Multiple situations throughout the globe create massive uncertainties about the future price and supply of oil and other key commodities. Many manufacturers are responding by beefing up stocks of commodities and raw materials, locking into current prices. That strategy, according to the Institute for Supply Management, has been driving up inventories for some time now.
Is this the right approach to take? The only way to really know the answer is to assess the situation properly. Purchasing managers need to align themselves with finance and operations for better insight into a solution that will work for your business.
Whatever you decide, don’t do it purely for the sake of speculation. The goal is to reduce risk, not increase it. Avoiding commodity price spikes also entails some accounting issues. The purchaser needs to mark an asset at its current value on a quarterly basis, which is fine if the locked-in price remains below market levels. But if the company’s long-term cost begins to exceed the market rate, then the implications on its balance sheet can be severe.
Microsoft Dynamics® GP can help you make these important decisions so your company doesn’t suffer severely from soaring commodity prices. Microsoft Dynamics GP allows you to manage inventory more effectively and incorporate deeper business insight into distribution and supply chain processes for your customers. You can have real-time insight into your inventory and leverage critical forecasting to plan for future needs.
Join us on March 22nd at 11am PST for a free webcast on how to Optimize Distribution and Manufacturing Inventories with Microsoft Dynamics GP.
By Earl Hunt of The Resource Group, Seattle based Microsoft Dynamics ERP Partner