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Managing the modern business organization has become an incredibly complex task. A large part of this complexity stems from the numerous functional divisions most organizations feel compelled to maintain--there are departments for accounting, health and safety, personnel, marketing, research and design, and so on. Much effort is required to coordinate these divisions and to parcel out the organization's limited resources.
Borrowed from the Total Quality Management toolbox, one approach to managing this task has been to create internal customers. The idea here is that each department in an organization carries out work both with the aid of other departments and for the benefit of others. Viewing those who help you as your suppliers and those whom you help as your customers is intended to bring you closer to both. The desired result is a more integrated effort across functional lines and reduced complexity for the organization as a whole.
This approach has had many well-documented successes. Internalizing the customer has done much to break down the functional barriers that can impede communication and progress. Some companies have even been able to adapt their managerial accounting techniques to the internal customer concept, making their cost data more timely and accurate.
But the concept has its limitations, as only too many frustrated managers will aver. The internal customer approach appears to work well only in those situations where work processes can be linked in a sequential manner. In this linear type of value-added chain, it is very easy to determine who are the customers and who are the suppliers, and the advantages of the concept are quickly realized.
This concept begins to run into problems, however, in more abstract applications. When work processes within an organization are not linear, when there is no clear preceding or following value-added step, it is difficult to see either the applicability or the utility of having internal customers. The problems become especially clear if one considers the linkages between the departments that provide support services in organizations. In what sense is health and safety the supplier or customer of finance? How should marketing relate to personnel? These departments are in no less need of integration than others, yet to speak in terms of internal customers here is a reach indeed....