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To make good decisions about what to prioritize in a supply chain, start with your customers. Because the purpose of a supply chain is to deliver value to a customer, the first step in engineering and managing a supply chain is understanding exactly what your customers value. They may value having a wide variety of products to choose among, for example, or they might prefer to have a smaller number of options at a lower price. Alternatively, your customers may value having products available immediately for pickup or to have products delivered to their homes at a time that they choose.

Your customers may actually want “all of the above,” but each choice creates different requirements for a supply chain, and the choices may be contradictory. It often helps to choose a key customer and focus on their specific preferences.

Some great techniques are available to help you identify what customers value most. One of the most popular of these techniques is officially called Quality Functional Deployment (QFD), but many people call it the House of Quality (HOQ). Figure 3-1 shows an example HOQ, which looks like a bunch of boxes with a roof on top. To build an HOQ, first you interview customers to determine which characteristics or features they value most. Then you match those features with your design to ensure that you’re focusing on delivering products and services that genuinely meet your customers’ needs.

FIGURE 3-1: Example HOQ.

For more information on how to build an HOQ , visit https://hbr.org/1988/05/the-house-of-quality.

Another common technique for determining customer preferences is called A/B testing. To perform an A/B test, you give your customer a choice between two options: A and B. Online shopping sites frequently use A/B testing to see which products or ads are most attractive to customers, but A/B testing can also be used in face-to-face experiments.