A large global wholesaler came to us when they suspected they were spending more on commodity purchasing than they needed to.
Our client was a long-established wholesaler working in a relatively low-tech and low-margin industry.
Buying was done at multi-day auctions across the country several times a year, with both spot (purchase at today’s price) and forward (where a commitment to buy in the future at a price agreed on the day) purchasing options available to our client.
Our client’s finance director said, "We wanted to know, what is the best time of year, best day of a multi-day auction and the best time of day to purchase to achieve the lowest price.
"Having answers to these questions would enhance our competitiveness by giving us the ability to offer lower prices to our customers. It would also enhance the profitability on each trade we did."
Like many of our clients, the wholesaler possessed large quantities of data, but as auction records were held in 90 different spreadsheets the company was unable to make use of them to get the clear and definitive answers they wanted.
What we did
We conducted competitor analysis using publicly available information published by the auctioneers to establish who our client’s main competitors were in terms of lot size and quality grade of material bought.
We then completed price analysis, again using publicly available information from the auctioneers, and powerful processing technology from SAS to identify key pricing trends over a three-year period. Our calculations took into account not just the price paid at auction, but the varying costs of transport and processing which depended on the auction location and the grade of the product purchased.
Dave Laycock, Head of Data Practice for Alscient, said, “By analysing purchase prices in greater detail than our client had been able to do before, we identified potential annual cost savings amounting to several hundreds of thousands of pounds. That is money our client can use for growth and investment, or as a higher return for shareholders. “
SAS is an ideal technology for analysing large quantities of historical data to identify trends. It can enable the skilled data analysts at Alscient to find quick answers to long-standing business challenges.
Our client’s financial director said, “My team of buyers now have dashboards and reports that make the decision as to when and where to buy quite simple. Every few months, Alscient append the data from the most recent auction within a matter of days of the auction closing. Our intelligence stays up to date and grows even more powerful as longer-term trend analysis becomes possible.
“It is easier for me to produce annual budgets and easier for us as a business to set pricing strategies that optimise profitability.
“We are now discussing further use of the SAS consultancy service with Alscient, as we see this as a service and a technology that can benefit other areas of our business.”
Improved financial planning
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