Navigating the Crude Oil Conundrum: SpendEdge's Strategic Guidance

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Sep 25, 2023, 00:00 ET

NEW YORK, Sept. 25, 2023 /PRNewswire/ -- A leading North American manufacturer of packaging solutions, faced a conundrum of unprecedented proportions. A stalwart in the industry, this client supported a diverse clientele across North America, with products spanning the spectrum from aerospace and automotive components to protective packaging materials. However, their reliance on crude-oil derived raw materials, such as ethylene and propylene, posed a substantial challenge. Prices of critical inputs like polyethylene and polypropylene had surged to all-time highs, and ongoing issues in the oil and gas supply chain sent shockwaves of uncertainty.

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Client Details: Our client's operations spanned over 50 production facilities, serving a multitude of industries. Their extensive portfolio included shrink wraps, stretch films, and protective packaging fabricated from polyvinyl chloride (PVC), polyethylene (PE), and polyolefin (POF). However, their dependence on oil and gas-derived raw materials called for a strategic reassessment in the face of mounting challenges.

Challenges: The client encountered a series of formidable challenges:

Supply Chain Vulnerability: With critical input materials originating from Russia and Ukraine, geopolitical conflicts and sanctions loomed as potential roadblocks. The shrinking supply from these regions compounded the client's supply chain concerns.
Price Volatility: Skyrocketing prices of essential raw materials, driven by oil and gas market dynamics, threatened profitability and competitiveness.
Backlogged Orders: An ever-growing backlog of customer orders underscored the urgency of finding a sustainable solution.
Single Sourcing Risks: The client's age-old single sourcing strategy, while previously effective, now appeared vulnerable to supply disruptions, price inflations, and production delays.

Solutions: SpendEdge's team of experts swiftly swung into action, delivering a comprehensive study that shaped the client's strategic pivot:

Crucial Market Insights: Our experts embarked on a deep dive into the global crude oil market, spanning the years 2022-2028. This study encompassed a spectrum of oil and gas sector activities, historical price movements, supply-demand dynamics, product markets, refining operations, and downstream impacts on raw material prices.
Rigorous Analysis: Leveraging our extensive dataset and market knowledge, we provided the client with actionable recommendations and insights into navigating the tumultuous crude oil landscape.
Dual Sourcing Strategy: Armed with our insights, the client is now actively pursuing a dual sourcing strategy in the near-to-mid term. This strategic pivot aims to mitigate risks while upholding product quality and consistency.

Results: Our engagement has borne significant results:

Risk Mitigation: The client is poised to reduce exposure to supply chain vulnerabilities, safeguarding against unforeseen geopolitical disruptions.
Cost Optimization: A dual sourcing strategy will provide the client with price stability and competitive resilience.
Enhanced Supply Chain Resilience: With a more diversified supplier base, the client is better positioned to withstand challenges and ensure consistent product delivery.

To learn more about SpendEdge's transformative solutions and how we can elevate your procurement strategies, click here.

About SpendEdge: SpendEdge is a global leader in procurement and supply chain consulting. Renowned for our unwavering commitment to data-driven decision-making, we empower organizations to navigate complex market challenges.

SOURCE SpendEdge