Advice to a meat integrator to improve margins.

The compound-feed purchasing department of a meat integrator is concerned about its margins: the team has always followed the same purchasing strategy for grains, protein meals, vegetable oils, and animal fats. But lately, it does not work very well. Agricultural commodity prices are increasingly volatile and more difficult to manage. How can the meat integrator increase its margins again?

1. Together with the purchasing department, we analyze the current supply system – quantities, purchasing time, pricing method, feed ingredient origins, price, risk management – to determine the reasons for the fall in margins.
2. We propose solutions: we offer the team the necessary tools to manage commodities prices and to better quantify their risk.
3. We design a new risk management strategy that enables the department to closely monitor the global and local markets. They learn how to break down prices, optimize the bases and futures component when applicable, and form a market opinion, including the possibility of using “price insurance” (futures and options). All this is accompanied by the training the team needs.
4. While the new strategy is being implemented, we evaluate the results to improve and modify actions if necessary.
5. Once the department is working efficiently and cost-effectively, we present the results of the new system along with options to keep supporting the team.

• The purchasing department of the meat integrator understands the reasons for the fall in margins.
• The purchasing team adopts a new and highly competitive strategy, with consistent margin increases.
• The team has the necessary tools and assistance to proceed with a continuous improvement process, adapting with agility to changes in the market.