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  • Home
  • What is DCM?
  • Where is DCM useful?
  • Where to start?
  • 8 Questions for a CFO or CPO
  • About
    • Our Leadership
  • Contact
  • Compliance and Monitoring
  • DCM Blog
  • COVID-19

Simple Questions to ask if DCM might fit your needs

Many firms are confronting challenges associated with costs of good sold (COGS) from dynamically priced inputs or finished goods. We have developed 8 simple questions for a CFO or CPO to determine whether commodity management for dynamic markets may be an appropriate area to focus on:
  • Do you find earnings (for a CPO) or procurement costs (for a CPO) easier to manage within plan for predictable earnings or margin when input prices are rising/falling and harder to manage within plan in the opposite direction?
  • Do you find earnings or costs have some inputs that have significant cost variation impacts (overpriced inventories/volatile COGS) associated with demand or production forecasting errors?
  • Do you find the sales pricing cycle (how often you change prices) causes issues with procurement cost management(input costs vary more and more frequently than sales prices or vice versa)?
  • Do external factors (weather, commodity markets, other inputs) cause changes in demand or material planning or revenue forecasts that are not accounted for in current forecast or revenue models?
  • Does the amount your competitors hedge or do not hedge inputs have the potential to cause competitive impacts in your sales prices and margins?
  • Do you have significant accounting write downs/mark ups on raw material or finished goods inventories caused by variation in reference prices?
  • Do you experience unanticipated collateral  or margin calls for hedging transactions?
  • Do you have revenue declines caused by COGS changes that do not impact your margins or earning that you need to explain?

​If you answered yes to one or more of these questions, the addition of dynamic commodity management methods to your strategic sourcing operating model is likely to improve your results
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