Business Problem
A global FMCG organization hadimplemented price risk management strategies that were largely subjective andnot fully grounded in data-driven methods. This resulted in inconsistentpricing decisions, suboptimal timing of buys and sells, and limited controlover commodity volumes.
Actions Taken
· Adopted a systematic, rule-based,data-driven approach grounded in the mean reversion principle.
· Developed multiple pricing and riskstrategies using different permutations of business rules.
· Evaluated strategies against both marketbenchmarks and internal performance criteria.
· Established disciplined execution rules toreduce subjective intervention.
Outcomes Achieved
· Achieved consistent and more accuratepricing decisions.
· Improved timing of commodity purchases andsales.
· Enhanced volume control across commodities.
· Identified potential savings of up to half a Billion USD through disciplined,rules-based price risk management.
