At S2P Profesionals we use the term “Commodity Procurement” for direct spend categories of commodities, raw materials and ingredients. Commodity Procurement differs from procurement of indirect goods and services that there is no “one size fits all” approach or solution that covers all areas.
Each category, – and often subcategories as well-, has specific supply-side market characteristics, demographics, risks, trading/buying processes, trade restrictions/legislature, contract terms and logistics.
Successful Commodity Procurement plays an important role in the core strategy and processes of an organization. It is complex, represents a large percentage of total spend and the technology hype cycle is in its early phases. We simply love this space and helping customers achieve their goals.
Our expertise in commodity procurement focusses on
Commodity Procurement touches multiple business processes and parts of the organization. It is often complex, involves vast amounts of money and small mistakes can have large impact.
Constant monitoring and improving is essential for competitive advantage. S2P Professionals uses the LEAN methodology and MSU framework to help organizations improve performance of their Commodity Procurement processes.
Commodity specialists: a rare breed of people
As goes for many other business processes people are the biggest contributors to effective Commodity Procurement. Buyers deal with vast amounts of spend quite often under considerable time pressure. Impact of their actions directly impacts the organization’s bottom line.
At the same time senior management requires (realtime) reliable reporting and governance to manage the risks and decisions they are facing. The unique set of skills and experience required to manage commodities makes successful commodity buyers a rare- and sought after breed of people.
Structure of the supply side of the market is a prime determinant of your organization’s leverage with suppliers.
In what quadrant do your key suppliers operate and how do you mitigate the associated risks in your commodity sourcing strategy?
How many new suppliers for key commodities did you source in the last quarter?
How are contracts for Commodities stored and managed in the organization? A dashboard showing contract status as well as alerts for price fixations, delivery and quality, is an important tool for commodity buyers. Entering, copying and updating contracts should be easy and fast to ensure positions are up to date.
Commodity buyers need to understand and actively manage positions at any time. An up-to-date view of Demand, contracted Supply and deficit positions requiring attention is essential. Different commodities require different intelligence; make sure your tooling includes features to let buyers create their own reports. Permanent monitoring of pricing and locking prices within contractual parameters avoids futures liquidity traps and unwanted risk.
How do you forecast supply, demand and pricing for your key commodities?
Monitoring and analyzing of many commodity markets (i.e. energy, agri-products, metals,…) is part of the day-to-day activities of a commodity buyer.
Integrate analyst information, news feeds and trade pricing with your Commodity Procurement system to produce meaningful insights.
Schedule a demo to see how this works for your categories.
Futures & Options
Managing risk and tracking positions through futures or delta-equivalent options hedging, raises the bar for an organization’s processes and reporting capabilities. Direct integration of settlement pricing will facilitate Mark to Market allowing you to analyze and manage your market risk exposure real-time.
Some commodities are sourced locally, but Commodity Procurement in large corporate organizations almost always involves dealing with multiple commodities, -vendors, currencies and languages.
Trends & key topics
– implementation of Commodity Procurement solutions by large Food & Bev manufacturers
– increased use of online portals to integrate with supply chain partners and trading platforms
– use of eAuctions in Commodity Procurement
– interim commodity buyers
– performance analyses and improvement programs
– Automation and solutions for Commodity Procurement
– Commodity RFx and eAuctions
-Contact us for more information by sending an email to firstname.lastname@example.org or call +31 (0)85 3034687.