Capturing the value in key chemical components
Introducing dynamic pricing to an Asian chemicals company.
Our client, an Asian chemicals company with a global distribution network, was looking to optimize its commercial strategy by introducing dynamic pricing.
They needed a systematic procurement strategy for one of their key chemical components, acetic acid. Additionally, sub-optimal pricing of the end product, acetic anhydride, meant they were leaving money on the table.
Optimizing procurement and commercial strategies for the long-term
Applying sophisticated forecasting models to the acetic acid market.
Our team started by identifying the key price drivers of acetic acid and understanding the current pricing framework used for acetic anhydride. From this, we developed a sophisticated forecasting model to estimate the prices of acetic acid. To ensure it was robust and reliable, the team tested for correlation and causation across over 25 variables.
Once fully tested, the model was ready for application. By leveraging the forecast model, we helped our client to improve their procurement and commercial strategy. Additionally, our solution enabled a review and update of their acetic anhydride pricing to ensure they were capturing the full market potential. This included optimizing for spot and contract volume allocations.
Getting the model right was just one part of the challenge.
We worked with our client to roll out the new model and strategic changes, ensuring they were embedded within the organization.
The use of the model delivered a 3.6% return on sale for our client, with the optimized strategy expected to add a 0.8% boost to ROS.