventory. The result greatly impacts the customer as they receive their ordered products on time and of the right quality. Customer satisfaction: first step achieved! When the customer is satisfied, your organization becomes their preferred supplier and, therefore, you receive more orders.
Your good suppliers become your preferred suppliers and you place more orders to them. This helps you bargain for a better price, and this leads to the input cost going down and enables you to reduce the price for your customer. The customer is thrilled and, again, places more orders. In return, you place more orders with your supplier, causing the supplier, the organization and the customer to increase their volume of business and also profit, which is referred to as the profitability continuum.
About the Author
N. Satishkumar has worked in the materials and supply management field for over 25 years. In addition, he has also gained valuable experience in various industries including engineering, electrical, electronics, chemicals, FMCG and hospitality, giving him a wide angle view of the functions and applications of many industries. Satishkumar acquired professional qualifications in the field of Materials Management, Business Management, Foreign Trade and a Certification in Supply Management from NLP in the USA. He worked in India for 15 years before transferring to the Gulf, establishing professional Materials/Supply Management departments in every organization he worked for. Satishkumar currently heads the Materials Management division at a chemical company in Kuwait, and is author of The MRD Concept. You can contact Satishkumar at: firstname.lastname@example.org.