Commodity Study Guidelines by 0I7T01


									                    Commodity Study Guidelines

The Commodity Study will serve as a comprehensive data source for which
you will use to develop your Global Sourcing Strategy. It should consider
the below listed elements as well as other items that might be critical based
on the specific commodity.

   1. Current and future status. Include a description of the commodity, its current
      usage and forecast of future requirements, suppliers, price, terms, annual
      expenditures, mode of transportation and storage considerations.
   2. Production process. Include how the item is made or grown, the materials or
      process used, the supply/price status of the materials required, the labor required,
      the current and future labor situation, alternative produce processes and the
      possibility of making the item (make vs buy) including costs, time factor, and
      production problems or risks.
   3. Uses of the item. Include primary use(s), secondary use(s), possible substitutes,
      and the economics of substitution.
   4. Demand. Include current and future projected requirements, inventory status,
      sources of forecast information and lead times, and competing demand – current
      and projected – by industry, by end product use and by individual companies.
   5. Supply. Include current producers – location, reliability, quality, labor situation,
      capacity, distribution channels, and strengths and weaknesses of each supplier
      (SWAT Analysis); total aggregate supply situation, current and projected; and
      external factors – import issues, governmental regulations, technological change
      forecast, and political and ecological trends/problems.
   6. Price. Includes economic structure of producing industry, price history and future
      forecast, factors determining price, cost to produce and deliver, tariff and import
      regulations, effects of quality and business cycle changes on price, estimated
      profit margins of each supplier, price objectives of suppliers, potential rock-
      bottom price, and price variance among user industries. Consider factors that
      could impact price such as supply & demand or industry consolidation.
   7. Strategy. A high level general strategy on key considerations in sourcing this
      specific commodity should be included. Primarily cost reductions/management
      efforts and continuity of supply techniques. Other strategies can be included that
      address areas of risk uncovered in the commodity study. Make Vs Buy,
      Outsourcing, Off Shoring can all be items to consider in your strategy section.
   8. Appendix. Include general information such as specifications, quality
      requirements and methods, freight rates and transportation costs, storage and
      handling, raw materials reserves and statistics, for example, price, production and
      purchasing trends. Please note that all data in the appendix should support
      statements in the body of the commodity study and be referenced as such.
      Supporting charts, graphs and diagrams which are referenced back to the original
      source data.

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