Sourcing & Procurement: The role of weather and climate change in commodity hedging strategies
For many companies, understanding and effectively hedging commodity prices make the difference between profit and loss -- or in extreme cases the firm's very survival. Many interdependent factors affect commodity prices: among them are demand/business cycle, supply constraints, regulation/political factors, speculation/investment market factors and exchange rates. I have long touted the advantages of a multi-discipline hedging strategy team with expertise in sourcing and commodity management, engineering, treasury, product management and economic analysis. Now you should add weather and climate change to that list.
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