Leveraging the Power of Strategic iQ’s Planning Factory for Commodity Price Indexing

Introduction: In the ever-evolving landscape of the manufacturing industry, financial teams face the constant challenge of navigating through complex variables that impact the bottom line – one of these important variables is the cost of commodities.  

In this blog, we’ll delve into why financial teams in the manufacturing sector should consider adopting OneStream and SiQ’s Planning Factory to help them automate and improve the management of commodity price indexing.

The Manufacturing Financial Challenge: Manufacturing companies operate in an environment where commodity prices can fluctuate significantly, affecting production costs and profit margins. Financial teams struggle with the task of staying ahead of these fluctuations, making strategic decisions that safeguard the financial health of their organization.

In addition, some companies can update their pricing based on increases in commodity cost fluctuations and pass the increase onto their customers. The speed at which these customers-to-product commodity cost increases can be executed varies across industries and individual customer agreements. But the clear challenge for most manufacturers is that the process of keeping their pricing current with the commodity cost index can often be delayed by a quarter or more, and maintaining a clear documentation trail supporting the price adjustment can be difficult to maintain and manage.

Enter Strategic iQ’s Planning Factory: Strategic iQ’s Planning Factory, built on OneStream’s Platform, emerges as a comprehensive financial planning solution tailored for the unique challenges of the manufacturing sector. This sophisticated tool empowers financial teams with the ability to navigate commodity price volatility with confidence.

Key Features of Strategic iQ’s Planning Factory:

1. Comprehensive Integrated Business Planning:

This solution offers a holistic approach that unifies Sales & Operational Planning (S&OP) with Business and Financial Planning. What this means for manufacturers is that they have the opportunity to manage their business with a single point of view on Demand Planning, Supply Planning, Capacity, and Financial Forecasting.

2. “Customer-to-Part” Price Management:

Strategic iQ’s Planning Factory allows you to update Pricing and Price Adjustments by Customer down to Part or SKU. These can be documented and tracked over time or even updated with a future date. This allows finance teams to understand, down to a Gross Margin level, their profitability by Customer by Part.

3. Scenario Modeling:

Empower your team with the ability to define and analyze numerous demand models quickly. Our customers can update multiple forecasts in minutes, and they can take advantage of a comprehensive approach to business driver-based forecasting. This creates opportunities to ensure agile updates to plans, pricing and costs, giving you a clear picture of potential profitability.

4. Commodity Price Indexing:

This solution allows your sales and operational teams to make Commodity Price Index-based adjustments every month with full, auditable documentation and controls.

Why Managing your Product Profitability via Commodity Price Indexing Matters:

1. Risk Mitigation:

Manufacturing companies are exposed to various risks associated with commodity price fluctuations. With the ability to update prices in alignment to index commodity increases, your sales and financial teams can proactively mitigate these risks.

2. Cost Accuracy:

Ensure accurate cost projections by incorporating the latest commodity prices into financial models. This precision is crucial for maintaining healthy profit margins in a competitive market.

3. Strategic Decision-Making:

Equip your team with the tools needed to make informed and strategic decisions based on the most up-to-date market conditions. Whether it’s adjusting production volumes or renegotiating supplier contracts, having a pulse on commodity prices is a strategic advantage.

Partnering with Strategic iQ: Strategic iQ’s Planning Factory is the first industry-specific solution for manufacturing on OneStream’s PartnerPlace. As a pre-built solution, based on decades of experience implementing financial reporting and forecasting solutions for manufacturers, Strategic iQ’s Planning Factory provides a user-friendly interface, sophisticated business logic, automated variance analysis dashboards and robust data integration to ensure seamless alignment with existing financial workflows.

Conclusion: In the dynamic landscape of the manufacturing industry, financial teams need more than just a conventional financial planning tool. Strategic iQ’s Planning Factory, backed by the power of OneStream’s Platform, offers a comprehensive solution that unifies Demand Planning, Supply Planning, Capacity, and Financial Forecasting. With the ability to quickly accommodate commodity price fluctuations, finance teams can elevate their financial planning capabilities and embrace a future where profitability decision-making is improved. Explore the possibilities with Strategic iQ – where innovation meets financial excellence.