Buyers manage raw material prices per mouse click

Inverto integrates raw material indices of KI, MEPS and vwd group into its raw material cost calculator

In discussions with suppliers, buyers now have a clearer overview of the latest developments on the raw material markets. Sourcing consultant Inverto has expanded its raw material cost calculator to provide direct access to additional raw material indices. “By adding indices from suppliers KI, vwd group and MEPS, we have expanded our information base to include raw material data for industry and plastics, while the MEPS index adds information on steel,” explains Ina Fliegner, Manager of Software Services at Inverto. Buyers can choose from a range of indices, with the raw material cost calculator being customized to include the raw materials that a company needs. The sourcing software module e-contor enables procurement managers to identify immediately how raw material prices affect the total price of a product. What’s more, when suppliers up their prices quoting spiralling raw material costs, it is also easier to judge whether their claims are valid or not. “One of a buyer’s main tasks is to keep a close eye on market developments. Experience shows that raw material prices have a significant impact on a company’s operating result,” says Sebastian Mayer, head of the Inverto Excellence Centre for Industrial Raw Materials. Buyers can try out the process of integrating indices into the raw material cost calculator for themselves at the e_procure & supply trade fair on 28 and 29 April in Nuremberg.

Actively managing raw material costs unlocks potential savings in the sourcing department in the long term and reduces a company’s dependency on market fluctuations. This requires access to up-to-date, reliable market data on raw materials. In sourcing discussions, raw material indices often serve as the basis for negotiation. Sourcing consultant Inverto has now expanded its raw material cost calculator to enable direct access to additional indices. KI - Kunststoff Information, the specialist information service for the plastics industry, supplies pricing data on raw materials relating to plastics. Inverto obtains comprehensive price information on listed raw materials, such as non-ferrous metals, from the vwd group, while MEPS in the UK primarily covers raw materials for the steel industry. Buyers can choose to integrate all the key indices they need for their company into their version of the raw material cost calculator. Inverto provides support in the selection of relevant raw material indices.

Decision-making data from a single source
“Buyers benefit from the fact that they have access to all the latest market information and the software support they need to successfully manage their raw material costs – all from a single source,” explains Fliegner. “This tool provides a clear overview at any time of changes in raw material prices that could have an impact on sourcing decisions. Rather than simply collecting data, the cost calculator also interprets and applies it immediately.”

This form of index integration is one step up from the web-based raw material cost calculator. This module of the e-contor sourcing software enables procurement managers to access the latest raw material prices at the touch of a button and provides information on how these prices will impact on their particular product. Simulation calculations highlight different scenarios for the overall product price, depending on how the raw material prices develop. The raw material cost calculator helps buyers with price negotiations, strategic decisions on the product portfolio and the planning of tendering processes.

Raw material indices integrated into the entire sourcing process
Via the raw material cost calculator, the indices are integrated into the e-contor sourcing suite, which maps the entire sourcing process and simplifies the company’s strategic sourcing activities. This ensures that the information from the raw material indices is linked to all the interfaces in the sourcing process. This software is an invaluable asset for procurement managers in the capital goods industry and commercial buyers.