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Begin by asking questions about your customers. What kind of customer does your company serve? What kind of customer does your customer sell to? What kind of supply chain is your company a part of?
The answers to these questions will tell you what supply chains your company serves and whether your supply chain needs to emphasize responsiveness or efficiency. Chopra and Meindl have defined the following attributes that help to clarify requirements for the Customers you serve. These attributes are:
• The Quantity of the Product Needed in Each Lot—Do your customers want small amounts of products or will they buy large quantities? A customer at a convenience store or a drug
store buys in small quantities. A customer of a discount warehouse club, such as Sam’s Club, buys in large quantities.
• The Response Time That Customers Are Willing to Tolerate—Do your customers buy on short notice and expect quick service or is a longer lead time acceptable? Customers of a fast food restaurant certainly buy on short notice and expect quick service. Customers buying custom machinery would plan the purchase in advance and expect some lead time before the product could be delivered
• The Variety of Products Needed—Are customers looking for a narrow and well-defined bundle of products or are they looking for a wide selection of different kinds of products?
Customers of a fashion boutique expect a narrowly defined group of products. Customers of a “big box” discount store like Wal-Mart expect a wide variety of products to be available.
• The Service Level Required—Do customers expect all products to be available for immediate delivery or will they accept partial deliveries of products and longer lead times? Customers of a music store expect to get the CD they are looking for immediately
or they will go elsewhere. Customers who order a custom-built new machine tool expect to wait a while before delivery.
• The Price of the Product—How much are customers willing to pay? Some customers will pay more for convenience or high levels of service and other customers look to buy based on
the lowest price they can get.
• The Desired Rate of Innovation in the Product—How fast are new products introduced and how long before existing products become obsolete? In products such as electronics and
computers, customers expect a high rate of innovation. In other products, such as house paint, customers do not desire such a high rate of innovation.