In an ever-changing world that is shaped by global political, environmental, social and technological changes, being aware of how these changes affect your business can feel extremely daunting. Keeping on top of your day-to-day role and responsibilities at work may seem a never-ending task, and then, on top of this, ensuring your business is getting optimal value for money through the products and services that it procures, may not be at the top of your “to do” list.
The world today is exposed to major shifts, be that through environmental degradation fuelled by climate change, or by geopolitical conflicts sending shock waves throughout the world. These events often feel distant to your organisation, especially since the majority of the audience that this article will reach is living in a relatively sheltered and stable society. However, these events can have a significant impact on our society at a scale far beyond just localised impact.
At Insider Pro we are constantly exposed to examples where global dynamics are having an impact on specific sectors. To demonstrate this, we will examine the paper commodity prices and the implications that this has had on the paper packaging sector. To set the scene, this article is being written in early 2024, amidst a war between Russia and Ukraine and a few years after the Coronavirus pandemic. Paper is a commodity, trees have to be cut down, or items have to be recycled to produce the end product.
The very nature of this commodity means that it is exposed to impacts from the following:
Whilst not exhaustive, the aspects highlighted above give a flavour of just how many key elements drive a final commodity price, so understanding how each of these aspects impacts on a commodity price is something that we empower our clients to understand. Continuing with the example of paper pricing, we believe that a holistic understanding of the market and subsequent commodity prices is something that should be a common area of discussion between a packaging supplier and their customers. This could be through a contract term that tracks commodity prices, or just through general discussions aimed at understanding the likely direction of travel in any upcoming price reviews.