Reducing Material usage to compensate for rising commodity prices

An article in the Financial Times (Page 11, Dec8,2010) discusses the impact of commodity price increases – prices of cotton, copper, agricultural inputs.  It summarizes several options – forward buying of commodities, reducing costs by changing formulations, changing processes, substituting inputs, and price increases.   The examples include Unilever using lemon peel in their mayonnaise formulations to reduce oil required and thus reducing their carbon footprint.  Apparel retailers talk about increased use of viscose in shirts or reducing pack size for cereal manufacturers.  Yet other companies claim that injecting more fashion flair may enable an increase in prices. The danger is that this price inflation may hurt demand – and that would be painful during a downturn.  Have you seen such changes already ? Which of these are being considered in your company ? Will this pressure spur manufacturing innovation ?

 

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About aviyer2010

Professor
This entry was posted in Global Contexts, Supply Chain Issues, Sustainability and tagged . Bookmark the permalink.

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