Customer Value Driver Discovery
When Mukund Kumar’s assistant told him Arvind Mehta was on the phone, he thought “Finally.” Mukund had been waiting for two weeks to hear from Tastyco on a long term Strategic Supplier Agreement (SSA) and he was starting to worry…
Mukund was Givaudan’s account manager for Tastyco and the assignment had been a good one for Mukund. In the three years he handled the account, Mukund rarely ever had to compete with any other flavor supplier and he was generally able to get premium prices for both basic and custom flavor products. Tastyco flavor purchases had been growing steadily over the past three years because of the success ...view middle of the document...
After the initial shock, Mukund tried to quiz Arvind about the new agreement, but Arvind cut him off saying that he had to run to another meeting, but he would call him back in a few weeks to give him a schedule for responding to the SSA. Before hanging up, Arvind made a final comment that troubled Mukund: “Don’t forget Mukund, achieving SSA status will allow Givaudan to have a first shot at our new flavors projects, but it also means you will probably have to sharpen the pencil on some of the existing flavors.”
Mukund was not sure exactly what Arvind meant by the comment, but he knew that several of the older carbonated beverages that Givaudan supplied flavors for had been transitioned to the “productivity program.” When this happened, Mukund knew that Tastyco would start looking for ways to improve efficiencies for the product – and this usually meant cutting supplier costs.
Even with this concern, Mukund was very confident that he would be able to win SSA status with Tastyco. Mukund did not have every detail, but he knew that Givaudan’s R&D group had been a big help to Tastyco’s Beverage R&D team led by Milind Khare. While he had never met him, Mukund had heard through the grapevine that Milind was a supporter because Givaudan was helping Tastyco in a number of technical areas. Mukund also knew that his R&D team had conducted “Flavors 101” Training for Tastyco’s R&D team, which included some of Tastyco’s Brand Managers who reported to Vishwas, Beverage Category Manager. The training was widely viewed by Tastyco as a success and this was talk of making it an annual event.
Mukund was so sure that Givaudan would be selected as a Strategic Supplier that he told his boss, Michael Alphonso, that the deal was as good as signed. But lately Mukund was beginning to worry. He had not heard from Arvind in over two weeks and he wasn’t returning his phone calls.
Tough Speaking Customer
So, when Mukund heard Arvind was on the line, his next thought was about ways to celebrate the closing of the agreement with his wife. As he picked up the phone, Mukund greeted Arvind and asked if he would like to have lunch with him. Mukund was shocked when Arvind told him that was “premature.” Arvind continued: “Mukund, I have been reviewing our flavor purchases from you over the last 24 months and while I would like to see Givaudan become one of our strategic suppliers, my analysis shows that your prices are way out of line on a number of flavors and you better find a way to fix it quickly.”
Mukund hesitated, and then asked: “What do you mean?”
“Well, I told you about our new purchasing policy – we are going to identify several strategic flavor suppliers and seek competitive bids from them on flavors we believe have opportunities for cost savings,” Arvind said. “We will be implementing a matching program to give different vendors an opportunity to replace flavors we think should have lower prices. After reviewing the flavor products...