Empowering Smarter Procurement with Commodity Price Forecasting

Solution Price Forecasting Tool
Solution Price Forecasting Tool
Industry CPG
Region US
Technology Microsoft Azure
Context
In today’s volatile global markets, CPG enterprises face constant pressure from unpredictable swings in commodity prices for raw materials such as grains, oils, dairy, and packaging. These fluctuations can severely impact margins, disrupt production planning, and force reactive pricing decisions that erode competitiveness. The challenge is further amplified by factors such as geopolitical uncertainties, climate variability, supply chain disruptions, and shifting consumer demand, making it difficult for traditional forecasting methods to keep pace.  It is, hence, crucial for enterprises to adopt advanced commodity price forecasting to anticipate market shifts with greater accuracy. This enables procurement teams to negotiate better contracts, finance teams to manage risks proactively, and supply chain planners to align sourcing strategies. By moving from reactive to predictive decision-making, businesses can safeguard profitability, stabilize operations, and turn commodity volatility into a strategic advantage. 
Problem Statement

The client, a leading CPG manufacturer in the food and beverages industry, faced persistent challenges in forecasting prices for key raw materials such as corn, wheat, and oils. Although an internal forecasting model existed, it consistently failed to capture price volatility accurately. This resulted in missed opportunities to procure commodities at optimal price points, higher procurement costs, and budget overruns. Vendor negotiations were also weakened due to unreliable forecasts—ultimately inflating the cost of goods and impacting profitability. 

Impact

  • Reduced raw material procurement costs by up to 5% 
  • Aligned expenditures closer to planned targets, lowering budget overruns by 30% 
  • Enhanced volatility capture decreased missed procurement opportunities by ~25%, enabling more purchases at favorable prices 

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