Author Archives: Mike Pringle - Iasta
In Part 2, I ended my blog post with: The basis of price risk management therefore lies in asking the following questions: What is the “right” level of price cover and how do we determine what this level should be (particularly if we do not enjoy market information advantage)? What are the cost/benefits of derivatives over inventories? What is the difference between hedging and trading? How can we ensure our corporate objectives are aligned to our price risk management program? … More
In Part 1, I ended with the statement that procurement “errors” affect the market capitalization, the competitiveness and the well-thought out plans for the business and, that price risk can affect any of the aforementioned. It is therefore imperative for organizations to have a clearly articulated and well-defined plan for (price) risk management. This blog will highlight the traditional approaches to hedging and suggest that organizations ask themselves a range of questions when developing their hedging strategy. Traditional approaches to … More
Since the turn of the century, they have experienced the wrath of volatile price fluctuations (mainly price up) in their commodity markets. The Holy Grail in procurement is to achieve a position in the firm where its function is no longer justifying its existence and focusing on an internal sales job. This goal is made a lot harder to achieve when procurement must defend why costs exceed expectations. I can only imagine how many CPOs have been hauled into boardrooms … More
