INTERNAL CUSTOMER

SATISFACTION (ICS)
Creating a Customer Centric Culture

SAIL e-book for E2

Prepared by :
Dr C Chandra Mouli
SAIL/MTI/E2/Version1/2021 GM (Business Excellence)
(For Internal use only) SAIL-ISP
The purpose of a business is to create a customer
-Peter F Drucker
Contents

Introduction………………………………………… 1

Learning Objectives………………………………… 1

Customer Satisfaction………………………………. 2

Internal Customer Satisfaction (ICS)……………….. 3

Internal vs External Customers …………………….. 4

ICS Agreements in SAIL …………………………… 5

Conclusion…………………………………………… 6

Annexures

Annexure I Sample Agreement – ISP

Annexure II Sample Agreement – RSP
Introduction
One of the core values of SAIL is Customer Satisfaction. This value seems to be externally
oriented, but a large part of it is internal in nature as each and every aspect of the organization is
connected to meet the requirements of the customer. This aspect is less widely known among the
employees as very few employees are directly involved with the external customer interface. It’s
also very difficult to visualize how any employee of Coke Ovens or Sinter Plant is connected to
the External Customer who may be interested in buying Wire Rods or Hot Rolled Steel from SAIL.
This can be explained by visualizing the entire chain of Customer Satisfaction as a process with
Input and Output in every aspect of the Steel making starting from Mines, Raw Material Handling,
Coke Ovens, Sinter Plant, Blast Furnace, Steel Melting Shop, Mills, Dispatch, Ware House,
Distribution Channels, Sales, Marketing, Personnel, Materials Management, Finance,
Communications, etc. At every level, the output of one process is received by another as an input.
The quality of the output will depend upon the input provided by the previous process. In a way,
every Department/Function can be considered as Internal Supplier or Customer. This chain
continues till the final output is received by the External Customer as per the requirements in terms
of Quality as well as Service.

This module of Internal Customer Satisfaction (ICS) has been created to enhance the conceptual
understanding of the E2 executives and also prepare them for their future role in which they will
have to interact and resolve issues related to various aspects of internal customer satisfaction. The
module also explains how to develop a measure for achieving customer satisfaction through the
creation of ICS agreements between Internal Suppliers and Internal Customers.

Learning Objectives of the Module

• Understand the concept and significance of Internal Customer Satisfaction.
• Know the difference between Internal and External Customers.
• Appreciate the role of ISO 9001:2015 Quality Management System (QMS)
in Internal Customer Satisfaction.
• Conceptualize Internal Customer Satisfaction Agreements

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Customer Satisfaction
Customer satisfaction is defined as a measurement that determines how happy customers
are with a company’s products, services, and capabilities. Customer satisfaction
information can help a company determine how to best improve or changes its products
and services.
https://asq.org/quality-resources/customer-
satisfaction

The Four Secrets of Achieving Customer Satisfaction

Micah Solomon, an experienced consultant in the field of Customer Satisfaction and contributor
to Forbes Magazine provides four important pillars which go beyond Customer Satisfaction
leading to active customer engagement.
Perfect Product
Customers want defect-free products and services. You need to design your product or
service so that it can be expected to function perfectly within foreseeable boundaries. True,
things will sometimes go wrong. Your products, and people, will sometimes fail due to
unpredictable circumstances. But sloppy or incomplete product or service design is, from
a customer’s perspective, intolerable.

Service Delivery by Caring People

Your perfect product now requires caring, friendly people to deliver it. Let’s visualize just
how a product and its delivery work together to determine satisfaction.

Timeliness
A perfect product delivered late by friendly, caring people is the equivalent of a defective
one. Customer experiences guide their expectations, so on-time delivery standards
continue to get tougher all the time. What your customer today thinks of as on-time delivery
is not only stricter than what her parents would have tolerated, it’s stricter than what even
her older sister would have tolerated.

