Sourcing Events on Category Spends

January 29th, 2019

SafeSourcing’s professional service offerings support our mission of ……………..

 

Today’s post is by Alex Borbely, Vice President of Sales at SafeSourcing Inc.

SafeSourcing’s professional service offerings support our mission of providing information and services to our customers through e-procurement best practices that proactively support e-procurement events from category discovery to results analysis. As part of our full-service offerings, this also includes ROI delivery and focus on consumer safety and environmental standards in the global supply chain. Today, I would like to discuss a service of providing industry updates/news that may affect sourcing events on category spends.  We often play a role with our clients in keeping them abreast of changes in the marketplace and specifically what impact a commodity like corn can have on the pricing of items such as corrugated products.  Most items at your favorite supermarket, discount store, or shopping mall were safely delivered in boxes made of corrugated cardboard, and many are displayed in the same boxes, which were manufactured so they could be opened and used for this purpose. Other items may arrive in their own corrugated or alternative types of paperboard boxes. Because corrugated cardboard is such a versatile packaging material, millions of tons are used each year to protect and display products. Annually, more than 50 million tons of corrugated cardboard were produced in the United States. In addition, millions of tons of uncorrugated boxboard or paperboard are also produced for use in folding cartons.

Fast-growing pine trees provide the primary raw material used to make corrugated cardboard. The largest packaging companies own thousands of acres of land where trees are matured, harvested, and replaced with seedlings

At the corrugating plant, only a few other raw materials are needed to make a finished box. Corn starch glue is used to bond the corrugated medium to the liner sheets. Because so much glue is used, rail cars or large tanker trucks deliver it as a dry powder that will be stored in huge silos at the corrugating plant until it is needed. Drawn from the silo, the dry corn starch is mixed with water and other chemicals and pumped into the corrugator to be spread on the corrugated medium as the layers of liner are added.

When speaking with clients about corrugated spends it is important for the buyer to understand the components that go into the product and what impact those ingredients have with pricing such as corn.  There are a lot of factors that one needs to bear in mind such as the time of the year, supply and demand, hedgers/speculation traders, ethanol demand, and many other influencers that play a role in corn pricing and as a result the final product price of corrugated.

If you would like more information on how SafeSourcing can help you, please contact a SafeSourcing Customer Service representative.  We have an entire team ready to assist you today.

We look forward to your comments.

 

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