Spend@Risk: An Analytical Approach to Manage Commodity Spend Risk
Procurement decisions for a commodity exposed entity, in most cases, are not trivial. And as is frequently the case, more available and more relevant information leads to better decisions. A Spend@Risk analysis provides a framework that serves as an additional point of insight that can be used to help an organization determine its commodity procurement strategy.
This white paper discusses a commodity procurement strategy and framework that helps organizations protect margin, given their financial constraints and competitive landscape.
Key benefits of the Spend@Risk framework include:
- Improved transparency and management of gross margin uncertainty
- Enhanced ability to meet earnings or cashflow targets and debt covenants
- Retained flexibility to capture favorable market movements as they arise
- Improved capability to institutionalize the procurement risk management process
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