Table of Contents
Identifying a Product's Raw Materials
Today, more than ever, supply managers are becoming increasingly involved in product/service design. Unless an organization is a major player in a given market, it's most likely encountering significant pressures from customers to reduce costs, reduce cycle times, and deliver more customized products on a Just-In-Time basis. As a result, there are increasing pressures within the supply management organization and on its suppliers to provide savings opportunities.
Sources of Market Information
Supply managers are fortunate to live in the information age, with choices galore for gathering market information on everything imaginable. When thinking about it, it's really common sense, but sometimes supply managers get bogged down in the more intellectual or analytical approach, when in reality there are easy, sound business alternatives for sources of market information. The hard part is deciding exactly what they want or are looking for. The more narrow the scope or definition, the better off supply managers are in finding answers. A broad-based view is not a bad thing either, but it can lead to information overload. For example, if a supply manager decides to go out to eat, he or she can go online and search "Restaurants" and be overwhelmed by a multitude of choices. However, by first deciding on "Thai" food, the search can be narrowed to "Thai" restaurants in the local area. The volume and type of information sought is clearly up to him or her.
Using Gauges For Market Forecasting
It's hard to believe that last year at this time the Fed had just finished raising rates in a bid to slow the economy and avoid inflation, boosting the federal funds rate to a nine-year high of 6.5 percent. The Fed's rate-cutting campaign is - or should be - nearly over, and the central bank will be mostly content to wait for the economic impact of the 2.5 percentage points it has already slashed from short-term interest rates this year. As of June, the Federal Reserve had announced the sixth interest rate cut this year of 25 basis points. Economists were predicting the Fed might either hold tight or provide a 25-basis point cut. Meanwhile, the stock market anticipated a 50-basis point cut.
Gaining a Competitive Marketplace Advantage
There are a number of techniques available to a supply manager that can be used when implementing supply management strategies for specific commodities. If used effectively, they can offer an organization a competitive advantage by reducing risk and/or costs.
Commodity Market Resources
Michele J. Flynn
Michele J. Flynn is the founding principal of Expense Management Solutions, Inc. (EMS) in Boston. EMS is a national consulting firm specializing in delivering strategic business solutions to improve cycle times, reduce costs, leverage technology, and enhance productivity in the areas of procurement, administrative services, and real estate. She has extensive hands-on management experience with Fortune 500 companies generating millions of dollars of savings annually for EMS clients.
Nancy J. Hite, CFP, ChFC, RFC, CLU
Nancy J. Hite counsels and advises high-net-worth clientele through her affiliation with K.W. Brown Investments, and provides money management services through 21st Century Advisors in Delray Beach, Florida. During her career, she has specialized in wealth management, personal financial and insurance protection, and estate and business planning services. She is a member of the Financial Planning Association and a highly sought-after speaker and presenter on financial issues facing today's women.
Michael J. Stanly, C.P.M.
Michael J. Stanly is a supply management consultant and registered commodity trading advisor. His 20 years of experience includes senior purchasing positions with McKinsey, Pillsbury, and International Multifoods.
- "Selection of Currency and Hedging Strategy in Global Supply Management," Richard Locke, NAPM Conference Proceedings, May 1994
- "Fuel Hedging: Taking Advantage of Opportunities," by Jonathan R. Leak, Purchasing Today®, March 1999
- "Commodity Futures and Options as a Price Risk Management Tool," by Michael Stanley, NAPM Conference Proceedings, May 1994
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