Managing Commodity Volatility in the Food & Beverage Industry

June 14, 2012 | Ann Surratt

Commodity volatility combined with soaring commodity prices make predicting and maintaining margin challenging for Food and Beverage companies. In a recent article in We Know Commodities, Mark van Erkelens, an executive in Accenture’s SAP Supply Chain Solutions Group, shared four tips for managing commodity volatility in the food & beverage industry.

1. Maintain margin despite growing volatility. In order to ensure a consistent stock of raw materials at the best price, utilize tools that can provide enhanced insight into commodity pricing trends.

2. Integrate financial and physical markets. Research from Accenture’s Institute for High Performance shows that market leaders take an end-to-end approach to the sourcing, selling, trading, and logistics processing of commodities. Companies that integrate financial and physical markets improve decision making, reduce operational risk, and accelerate their ability to move in and out of positions.

3. Identify market opportunities before competitors. Don’t be the last to know. Utilize advanced tools for market simulation and planning, combined with predictive analytics, to identify market opportunities before competitors. These tools will also allow you to forecast results more accurately and develop more effective reporting mechanisms in general.

4. Optimize trading agility and integrate sourcing needs. Today’s market leaders use advanced simulation technologies to model demand forecasts and make refined trading decisions based on forecasted as well as unanticipated needs. Look to integrate the needs of the sourcing units – from logistics through invoicing and financial processes.

Mark concludes the article by saying, concludes the article by saying, “Integrated and optimized supply and commercial planning capabilities are critical to driving revenue and profit maximization – and key to high performance – especially in our volatile global environment. By implementing a fully integrated, scalable, end-to-end approach to commodity management, organizations improve real-time visibility into enterprise market position and are able to move in and out of positions more swiftly.” Learn more about Triple Point’s Food and Beverage Commodity Procurement Solution, Commodity XL.