Toblerones – Mind the Gap

  • Published on: 11 November 2016
  • By: Avtar Nagra

Toblerones – Mind the Gap 

Mondelez caused a furore this week by increasing the gaps between the “mountains” in a Toblerone to reduce the weight and hence keep the cost the same to the consumer.

Why were people upset?

They purchased a Toblerone expecting a Toblerone – when they got a “poor relation” they were disappointed. 

What lessons can be learnt from this?

Businesses are always trying to save costs particularly with their purchases and some fall into the trap of reducing the cost during the purchasing process to the extent that they get a cost saving but sacrifice quality, size or volume and end up not getting what they need. The enthusiasm and negotiation skill of the procurement specialist to reduce cost may not be doing you any favours in the long run.

How can this be avoided? 

The key is to get the technical specification and the commercial wrap right before you negotiate on price.

  • Identify the ‘showstoppers’, ‘must haves’ and ‘nice to haves’ before you engage with your supplier.
  • Make sure you have the mechanism to manage your supplier in terms of incentivising them to perform well and penalise them for poor performance proportionate to the scope of supply and the importance of the supply to your business.
  • Having appropriate KPIs linked to SLAs is the foundation for establishing this mechanism.

Don’t negotiate solely on price at the expense of losing features that you rely upon, i.e. don’t end up with a ‘gappy’ Toblerone that does not fit the bill.

eXceeding has a wealth of experience in developing and negotiating specification and commercial arrangements that is evidenced by its long list of successful engagements and satisfied clients.

For further information on eXceeding’s procurement capabilities please visit our Procurement Services page

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