As a professional buyer, keeping track of the global oil price is a critical part of your job. While oil may not be directly related to your procurement processes, it can have a significant impact on the prices of the goods and services you buy, as well as your organization’s overall budget. In this blog post, we’ll explore the benefits of keeping track of the global oil price and how it can help you become a more effective buyer.
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Anticipate changes in the price
First and foremost, keeping track of the global oil price can help you anticipate changes in the prices of the goods and services you buy. Oil prices have a ripple effect throughout the global economy, impacting everything from transportation costs to the cost of raw materials. By keeping an eye on the global oil price, you can anticipate changes in these costs and adjust your procurement strategy accordingly.
For example, if you notice that the global oil price is rising, you may want to consider stockpiling certain goods or negotiating longer-term contracts with your suppliers. This can help you lock in lower prices before they rise further, and ensure that your organization has the resources it needs to continue operating effectively.
Identify potential risks and opportunities
In addition, keeping track of the global oil price can also help you identify potential risks and opportunities in your procurement processes. For example, if you notice that the oil price is fluctuating wildly, you may want to consider diversifying your supplier base or exploring alternative sourcing strategies. This can help you mitigate risk and ensure that your organization is prepared for any potential disruptions in the market.
Furthermore, by keeping track of the global oil price, you can also become a more informed and effective negotiator. Oil prices can have a significant impact on the pricing strategies of your suppliers, and understanding how they are impacted by changes in the oil price can help you negotiate more effectively. You can use this information to leverage better prices, improve contract terms, and secure more favorable deals for your organization.
Finally, keeping track of the global oil price can help you become a more strategic and forward-thinking buyer. By understanding how the global economy is changing, and how it is likely to impact your organization, you can develop more effective procurement strategies that are aligned with your organization’s long-term goals. This can help you stay ahead of the competition and ensure that your organization is well-positioned for success.
Keeping an eye on other commodity prices
Keeping an eye on other commodity prices, such as copper and aluminum, can also be beneficial for professional buyers. Just like with oil, fluctuations in these commodity prices can impact the cost of the goods and services you purchase, as well as your organization’s overall budget. For example, if copper prices rise, this could impact the price of electronics or wiring that your organization purchases.
In addition, keeping an eye on global currencies is also important for professional buyers. Currencies like the USD, EUR, GBP, and JPY are all important global currencies that can impact the cost of your purchases. Changes in exchange rates can impact the cost of goods and services sourced from other countries, so it’s important to stay up to date on currency fluctuations.
Examples of sources commodity pricing and global pricing
Here are some examples of sources that professional buyers can visit daily to keep track of commodity pricing and global pricing:
Bloomberg: Bloomberg is a well-known business news outlet that provides up-to-date information on a range of topics, including commodity prices and global currency rates.
Reuters: Reuters is another reputable business news outlet that provides news and data on a range of topics, including commodity prices and global currency rates.
Investing.com: Investing.com is a website that provides real-time data on global markets, including commodity prices, currency rates, and stock prices.
World Bank: The World Bank provides a range of economic data and research, including information on commodity prices and global currencies.
Commodity Exchange: Commodity exchanges like the London Metal Exchange or the Chicago Mercantile Exchange provide real-time pricing data for commodities like copper, aluminum, and other metals.
Navigate the expansive universe of market indexes with Prognos. With countless indexes available, selecting the ones that best represent your unique needs can be challenging. Selected Indexes simplify this process, helping you find, understand, and choose indexes relevant to your supplier base. We know how to select and use available indexes to give you the upper hand in your negotiations.
Enhancing respect in negotiation situations
Being well-informed is a critical factor in enhancing respect in negotiation situations. When entering into a negotiation, it’s important to have a deep understanding of the topic at hand, as well as the broader market and industry trends. This level of knowledge and expertise not only allows you to confidently articulate your position and defend your interests, but also demonstrates your competence and professionalism to the other party.
By showing that you have done your homework and are well-prepared, you can earn the respect and trust of the other party in the negotiation. They will see you as a credible and knowledgeable partner, rather than someone who is just trying to push their agenda.
Additionally, being well-informed allows you to be more flexible and creative in your negotiation strategies. You can identify alternative solutions or propose compromises that are mutually beneficial, based on your deep knowledge of the market and industry trends. This can help foster a more collaborative and productive negotiation process, leading to better outcomes for both parties.
Conclusion keeping track of the global oil price
Overall, keeping an eye on commodity prices and global currencies can help professional buyers make more informed purchasing decisions. By understanding how these factors impact the prices of the goods and services they purchase, buyers can anticipate changes and develop more effective procurement strategies. It’s important to stay informed about the market and keep an eye on a variety of factors that can impact procurement, not just oil prices.
Creating a morning routine of checking and reading business news, including commodities and currencies, is a great idea for professional buyers. Staying up-to-date on market trends and developments is an important part of being a successful buyer, and establishing a routine can help ensure that you stay informed on a regular basis.
Learn more about Indexes in the course Should Cost Analysis. Should Cost analysis is a cost estimation technique used by procurement professionals to determine what a product should cost to manufacture and price development over time.
Note: Illustration to blogpost “Keeping track of the global oil price” was created by Chat GPT on Sept 8, 2024.
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