Commodity price volatility and its inherent risk to profitability, costs, and availability is a supply chain challenge—and opportunity. Almost all businesses are exposed at some level to the financial risk stemming from commodity price volatility. Risk exposure may come from changes in direct materials prices, for example, wheat for a flour producer, aluminum for an automotive parts supplier, or plastic for a packaging producer. Indirect purchases such as utilities and transportation create price risk for many types of organizations including services. The greatest risk may be from purchases made by companies several tiers upstream in a supply chain, increasing the risk management challenge.
The commodity price risk management challenge ...
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