The Support of an Effective Problem Resolution Process

Service breakdowns and other problems experienced by customers are crucial emotional
moments in a business relationship. Therefore, solving these problems will have an
outsized impact on your business success. That’s why you need an effective problem
resolution process.
https://www.forbes.com/sites/micahsolomon/2018/06/10/the-four-elements-of-
customer-satisfaction-how-to-achieve-it-over-and-over-again/?sh=735e80af28c2

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Internal Customer Satisfaction (ICS)
An organization may be portrayed as a chain of individual functional units, linked together for the
purpose of satisfying external customers. Each unit is an independent producer, turning inputs (e.g.
materials received from suppliers) into outputs (e.g. products) for the direct use of the next
function, or internal customer. Thus, at each functional interface, customer needs, reciprocal
obligations, and satisfaction should be determined

ICS is the measure of the Internal Customer Service, provided within the organization, aiming at
achieving, enhancing and surpassing the External Customer needs and expectations. Internal
customer service is viewed as a two-way exchange process between individuals in different
functional departments of a firm where the provider is charged with responding to the needs of
his/her internal customers, leading to satisfied internal exchange partners. The concept of ICS has
its roots in the Total Quality Management and Marketing. TQM has evolved into Quality
Management System (QMS) which can be certified by external auditors as per the standards of
ISO 9001:2015. In SAIL, all the units have ISO 9001:2015 QMS.

Quality
Management Marketing
ICS
System (QMS)* Concept
Concept

References

1) Chang, W. J. A., & Huang, T. C. (2010). The impact of human resource capabilities on internal
customer satisfaction and organisational effectiveness. Total Quality Management, 21(6), 633-
648.
2) Marshall, G. W., Baker, J., & Finn, D. W. (1998). Exploring internal customer service quality.
Journal of Business & Industrial Marketing.

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Internal vs External Customers
It is widely accepted that internal customer satisfaction is a driving force to achieve external
customer satisfaction, which is critical to the long-term success of any organisation. In turn, the
internal customer satisfaction is primarily influenced by the internal service quality provided by
the internal supplier. While the principles of Customer Satisfaction are same for Internal as well
as External Customers there are some fundamental differences between the two.

Internal Customers (IC) External Customers (EC)

Internal customers may have little External customers typically have a choice
or no choice. They cannot go beyond the about where to do business.
organization for their needs.

Internal customers are paid, professional
consumers of the services (and products) they
use. As such, they are more familiar with and
knowledgeable about the services (and
products).
Location of Internal Customer is mostly
centralized.
External Customers pay for the products and
services. Cost of procurement and value
delivered are the key factors in buying.
Location of External Customer can be in
different geographical locations.

“External customers have been inherent in business since people started making and selling
products—a long time! The idea of an internal customer, however, is a more modern one.
For instance, Six Sigma encourages identifying internal customers as a way of creating a
more positive work environment…. One school of thought connects satisfied internal
customers with happy external customers”
https://www.bmc.com/blogs/internal-vs-external-customers/#

References

Jun, M., & Cai, S. (2010). Examining the relationships between internal service quality and its
dimensions, and internal customer satisfaction. Total Quality Management, 21(2), 205-223.

Marshall, G. W., Baker, J., & Finn, D. W. (1998). Exploring internal customer service quality.
Journal of Business & Industrial Marketing

4
ICS Agreements in SAIL
SAIL follows the ISO 9001:2015 Standard for its Quality Management Systems. A QMS
integrates established fundamental concepts, principles, processes and resources related to quality,
in order to help organizations, realize their objectives. These systems are audited by External
Auditors on a regular basis. According to the clause 9.1.2 of the ISO 9001:2015 standard, the
organization should monitor customer perceptions of the degree to which their needs and
expectations have been fulfilled and must determine the methods for obtaining, monitoring, and
using this information.
The ICS Agreements can be primarily based on Qualitative Aspects affecting the Process
(although some units of SAIL have introduced quantitative aspects as well). Attributes like size,
composition, physical properties, time, moisture, strength, purity of the material supplied or
effectiveness of calibration can be qualitative aspects in Technical Areas. Quality of spares
supplied, Complaint’s resolution time in Personnel and Town Services, Time required to provide
data, Training Effectiveness, etc., of the services provided can be qualitative aspects in Non-
Technical Areas.

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Conclusion

Internal Customer Satisfaction (ICS) is an important concept through which a culture of customer
satisfaction can be built in the organization. As most of the employees in SAIL don’t have a direct
customer interface, ICS provides an opportunity for them to understand the importance of
customer satisfaction in their own context. The various agreements made between the Internal
Suppliers and Customers also provide an efficient monitoring tool for the leadership and help them
in taking corrective actions.

“Internal customers generate goods and services for the end customer and, as such, are
crucial to providing customer satisfaction. Employees must receive the best possible
quality product from those upstream in the chain of production, if they are to provide a
high-quality product to those downstream”
Reference: Conduit, J., & Mavondo, F. T. (2001). How critical is internal
customer orientation to market orientation? Journal of business
research, 51(1), 11-24.

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Annexure I
Annexure II
There's a little bit of SAIL in everybody's life