Commodity Intelligence, Risk Management & Price Volatility at a glance:
Commodity market volatility in pricing, supply and demand has a direct and significant impact on your organisation’s procurement budget, ability to deliver savings and overall profitability. The trouble is, many commodity markets are exactly that – volatile.
Access reliable forecasts and analysis reports to gain a true picture of their position in the market – and a view of where category markets are headed.
Accelerate information gathering and spend more time focusing on creating mitigation strategies than piecing together diverse, incomplete data.
Cut through market noise and understand which risk indicators truly pose a threat to their category and broader procurement strategies.
Build ongoing, always-on insight programmes that free them to achieve their full potential as strategic advisors to the rest of the business.
Our Commodity Intelligence solution combines The Smart Cube’s proven forecasting models with analysis of your internal data, to deliver reliable commodity price forecasts and impact assessments that are contextualised for your business. Accessed through Amplifi PRO, our on-demand procurement intelligence platform, your custom Commodity Intelligence solution gives you:
Our dedicated specialists use a combination of technical, fundamental and AI methodologies, and supplement quantitative price forecasts with reasoning and analysis to give you full visibility.
We provide broad basket coverage across industries and commodities including Agro, Dairy, Livestock, Energy, Fuels, Resins, Petrochemicals, Metals and more.
Clearly see how volatility can impact your category spend with analytical insights and AI techniques to improve accuracy, that enable you to respond proactively.
We support you with defining commodity purchase strategies, mitigating event-related risks and ongoing hedging governance.
When you work with The Smart Cube, our team becomes an extension of yours – providing contextualised insights and recommendations as required.
With Commodity Intelligence from The Smart Cube, you can:
We combine your internal data with our proprietary assets and deep commodity market expertise to create the contextualised forecasts you need – and we deliver them through custom digital portals and web-based dashboards, so your whole team can make use of them.
We work with you to identify the commodity markets impacting your spend, and map out their value chains.
We identify key variables across the value chain and correlate them to commodity prices using historical data.
Our team develops statistical models supplemented with AI techniques to determine the relationships between shortlisted variables, drivers and events, and commodity prices.
We test the model by calculating historical prices, then measuring deviation from actual historical prices levels.
We create detailed forecasts, enabling category managers and procurement teams to reliably anticipate future commodity price fluctuations.
We add a layer of sentiment analysis using NLP to further enhance the accuracy of our models and incorporate the latest market information.
We marry these forecasts with your internal business data to help you understand and mitigate the volatility impact.
When you choose The Smart Cube’s Commodity Intelligence solution, you always get:
A dedicated team of commodity experts: Our team of commodity specialists have extensive experience providing contextualised market insights, proactive supply recommendations and deep category knowledge.
Customised self-service dashboards: With pre-built assets and custom solution elements, we build insight delivery portals around you – enabling everyone to access intelligence conveniently.
High accuracy rates: Consistently delivering a 95%+ accuracy rate for most commodity price forecasts, leveraging AI techniques (like ML algorithms and NLP) to continuously seek accuracy improvements.
Procurement-specific forecasts: Our background is in procurement intelligence – so we know the kind of information you need to manage risk and deliver savings, and how you want it delivered.
Contextualised insights: We combine internal data with reliable price forecasts to provide full context for your organisation – visualising the impact shifts will have on your budgets and strategies.
Broad basket coverage: The Smart Cube offers broad basket coverage across a wide range of industries, enabling a consistent approach to commodity management across your organisation.
The category team at this Global top 20 confectionary company was anticipating a rise in sugar prices globally, and wanted to identify levers to mitigate this risk.
The Smart Cube identified 2 key drivers impacting the sugar prices, and used regression modelling and scenario analysis on these drivers to assess the impact on sugar prices. We recommended a long-term hedge position in the futures market to mitigate the risk of rising sugar prices.
Based on our recommendation, the category team not only negated the impact of rise in sugar prices, but also achieved an annual savings of $2.5 million annually.
A leading global steel manufacturer was facing volatile commodity prices and challenging overall business conditions, which together led to pressure to deliver higher cost savings.
We ran a price benchmarking exercise to map current costs of the client’s various commodities against underlying price indexes, and provide information on market rates, trends, market dynamics, price movements, availability of alternative suppliers, products and Forex rates to produce insights into various cost drivers. We identified key demand-based and commercial negotiation levers, and created precise messaging and talking points to negotiate with suppliers.
Using our recommendations, the client generated savings worth £4million (10% of spend) across its key commodity suppliers and agreed new contract terms with suppliers to capitalise on positive commodity price changes and mitigate negative changes, thus reducing risk exposure in the future.
The client wanted to achieve cost savings by optimising spend on meat categories and wanted to assess potential hedging strategies to mitigate price hikes in meat category.
Our custom dashboard showcased the forecast prices of beef and pork for a year and estimated a savings of 8.8% based on the annual spend data. We recommended bringing the contract forward, buying these commodities upfront with delivery in the next quarter to avoid extra spend of 5% that would have otherwise been incurred due to expected price hikes.
The client followed our recommendations and bought next quarter’s supplies with a later delivery option to avoid an additional spend of €3 million (5% of quarterly spend).