Our expertise, in action.
Here are just a few examples of how we have helped our clients achieve success in our core service areas.
POSITION RECOMMENDATIONS
All clients have a different risk tolerance and pricing horizon so providing standard position recommendation results is irrelevant. Each recommendation is tailored to the specific business needs as well as incorporating the challenges of the market.
One particular customer is a manufacturer of baked goods that has very transparent pricing with its customers. This necessitates clear presentation of value buys by our client. With major exposure to wheat, vegetable oils, dairy, sugar, eggs, and natural gas (total spend around $50 million annually), positions must be managed closely across a broad range of products to ensure profitability. Results of our position recommendations can be found in the following:
| Engagement | Savings (Loss) in $ Million versus Market |
|---|---|
| Year One | 3.2 |
| Year Two | (3.1) |
| Year Three | 2.3 |
| Year Four | 5.6 |
| Year Five | 0.4 |
Through a thorough assessment of the business’s risks and measure of success, our team aligns with each client to define success. Each regular meeting will provide actionable steps to execute strategies that protect the business and achieve agreed upon goals. Position tracking allows assessment and analysis of the positions, as well.
All of this points to improved communication, clarity, and peace of mind as our clients wade the turbulent waters of commodity buying.
RISK MANAGEMENT PROCESSES
Getting the market right is great, but it can be tough, and no one does it perfectly every time. That is why setting up the proper, best-in-class risk management processes is essential for our clients.
One client was a $3 billion conglomerate with over 20 individual businesses with commodity exposure in grain, oilseed, dairy, and energy markets. While their purchasing and coverage methods were understood and sufficient, there was a lack of communication and transparency to the actual risk to the businesses. Some units were purchasing for school lunch programs as much as two years in advance while others were buying grain to feed animals the next week. Through risk quantification and volatility analysis, Beeson & Associates, Inc. provided standards, position limits, and a reporting structure that helped assure top-of-the line risk management program as well as a communication vehicle for the rest of the organization.
STRATEGIC SOURCING
Energy purchasing requires ongoing analysis and supply bids to ensure that we find the best suppliers for our clients.
For a large manufacturing company, the sourcing team was relying on a broker for all commodity research, analysis, and information as well as the execution of the supply contracts. As a result, the client was stuck in a perpetual extending of long-term contract cycle that saw minimal improvements year over year. However, the market dynamic would have allowed for much greater savings if coverage were extended more strategically.
Thankfully, our energy service caught the issue before another extension and implemented strategic, data-backed strategies that capitalized on favorable markets to lock in major savings.
FILLING THE GAPS
Our objective is to become a critical part of our clients’ commodity management teams. When there is a gap due to loss of an employee or lack of needed experience, Beeson & Associates, Inc. can step in and support the sourcing group.
One such engagement was with a casual dining concept with over $1 billion in sales. The company had been searching unsuccessfully for over six months to fill a commodity analyst position. In the interim, many of the purchasing staff were taken away from their regular roles to fill in on research and reporting, diluting their effectiveness and limiting availability for their primary role.
Our services provided a cost-efficient way to fill the research and analysis gap. Through weekly and monthly communications (on top of ad hoc research and support) the buyers are back to performing their critical functions. The purchasing team can stay abreast of the market by utilizing our information and regular communications provides a platform for the entire team to strategize and execute positions.