Strategic Procurement Series: Navigating the Future of Sourcing
1. Dynamic Commodity Strategy: Navigating Market Volatility with Live Intelligence
The way things work in the market is really complicated. It is hard to predict what will happen with things like supply and demand. This makes it tough to know how much things will cost. When we can get them. Big events like what happened in the Suez Canal or the shortage of semiconductors show us that we cannot just stick to one way of doing things. For the people in charge it is crucial to understand what is going on in the market and be able to adapt. If we do not do this we might end up losing a lot of money.
From Static to Live
The way of doing procurement is not good enough. It is based on a snapshot of what's happening at a particular moment. When we ask for a quote it is like taking a picture of what's happening right now.. By the time we sign the contract things have already changed. This means we end up paying more than we expected. To do well in a world that is always changing we need to move from these static snapshots and start using live sourcing intelligence.
In the Optiroq ecosystem we use something called Dynamic Commodity Strategy. This means we always keep an eye on what's happening in the market. We do not just negotiate a price once. Then forget about it. Instead we keep getting information all the time. Imagine we are buying a component that costs € 2.42. If the price of the materials suddenly goes up our system will notice right away. This allows us to make changes quickly like negotiating a price or finding a different supplier. To do this we need to change the way our organization works. We need to move from just setting things up and forgetting about them and start paying attention to the market all the time.
The Benefits of Live Sourcing Intelligence
If we use intelligence we can navigate the ups and downs of the global market.
* We can protect our margins by keeping an eye on prices in time. This means we can avoid losing money when the market changes.
* We can be more agile when it comes to dealing with problems. If we know what is happening we can move our supplies to places before our competitors do. This means we are less likely to run out of stock.
* We can get an understanding of the total cost of owning something. Live intelligence gives us real-time information, about logistics costs and market surcharges.
If we do not use a strategy we might end up paying too much for things. This is because we are paying the prices from yesterday even though the market has already changed. By moving to a model we can make our procurement process more resilient. This means we can navigate the ups and downs of the market with precision.
Do not wait and follow us, more to come on procurement AI from Optiroq.