Buy lower. Stay on budget.
Input prices can change by the day. Vadar Alpha helps procurement decide when to buy each input, how much, from which supplier and on what contract, checked against today's market and your buying policy.
Many teams buy the same way each month: the same share of what they need, on the same day, on the same contract. Prices do not follow that routine. When a lower price is on offer, for later delivery or from another supplier, the chance is often missed, and the savings that were never made are rarely tracked.
Orders often go out on the same day each month, for the same share and on the same contract, whatever prices are doing.
The futures market shows what an input will cost in the months ahead. Buyers rarely see those prices in time to use them.
Purchase price variance shows up at month end, after the money is spent.
Each day, Vadar Alpha compares today's price, the price for later delivery and your contract terms. When it pays to buy early, or to wait, procurement gets an instruction: how much to buy, what it saves in dollars, and the price at which it stops paying.
| Budget | Without | With Vadar Alpha | Policy range (low) | Policy range (high) | |
|---|---|---|---|---|---|
| Jan | 100 | 100 | 100 | 97 | 103 |
| Feb | 100 | 103 | 101 | 97 | 103 |
| Mar | 100 | 106 | 102 | 97 | 103 |
| Apr | 100 | 104 | 101 | 97 | 103 |
| May | 100 | 101 | 99 | 97 | 103 |
| Jun | 100 | 98 | 97 | 97 | 103 |
| Jul | 100 | 102 | 98 | 97 | 103 |
| Aug | 100 | 107 | 101 | 97 | 103 |
| Sep | 100 | 109 | 102 | 97 | 103 |
| Oct | 100 | 105 | 100 | 97 | 103 |
| Nov | 100 | 102 | 99 | 97 | 103 |
| Dec | 100 | 104 | 99 | 97 | 103 |
We read your open orders, supplier contracts and stock from the systems you already use.
Each input gets today's price and its price for each month ahead. Each purchase gets a target price and an amount.
Procurement gets each instruction. We track the result and score it against your buying policy.
| Step | Input spend against budget, $M per year |
|---|---|
| Budget spend | $40.00M |
| Buy ahead timing | −$0.86M |
| Volume split | −$0.42M |
| Contract terms | −$0.18M |
| Market moves | +$0.34M |
| Year end spend | $38.88M |
Each saving is tied to the instruction that produced it and measured against your buying policy, as agreed with finance. When the market moves against a purchase, you see that too, in the same view.
Commodity procurement is buying the inputs you need at the lowest cost the market allows, without running short. Most procurement analytics explains last month. These five ideas turn it into the next decision.
Purchase price variance (PPV) is the actual price paid minus the standard or budget price, multiplied by the quantity bought. A positive result means you paid more than planned. For example, buying 10,000 pounds at $2.10 against a $2.00 standard gives a $1,000 unfavorable variance. Vadar Alpha calculates it for each purchase as it is made, against your buying policy.
Many companies buy on a fixed schedule, so the price they pay is the price on the day the calendar picks. Vadar Alpha compares spot prices and forward curves every day, and recommends buying ahead when the forward price is low, or waiting when the market is falling.
Buying all of a quarter's need at once concentrates risk on one price. Buying in fixed shares ignores the market. Vadar Alpha splits each purchase into volumes and dates, inside the limits of your buying policy and your storage.
Purchase price variance compares what you paid with a reference price. Measured at month end, it explains the past. Vadar Alpha measures it for each decision as it is made, so procurement sees the result of each buy, not only the monthly total.
Buying ahead lowers the price but raises inventory and the cash tied up in it. Vadar Alpha prices the cost of holding stock into each recommendation, so a buy ahead is only made when it clears that cost.
Every decision arrives as a plain instruction, with the dollars at stake, the reason, and the point at which it stops paying.
Measured asIt is the price you paid for an input minus a planned price, such as your budget or standard cost, times the amount you bought. Buy 10,000 pounds at $2.10 against a $2.00 standard, and you paid $1,000 more than planned. Vadar Alpha measures this for each purchase as it is made, so you can see what each decision saved or cost.
A forward curve lists today's price for delivery in each future month. When those prices are below today's price, buying ahead can lock in a lower cost. Vadar Alpha reads the curve for each input, splits each purchase into amounts and dates, and shows procurement when buying ahead pays.
It can. Buying early can lower the price, but you hold more stock and more cash is tied up in it. Vadar Alpha counts the cost of holding that stock, within your storage limits, and recommends buying early when the saving is bigger than that cost.
No. Vadar Alpha works with your current suppliers and contracts. It reads your purchases and contract terms from the systems you already use.
A 30 minute conversation to see where your margin leaks and whether we can help.
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