Where is DCM useful?
DCM can be useful across the organization:
Dynamic commodity costs and risks can arise across your organization. Every component transport and decision area on this graphic can be a point at which tradeable commodity risk is acquired, held, transformed or removed. DCM is the model for aligning these issues with your strategic sourcing model.
Material inputs - not just your own material inputs but those of your supplies may be influenced by tradeable commodity components. Our leaders have worked with firms to examine Tier 2 (or even Tier 3) supplier pricing to examine DCM requirements. Solutions may be from the complex such as hedging the supplier input costs or tolling materials through the supplier to as simple as negotiating passthroughs from both the supplier to your firm and from your firm to your customer.
Dynamic commodity costs and risks can arise across your organization. Every component transport and decision area on this graphic can be a point at which tradeable commodity risk is acquired, held, transformed or removed. DCM is the model for aligning these issues with your strategic sourcing model.
Material inputs - not just your own material inputs but those of your supplies may be influenced by tradeable commodity components. Our leaders have worked with firms to examine Tier 2 (or even Tier 3) supplier pricing to examine DCM requirements. Solutions may be from the complex such as hedging the supplier input costs or tolling materials through the supplier to as simple as negotiating passthroughs from both the supplier to your firm and from your firm to your customer.
Supply Chains Logistics |
There are significant tradeable commodity impacts on the supply chain logistics. First, storage and transportation are fundamental levers in DCM strategies - if you are not controlling them, it is likely your supplier or their supplier is and you are not getting the benefit. We can help you examine the costs - and benefits - of the DCM components of your supply chain logistics - whether yo control them or not.
|
Sales |
A common source of tradeable commodity risk arises within the customer sales contract. Contract flexibility - for volume, or pricing date or delivery volume - is often a point of negotiation for sale of finished goods. Unfortunately, the sales staff in many firms do not have the tools or the training to understand the cost of that embedded flexibility. Even more importantly, there is no mechanism for valuing of tracking the impact of these structures on the cost of inputs and finished goods and the resulting margin impacts. DCM is designed to track the sources of cost and risk across the entire corporate chain to create greater alignment. The goal is to understand where costs arise - only then can those costs be managed.
|