No Profit, No Company

What is "customer-centric'? This was raised when I was participating in a training programme recently. Many junior managers had the impression that "it meant bending all the way backwards in order to satisfy customers' needs!"

I asked "how backwards?" ... the answer "... as back as possible ..."

Hmm ... does it mean that a Company, which has decided to make the customer his centre of universe, or focus, has to absolutely revolve his services, promotions, sales and marketing activities, around his customers? I would, without hesitation agree to this approach provided that ethics and policies of the Company are not breached. Further, the Company must be able to make reasonable healthy profit and growth.

In an example given during the discussion session, it was pointed out that the Company should extend long credit terms to its customers as a means of keeping and retaining the customers as opposed to many Companies which are rigid on its shorter payment term. I was astounded by this simplicity of thinking. Even, if the Company is cash rich and has a healthy cash flow this would be a very poor option.

Company would have to purchase inventories upfront, the inventories got delivered over a certain lead time, on arrival the stocks are stored for a period of 1-2 months before they are purchased and delivered to the customers. The Customers would then be having a credit term of an average of 90 days, as in Malaysia. From the financial perspective, the Company is acting like a banker or financers to the customers as the Company has to make use of his own finance facilities along the supply chain months before he gets paid!

Many managers conveniently overlooked the fact that, a Company exists to make reasonable healthy profit. Companies are not charitable organisations. And thus managers should understand basic financial management in order to add values to their respective organisations and play active roles in ageing accounts as well as accelerating purchase orders from customers, optimal inventory level, stock leakages and procurement etc ... all these define the sustainability of the Company.

Without reasonable healthy profit and cash flow ... it is a matter of time before staff are being retrenched and the Company downsized and exit from the scene!

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