You might have heard that the lobstermen in the northeast are experiencing tough times right now due to the extremely low prices they are able to get per pound recently. Due to environmental factors, there has been a huge change this year causing an increase in the supply of lobster.
This scenario is a real life example of how environmental and other external factors have the ability to dramatically affect the cost of the products that you are purchasing every day. From a procurement standpoint, there are steps that professionals can take that will help enable your company to protect itself from price increases and also to benefit from price decreases caused by these factors. So what can you do?
1. Ensure that your contracts contain a mechanism to tie your prices to the market. Indices are a great way to be certain that your pricing will remain consistent with current market conditions.
2. Do not include evergreen language. The terms are typically much worse than you would get through your existing eProcurement process.
3. Engage your eProcurement partner to monitor market conditions. They will help you determine when you should take your category to market.
4. Listen to and seek out seasonal recommendations. Reliable historical data is available that will provide great suggestions of the optimal timeframes to consider categories.
To learn more about your seafood sourcing needs, contact a SafeSourcing customer services representative.
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