It should come as no surprise that the commodity industry is predicting a continuation of 2012’s market volatility and slow economic growth for the balance of 2013. Regional economies that were thought to be in recovery are now slipping back into recession. Major commodity price fluctuations are expected to persist, and global demand for oil is expected to rise only 0.8% to 90.4 million barrels per day this year. Volatility will continue to be influenced by the euro-zone debt crisis, fluctuating demand in Asia, and continued political unrest in the Middle East.
Commodity-consuming companies are challenged to respond to this volatility with supply chain strategies that drive top line performance while protecting the bottom line. A strong pricing risk management strategy is essential to remain competitive. However, it is not the only strategy that must be considered. The profitability advantages gained from insightful commodity purchasing and trading decisions can be obliterated by a poor volume management strategy that quickly erodes margins by causing costly mistakes such as expedited shipments, lost orders, missed sales opportunities, poor inventory staging, stock-outs and overruns.
Global volatility only adds to the planning challenge. The importance of maintaining an accurate volume demand forecast, production schedule, distribution schedule, and inventory management strategy should not be lost on anyone.
Triple Point’s Supply Chain Optimization (SCO) solutions help you address your risk mitigation strategy from a volume point of view. Triple Point SCO integrates your data silos into a single planning database, allowing everyone to collaborate on one set of numbers to arrive at a highly accurate volume demand plan. This plan then drives more efficient downstream production planning and scheduling decisions which translates to higher utilization, higher service levels and reduced inventory costs. Learn more.