Keeping up with your commodities

Commodities are the heart of any thriving supply chain. Products don’t simply appear out of nowhere, after all. As a result, interruptions to commodity sourcing and transport can be difficult to recover from quickly, especially if your company or your supplier is caught by surprise.  

It’s important to understand where your commodities come from so you can avoid costly delays, disruptions, and avoid brand damaging sustainability issues. Tracking raw materials from the source may seem time consuming and confusing, especially considering some commodities are produced half a world away and through complex and obscured supply chains. However, monitoring your key commodities will help your organization stay compliant to new and existing regulations, allow your supply chain managers to plan and make decisions effectively, and even gain first-mover advantages.  

Today’s tools make it easier than ever to track raw materials across the world, so make sure you’re setting your organization up for supply chain success.  

What is commodities monitoring?

Commodities, or raw materials, are the basic building blocks of any product. They are key to production, and therefore present major risks to a business if their normal supply chains are disrupted. Monitoring the commodities that are central to your business’s product operation should be a significant part of your overall supply chain management strategy. 

To effectively monitor the state of your commodities’ supply chain, your business should focus on the sources and quality of your raw materials. These insights will give your company early detection abilities in the case of unexpected disruptions, such as inclement weather or an evolving geopolitical situation. Additionally, tracking your commodity inventory levels will give your company early awareness of any potential critical gaps in available capacity.  

Why monitoring commodities is important

Monitoring commodities isn’t just important, it’s critical. Imagine trying to make your products without the materials that make them up – how long would your business last without access to those components? Customers will not put up with delays, and if it happens they will also want to know that you can confidently predict when a delay due to materials shortage will be resolved. Especially now that technology to do so is available.  

It is getting more and more vital that your supply chain management team is monitoring your raw materials. You can’t prepare for a problem that you have no awareness of, most companies need 5 days to react to a disruption, which is way too late. Monitoring commodities means that you’ll understand emerging situations, as well as incidents, so you can quickly put an alternative plan into action.  

Finally, raw materials monitoring can help you keep compliant to various global regulations, such as CSDDD, the EU’s Deforestation Regulation or Canada’s Modern Slavery Act. These two regulations are good examples of recent legislations that are requiring a high level of knowledge and evidence of the origins of specific raw materials to ensure sustainable sourcing. 

Next Steps

Take stock of your company’s raw material needs. Do you have a full understanding of where they come from, how they’re transported, and any inherent risks involved in the process of sourcing and transforming a commodity? Make sure your business has a full end-to-end view of your supply chain, starting right from the beginning of a commodity’s lifecycle.  

Then, implement strategic tools to help you track the commodity. Monitoring your key commodities is too complicated and data-rich to do manually. But, with AI-powered analytics that automatically access and score data streams from multiple sources, supply chain management teams can easily understand new and ongoing risks and adjust commodity sourcing accordingly. Everstream’s Commodity Risk insights, for example, provide curated insights and real-time incident alerts, ensuring that your company is one of the first to know about any emerging risks.  

Figure 1 – Incident monitoring within the EA Platform on select commodities 

Finally, use what you learn to improve in the future. If your company’s key commodity is vulnerable to an ongoing risk, make sure you have alternative plans in your back pocket. The earlier you prepare solutions, such as building relationships with other suppliers or build influence deeper down the chain, the smoother the transition will be in the face of a major disruption. 

In conclusion, if your company doesn’t already monitor commodities closely, it’s time to get down to the details. Understanding where your raw materials are sourced and the potential risks to your products as a result is key to keeping your supply chain running smoothly. Early awareness of risks and incidents can go a long way to minimizing disruptions. Plus, it’ll help you with both regulators and consumers, who are increasingly demanding heightened scrutiny into sustainability practices. And, with AI-powered analytics at your fingertips, full supply chain visualization is only a few clicks away, providing you with powerful, actionable insights.