I personally have issues with the general use of the term "internal customer", as I believe that this term is often abused.
While there may be cases where ‘internal customer’ may be abused, I would suggest these may in the minority. Perhaps I am wrong.
I do not agree with the (popular) interpretation of an "internal customer" being the next person in a production line or next department in the flow of production
While this may be true in a strict interpretation of the ‘standard’ but, I do believe that the concept of internal customers has its place. When an organization decides to start on the path of systems management, the idea of an internal customer must be considered. After all, if process A cannot hand off to process B acceptable product, that raises costs. I believe it was Deming who said “Every one in the organization has a customer. If he does not understand that, he does not understand his job.” Perhaps I am paraphrasing, but the gist is there.
I prefer to refer to these individuals or departments as "process partners" rather than "internal customers". The term "process partner" is much more accurate in their description and still promotes the central idea of working together toward a common goal.
I agree with this, in part. I am trying now to move my organization from a ‘quality management’ to a ‘systems management’ paradigm (BTW, Thanks Marc, good concept).