Optimize Your Buy Side - Stabilizing Margins with Better Procurement Practices

Commodity Price Volatility Signals the Need for Risk Management in the Food Industry

If you are a food processor, purchaser or manufacturer, the need for a risk management program is greater now than ever before, according to Dennis Collins of Trilateral, a food-industry risk management company.

In “Optimize Your Buy Side,” Collins discusses how the globalization of commodities markets has led to greater price extremes and short-term volatility. He explains how the growth of emergent economies has affected both the supply and demand sides of the commodity markets, which are increasingly international. These changes have resulted in more complicated and more volatile market conditions and made the job of those in the food industry more challenging.

Collins says that solid risk management programs can help food-related businesses stay on the right side of the market. Investing in resources to manage price risk can:

  • Stabilize and improve margins
  • Lower average purchasing costs
  • Increase the accuracy of budget and cash flow planning
  • Enable more competitive pricing to your customers

The need for a plan of action is required, according to Collins, because market volatility does not allow time to ponder decisions.