Why All Businesses Should Recognize the Need for Commodity Risk Management

While Commodity Price Risk Management (CPRM) originated in the commodity players, such as miners, refiners, energy producers, and so on, it’s increasingly being adopted by businesses that have significant commodity costs in their cost base but whose core business lies elsewhere – such as FMCG, retailers, manufacturers, and so on.

For the many not the few

The volatility of the commodities market poses great risks for many businesses that buy in commodities or raw materials. Unless a business is able to pass price changes directly onto the end customer, simply absorbing the impact of a price increase can lead to periods of significant losses.

In contrast, business whose core business is the buying and selling of commodities, with established CPRM practices, or put another way hedging programs, in place are able not only to weather the storm when prices fluctuate in the markets, but also benefit from volatility.

Many organizations are not even aware of the value of the price risk they face. Instead they have pushed the risk onto their suppliers and are ignorant to both the cost of doing this as well as the opportunity to improve profits that they are missing.

They have pushed it onto their suppliers because that’s how it’s always been done. But that’s changing – and when you consider approximately 10% of a retail supermarket or grocery store’s revenue is a commodity cost, the numbers get very big very quickly; meaning the opportunity to reduce these costs by 20% will deliver tens or hundreds of millions of increased profits.

With expert help, you can get solutions such as raw material hedging that protect your margin in a rising market, and beat budget and improve profitability in a falling market.

More Information Please Visit Here : www.flowandebb.com
Location: Swan Court, 9 Tanner St, London SE1 3LE, UK

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