Why Price Forecasting in Important for Soybean Oil Manufacturers?
Global soybean oil production has grown by nearly two-thirds over the past decade. The increasing adoption and high market potential for high oleic soybean oil is a key growth driver for the soybean oil market. Moreover, the growing awareness among consumers regarding the soybean oil benefits in comparison to other vegetable edible oils has also driven the industry demand significantly. However, despite the strong growth in the industry, certain factors including the insufficient production and storage capacities, managing transportation and logistics process, and price fluctuations are increasing pressure on the soybean oil manufacturers.
The changes in demand and supply dynamics of the global soybean oil market have led to frequent changes in soybean oil prices. This has also created upward pressure on soybean oil manufacturers in adopting price forecasting strategies. Therefore, it is essential for manufacturers to develop a strong foundation in price forecasting, as it helps deliver breakthrough value and elevates the role of procurement by offering detailed insights into the price variations in the market.
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Price Forecasting Analysis for Analyzing the Future Trends and Price Variations for a Soybean Oil Manufacturer
The client is a renowned soybean oil manufacturer and exporter to more than 40 destinations across the world. The company specializes in operations ranging from oil palm cultivation, oilseeds crushing, oleochemicals, specialty fats to grains processing and merchandising.
The Business Challenge
With the rapid price fluctuations in the market due to supply and demand issues, the soybean oil manufacturers were finding it difficult to respond quickly to pricing trends. This resulted in revenue losses for the company. Thus, the client approached SpendEdge to leverage a price forecasting engagement.
Other challenges faced by the company included:
Problem Statement 1
With price forecasting engagement, the soybean oil manufacturer wanted to enhance their category expertise and intelligence across all critical areas of the supply network.
Problem Statement 2
The soybean oil manufacturer wanted to build a price forecasting model to lower inventory costs, improve cash turnover cycles, and respond quickly to pricing trends.
Problem Statement 3
The soybean oil manufacturers wanted to understand the overall price change influence on their sales volume and comply with the dynamic soybean oil industry trends.
Fluctuation prices of commodities can eat away profit margins slowly. Request for a FREE demo to leverage our price forecasting engagement and gain detailed prediction of the short and long-term prices of various commodities in your market.
To help the manufacturer tackle challenges and help them in achieving their business goal, SpendEdge adopted a comprehensive price forecasting methodology.
The initial revolved around the development of a key list of commodities important for the soybean oil manufacturers and collection of data based on their pricing history.
The second step revolved around the development of an appropriate price forecasting model to predict commodity costs. The developed price forecasting model enabled the client to improve business productivity by leveraging the use of valid predictions to enhance pricing decisions.
The devised price forecasting strategy proposed a detailed price prediction of various commodities and helped in establishing control points within the business to track financial performance
Moreover, with the aid of price forecasting model, the manufacturer was able to enhance their procurement efficiency. The developed price forecasting model enabled the client to improve business productivity by leveraging the use of valid predictions to enhance pricing decisions. Altogether, the price forecasting also enabled the client to gain detailed insights into the different categories within the supply network and helped in establishing control points within the business to track financial performance.
Why Price Forecasting?
Price forecasting deals with the collection and analysis of the demand and supply information in real-time. Implementing price forecasting solutions helps businesses to focus on pricing strategies to drive organizational value. Also, since procurement deals with prices for diverse categories, it is, therefore, essential for an organization to devise robust pricing strategies.
Commodity price fluctuation can have immense impacts on large and small businesses. It can make it extremely difficult to set prices to products as well as predict profits or losses going forward. Do you agree? If yes, don’t delay. Contact us today to leverage our price forecasting engagement!