Have you ever hedged your bets?

22 September 2008

Rebecca Ellinor By Rebecca Ellinor

With all that’s going on in the money markets, now might not seem like the best time to get into using complex financial instruments. But for some commodity buyers, the better question is perhaps: can you afford not to?

In the latest issue of Supply Management we speak to companies hedging fuel, energy and metals to examine the pros and cons of this approach. They warn it’s essential to focus on the task in hand – offsetting risk by securing better prices – and not to get sucked into the tantalising prospect of full-blown speculating.

And as well as actively trying to combat rising prices, this method seems to have had another spin-off for purchasing teams: it’s got the attention of the boss and requires procurement to be involved in top level meetings on a regular basis.

As costs continue to increase, would you now consider employing this approach? Have you played the markets and won or lost?

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