Triple Point officially opened its Latin American headquarters in Rio de Janeiro this week with a special reception hosting Vale, NORSUL, and other leading companies that rely on Triple Point’s Commodity Management solutions.
The new office enables Triple Point to service its rapidly growing customer base throughout the region. Latin America has always been an important market to Triple Point, with Petrobras becoming a customer back in 2000.
The Latin American economy is very commodity-driven because of rich natural resources including coffee, sugar, oil, and iron ore. The Brazilian economy in particular is the largest in the region, and the country is also one of the world’s largest commodity exporters.
In recent years, the commodity markets have become very volatile, with companies struggling to mitigate exposure to market swings. Because of these conditions, effective risk management is more important than ever, and Triple Point has seen interest in its commodity trading and risk management (CTRM) solutions increase significantly throughout Latin America.
The energy, mining, agriculture, and consumer products (CP) industries within Latin America represent big opportunities for Triple Point because Triple Point’s solutions provide extensive functionality that addresses the unique challenges of each industry. Learn more.
Heavy users of raw materials face a huge challenge. The prices of many of the world’s key commodities reached all-time highs last year, and volatility across the markets was more than enough to create huge problems for companies in the industrial manufacturing and consumer products industries.
It’s easy to find startling examples of price volatility in every category from arable crops and metals to timber, oil, and chemicals. And it’s also easy to see the consequences of such volatility in companies’ bottom lines – time and time again, there are stark reminders that sharply rising raw material costs can impact profitability.
For example, spice and condiment manufacturer McCormick saw first quarter profits hit by 3% because of higher than expected raw material costs. And Swiss agribusiness company Syngenta cautioned that its 2012 results would be impacted for the same reason.
According to a new white paper on Commodities Management from Procurement Leaders, there are several ways to fight back, including hedging, forming strategic supplier alliances, and leveraging advanced technology solutions. The paper provides a good primer on the subject, and discusses how companies including Unilever have successfully controlled skyrocketing raw material costs. Read it now.
News-grabbing headlines highlighting commodity price increases due to weather-related and other supply issues have completely shifted the dynamics of Commodity Management and broader procurement, sourcing and supply chain management activities.
According to advisory group Spend Matters, organizations are observing radical commodity price fluctuations of up to 40% which are having a massive impact on their P&Ls. However, despite this volatility and its impact, precious investments in technology solutions and skilled resources often go towards other areas of the business rather than being allocated towards efforts to control, mitigate and manage commodity risk. Companies that allocate little or nothing towards Commodity Management head down a very dangerous path towards declining returns and higher risk profiles.
A new white paper from Spend Matters, “Beyond Sourcing and Supply Chain: Commodity Management Solution Fundamentals,” explains that “now is the time for organizations to make the right set of investments in Commodity Management.” It outlines the business case for Commodity Management, including how to build a quantifiable argument to invest in the right team, processes and solutions to take action in the current environment. Read it now and learn how to prepare your organization to manage the dips, twists and turns of today’s roller coaster economy.
The Commodity Management Blog has been closely following the top Commodity Management issues throughout the year. Not surprisingly, posts discussing Dodd-Frank top the list. Below is a complete list of the 10 most popular posts over the past 12 months based on views and shares. We thank you for following us and hope these posts have provided valuable tips on how to manage commodities smarter.
2. The Treasury Function and Commodity Risk
3. Life in a Dodd-Frank World
4. 4 Out of Top 6 Commodity Traders Use Triple Point
5. Can There be Good News in Men’s Underwear?
6. Triple Point’s Partnership with SAP
7. CTRM Checklist for Agriculture Companies
8. 5 New Rules for Credit Risk Management
9. Surviving Global Economic Uncertainty
10. Purchasing: The Impact of Risk and Volatile Raw Material Prices
We have some really great things in store for 2012, so here’s to a year of fresh ideas for Commodity Management!