Sometimes we just need an outside opinion…….
Today’s post is from Steve Schwerin an account manager at Safesourcing.
Other times, we also need someone in a position to help us act on that opinion. Procurement professionals are in position to offer both. What I am referencing to here, are situations like the recent drop in gold prices. Whenever I see an article like the recent article, “Gold’s peak seen by BofA as end to China’s leadership in markets” on bloomburg.com, I think of indexes or how commodities affect prices of finished products.
Were you someone who thought gold would never come back down from its charge past $1,900 per ounce back in 2011? I had not given much thought to the price of gold for a while mainly because I was one of those people who figured gold was up around $1,800 to stay. It wasn’t, though. It recently dropped to $1,386.35 per ounce. Does it signal something? A broad drop in commodity prices? A prolonged retracement in the price of gold itself? Who knows?
The point is, the price of gold could go in either direction depending on developments. This is where indexes and contract management benefit your business. Sometimes, you have a little more at stake than a curious thought about the price of gold. There are two things going on here. We in the procurement industry may have helped you achieve indexed pricing allowing for potential price adjustments if an underlying commodity experiences a large price swing. Who is going to remind you to act on this, though? This is where that outside opinion of someone who can help you act comes into play.
Here at SafeSourcing, our eProcurement tools include contract management tools that can alert you of not only renewals, but the potential to realize savings due to index fluctuation. Things like index pricing sound easy enough to manage. One problem is that we have all been in situations where we “knew” something would happen only for the opposite to occur. In the meantime, we are busy running your businesses, and are not in a position to take advantage of clauses like index clauses. This can occur despite our foresight to include the index clause in the first place!
Let us here at SafeSourcing help you realize the benefits of good foresight. Contact your SafeSourcing customer service representative at 1-888-261-9070 to find out how.