Integrating contract prices for better procurement portfolio evaluation and multiblend formulation
The nutritional supply chain is a complex and interconnected ecosystem where risk management is critical. For companies operating in the animal feed industry, managing risk requires a collaborative effort across departments. Procurement and R&D must work closely together to identify the best future recipes that fit the specifications of the animals and provide a competitive selling price. One of the biggest challenges in this exercise is that the most important ingredients are soft commodities, which are subject to geopolitical and climatological unpredictability, leading to volatility in prices.
Optimizing Ingredient Procurement: Strategies for Managing Commodity Contracts, Market Position, and Profitability
To ensure access to these crucial ingredients, purchasers need to make long-term forward contracts for commodities such as wheat, corn, and soy, often several months or even years in advance. Consolidating these contracts into one cumulative quantity and one average price is crucial for evaluating the real position in the market. Mark-to-market price comparisons and collaboration with R&D are also essential for formulating future recipes, negotiating sales prices, planning revenue and profit, and avoiding potential losses due to fluctuating market prices.
Introducing BESTMIX® Enterprise's Average Purchase Price Prediction Integration for Informed Decision-Making
BESTMIX® is a leading software partner in the nutritional chain, providing an industry-best solution called BESTMIX® Enterprise, which is based on Microsoft Dynamics 365 for Finance and Operations. BESTMIX® Enterprise offers an innovative feature called Average purchase price prediction, which is designed to support customers in the forward contracting and formulation integration business process.
With the average purchase price prediction module, customers can select the purchase contracts they want to include in the calculation, choose the raw material, supplier, month, and plant, and calculate a monthly average of the selected purchase contracts. The module also allows for including stock figures, deducting planned consumptions and sales for the next month, and taking the missing part with the actual market price if needed. The selected contract can be validated inclusive or exclusive of landed costs.
The results of the average purchase price prediction module are saved in a price list and integrated with BESTMIX® multiblend formulation. The formulation package sends the prices to the formulation, where customers can process them further.
Improving efficiency and minimizing errors with an integrated solution
The integration of the average purchase price prediction module with BESTMIX® multiblend formulation is a remarkable achievement, as it significantly improves efficiency and minimizes errors, enabling better business decision-making and ensuring a more competitive material sourcing. In today's fast-changing environment, where geopolitical and climatological unpredictability contributes to volatility in prices, having access to real-time data and collaborative risk management tools is critical for success. BESTMIX® Enterprise provides customers with the necessary tools to stay ahead of the curve and navigate the complexities of the nutritional supply chain with confidence.
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