Commodity Intelligence

Source & Procure Commodity Intelligence powered by propurchaser.com, is an information resource, price modelling, budgeting and forecasting solution for the professional purchaser, leading the purchasing knowledge revolution using SaaS technology. Furthermore, it provides Purchasing Professionals with:

  • Market knowledge during the contract life time allowing them to be fully prepared for negotiations with the supplier if prices were to move significantly up or down.
  • The ability to subscribe to specific product costs moving by a defined percentage, to receive commodity news information and best practices
  • The ability to compare products costs, even from different suppliers, over time

Navigating the Commodities Tool

A wide variety of commodities, currencies and indexes are available for display and use from Chemicals and Energy, to Food, Metals, Paper and Plastic, Labor, Economic Statistics, etc…

Commodity graph

All graphs span a default 2-year time horizon, which can be customised to reflect a shorter or longer time period, and can easily be exported and  sent by email in both numerical and graphical formats, ideal for presentations, internal reports, budget preparation and external price negotiations.

Source & Procure Cost Model Tool

Your products cost can be modelled from a limited set of cost drivers, knowing broadly what percentage of the price each cost driver represents.

If we take Copper Wire as an example, the cost drivers consist of Copper, PVC for insulation and fixed costs representing shipping, labour and supplier margin.

In order to build the Copper Wire cost model, start adding the cost drivers: add Copper and PVC from the commodity options and estimate the percentage of the selling price each of these components represents of the total (lets say 60% and 5%), leaving 35% which represents fixed costs.

Through the graph the system will create, you’ll see immediately the fair price today based on the commodity prices and supplier gross margin.

Cost model

The first time you create the model it just needs to be in the ballpark, as the objective is to use it as a discussion piece with your supplier in order to come to an agreement on the final model.

Share the information with your supplier and if they challenge it, get them to update it by telling you what the accurate percentage should be. The moment your supplier corrects it, they own it too! You can modify the model with the supplier (perhaps Copper is only 55%, they might ask for 10% to be added for Labour, 5% remains for PVC and this leaves 30% as the Gross Margin). With this price model agreed, you can rely on the commodity price updates to track changes which might enable you to revert to your supplier for further prices changes or link your future pricing to these indices.

Source & Procure Budget and Forecast Tools

The Budget and the Forecast Tools work in a similar way in the sense they support a collaborative process to predict future price evolution.The Budget Tool’s time scale is monthly whereas the Forecast Tool is annual.

The Budget Tool has been designed to be used in a collaborative forum with peers, so invite all stakeholders from Finance, Operations, Marketing, Sales and anyone with a vested interest in what the budget number is going to be. Then, lead the group through a structured process to come up with well considered and documented budget figures everyone can agree to, using Source & Procure’s Budget tool.

Simply choose a Commodity you want to budget to show the average price for that commodity for the last 12-months. Show the graph to the assembled group, where you can discuss about what happened in this marketplace during the previous year. Select one of our calculation methods with your group – you might decide to select the one for 6-months with the last 3-months weighted more heavily, or simply the last 6-months average. Build in the inflation factor your Finance team consider is relevant as well as an option factor based on your judgement for the year ahead (perhaps raw materials prices are increasing/decreasing heavily). 

Based on these assumptions and with a simple click on the results link, you can immediately see what the average price for your commodity will be for the year ahead. You can easily adjust the judgement factor and/or the inflation factor or the calculation method to get a figure which reflects something the group will agree to. Record in the notes section, brief but clear details of who was at the meeting, the rationale which led you to you your collective judgement, so that in 7-8 months time you have something to revert to which explains why you made your decisions based on the information available at time the budget was prepared.

Monthly Price Reports

We’re tracking Prices for your Commodities – every month we provide you with the opening prices from trusted sources for your selected commodities versus the previous month. 

If you have questions or need more information, don’t hesitate to contact us.