Eka1: SCM for raw materials and commodities

Commodity markets, which we are defining in this white paper as the buying and selling of raw or direct materials, have always carried risk—even before the disruptions wrought by a global pandemic. Produced and processed across complex supplier networks that span multiple countries, commodity markets are subject to geopolitical instability, climate change, regulatory restrictions, and, perhaps most critically, an increasingly dependent global supply chain that stretches across developed and emerging economies. Because of the inherent fungibility of commodities—one source of commodity goods is as good as another–that complexity is often overlooked.

That attitude is changing and for good reason
McKinsey & Company reports that supply chain disruption has increased dramatically in recent years. In just the past several years the cost of these disruptions has risen significantly: every year, one in twenty companies suffers a loss of at least US $100 million.

Then COVID-19 turned the world upside-down. Shortages of critical goods, factory shutdowns, dizzying swings in demand, border closings, and transportation gridlocks converged. Few business leaders were prepared. According to a survey of 60 supply chain executives conducted by McKinsey in Q2 of 2020, 73% encountered problems with suppliers, 75% struggled with production and distribution, and almost half experienced delays in planning and decision making. More telling, at a time when their workforces and supply partners were sequestered remotely, a stunning 85% of companies reported struggling with insufficient digital technologies to support them.

Supply chains for commodities, driven by inconsistent manual processes, disconnected systems, and inaccessible spreadsheets, were particularly vulnerable. With no visibility into unprecedented supply chain disruptions, commodities producers, traders, and consumers were unable to adequately assess or respond to a rapidly changing commodities landscape.

Download the white paper to continue reading.

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