Internal Suppliers

A supplier who is a part of the same company as its customer is an internal supplier. They may provide products, services, or other resources. They are the upstream processes and the support groups that provide their coworkers with the tools, materials, and work-in-process to do their jobs.

Internal suppliers and customers often have a rocky relationship. Because no money is changing hands, their customers don’t have any constraints on what they ask for. In most transactions, a willingness to pay a set amount clearly shows how much the customer values what the supplier is providing.

With no transaction, it is a challenge for an internal supplier to really understand what is most important to their customers. External customers, because they speak with their wallets, show their priorities in what they are willing to pay for.

This creates a challenge for internal suppliers. Internal customers disregard costs in their requests, but still tend to get upset when a need is not met.

On the flip side, internal customers are stuck with their suppliers. It is unlikely that an assembly line team could decide to outsource the painting of their parts because the paint shop consistently delivers bad quality.

At a minimum, internal suppliers should be graded just as external suppliers are. It is surprising how much poor performance and lack of improvement an internal customer will tolerate from its internal suppliers.