CONTACT US

    Raw materials forecasting: set optimum purchasing strategies with Vedrai

    FacebookTwitterLinkedInWhatsAppEmail

    The price of raw materials is an increasingly important element to focus on when establishing your company’s purchasing strategy. Raw material prices continue to increase and the cost of energy is going up, in turn leading to surging production costs. As a result, the ability to make forecasts about raw materials and understand the best time to buy at the lowest price is crucial if you want to make savings.

    Forecasting the right time to purchase supplies in order to save on raw material costs is far from simple, above all in the period we’re living through: according to a report by Commodity Markets Outlook the World Bank, it will take at least five years before prices for energy, metals, fuel and food begin to fall once more.

    Companies setting their purchasing strategies can count on the support of Vedrai, which, thanks to Becky, its virtual purchasing manager, can make forecasts on raw materials and the best time to buy them. Our virtual agent supports companies’ purchasing managers by providing guidance on when prices will rise or fall, helping them to make decisions on procurement and reduce purchasing costs.

    How to use raw material forecasting to save on purchases

    Purchasing raw materials depends on many factors, both external and internal. On the one hand, there is the cost set by market prices, which can vary significantly in a short time on the basis of availability, demand and how easy the material is to source. On the other hand, in determining the best time to purchase, the company has to take into account not only prices, but also storage availability in its warehouses and whether the material deteriorates, as in the case of polymers.

    On the basis of the company’s requirements, and the type of raw material it needs for its production processes, it will develop a purchasing strategy. And this is where artificial intelligence comes in: by taking raw material prices into account, it can forecast cost estimates and procurement requirements, thereby achieving actual savings. Saving on raw materials means lowering one of the items that features in production costs and being able to provide your customers with a suitably priced product while maximising margins.

    Becky: features and benefits of the Vedrai solution

    Let’s look more closely at the features of our virtual agent, Becky, and how Vedrai’s purchasing manager can help your company. Becky can make forecasts on raw materials, using external data, such as the price of the main commodities and raw materials, as her starting point. Human managers ask: “when should we buy?” Becky responds by providing a forecast of price trends, indicating the day or the week when prices will be highest or lowest, over a period that ranges from daily and weekly market prices, up to prices 12 weeks from now.

    Vedrai is currently working on making Becky even more precise in relation to the price of raw materials: we’re training our virtual agent using machine learning techniques which also take internal company criteria into account, such as strategy and past procurement. This will make it possible to receive monthly forecasts of price trends, from three to six months out.

    Such forecasts are an important data point for developing a company’s long-term purchasing strategy: for example, on the basis of the virtual agent’s forecasts, you may decide to immediately fix a price with a supplier, or purchase a month later at a better price

    Choosing Becky means working with a virtual agent who supports human managers in procurement planning, an agent who will become a company resource, accurately advising you on the best purchasing strategy to achieve a significant saving and increase your company’s profits.