Analytics to Help Mitigate Price Volatility Risk in Manufacturing Supply Chains

Manufacturers consistently face numerous risks related to protecting the operational integrity of their supply chains, including heat and vibration that can impact the operations of plant equipment and production systems to unforeseen glitches such as transportation problems, and natural disasters.

These and other issues can adversely affect the abilities of suppliers to deliver raw materials and other vital products manufacturers need to produce products and meet market demands.

Manufacturing leaders know all too well that even the slightest disruptions to their supply chains can have significant impacts on their quarterly profits.

Because they’re sensitive to supply chain volatility, CFOs and other manufacturing executives are also highly aware of the impact of price variances.

A prime culprit could include a sudden surge in petroleum prices due to political unrest or other issues that can cause a ripple effect in lifting the costs of suppliers’ products.

Manufacturing executives can use supplier, market, macro-economic, and other types of data with predictive analytics to better anticipate and mitigate risks associated with price volatility.

Armed with these insights, manufacturing business leaders can take steps to mitigate risks associated with impending or sudden price spikes, such as proactive partner negotiations, and opportunities for establishing partnerships with alternative suppliers at more favorable rates, etc.

Manufacturing executives who use predictive analytics and data to closely examine an organization’s supply chain can derive other insights regarding price instability that can be used to better insulate the company from risk.

These can include identifying the velocity and duration of any disruption to costs. For example, how quickly would the company feel the initial impact and how long would it be affected if the disruption were to continue?

In addition, company leaders can also use predictive analytics to assess organizational readiness to handle any sudden or even gradual changes in supply pricing. This information can help manufacturing leaders be proactive by identifying and acting on pricing issues before they become operational and/or financial burdens.

Next Steps:

  • We invite you to watch our complimentary, on-demand webcast “Applying Analytics Rigor to Procurement in Manufacturing Organizations,” designed especially for manufacturing companies. During the webcast, you will learn how a systematic review of purchase data can lead to significant savings across both strategic and non-strategic goods.
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