Why value purchasing is the biggest lie of feed companies

In recent years, a saying has become popular among feed companies: profit depends on purchasing. If this saying were placed in the stock market, it could be translated as "I am a stock god," and of course it would obviously be laughed at.Why has a similar saying become popular in the feed industry?In the short term, it is entirely possible to purchase raw materials below the market price. However, over a longer period, such as one year or two years, unless you are God, the probability of purchasing raw materials below the market average price is close to zero.Some large companies can purchase such raw materials, not because they can "guess" accurately, but because they have scale advantages.Profit depends on purchasing?Then wouldn't every raw material supplier become the boss of feed selling?Then why should feed companies still produce feed? They might as well all switch to selling raw materials.It is true that raw material costs account for a large proportion of a company's total costs, but they are static (market conditions are equal for all companies), so their impact on company costs is actually small. On the contrary, dynamic factors such as sales volume, brand and service are the more important factors affecting costs among different companies. Feed companies should focus on the more important things.Profit depends on purchasing?For companies that take this as their creed, if they do not adjust their thinking, there is no need to say what their prospects will be: they will only be eliminated by the market.Value purchasing, the biggest lie of feed companies.Some companies may say that by value purchasing we do not mean predicting market trends, but improving the company's purchasing management capability and reducing warehousing and logistics costs.Other companies may say that by value purchasing we mean evaluating the comprehensive value of raw materials and then deciding which raw material to use according to market prices.The problem is that all of the above are part of purchasing work and their responsibility, so why drag out the big hat of value purchasing? Then should we also create new terms such as "value production," "value quality control" and "value marketing"? We should deeply disapprove of such behavior.When purchasing is done well, the company develops. When the company develops, purchasing is naturally done well.Different philosophies determine a company's realm and development prospects!
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Sharp! Feed companies need to make money through scale/quality/capital turnover.
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A very popular slogan, worth deep thought!
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Very incisive insight. Companies that do not believe it can compare the raw material market price curve with the average inventory price curve over 2 to 3 years to see whether there is a large difference. Improving turnover rate brings more profit than market trends.
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Very incisive insight, an expert is indeed an expert.
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The statement that improving turnover rate brings more profit than market trends makes a lot of sense!
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Hu Bian is becoming more and more professional, I never expected it, impressive
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Not being bound by rigid rules is the real hard truth!
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Capital turnover rate is the true essence of profit!
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Personal opinion: the definition of value purchasing must be clear. Does value purchasing mean only making profit through purchasing, or purchasing according to the value of various raw materials, purchasing after judging and comprehensively analyzing raw material prices? If it is the latter, then value purchasing is definitely not just a slogan to fool us. For example, many kinds of raw materials can be purchased, so when prices of different raw materials vary, which raw material you actually use, and of which quality standard, involves great knowledge. In fact, value purchasing places very high demands on people, and also very high demands on a company's ability to integrate and share internal information and knowledge. Companies that propose this concept may not necessarily be able to achieve it. If they do achieve it, it will be very useful to the company. In addition, it seems everyone is not very keen on raw material forecasting, and this depends on how it is measured. The purchasing curve of each of our companies should converge with the market price curve, but if we can see half a step ahead, perhaps there will be some pre-production profit. Just talking nonsense, don't blame me if I'm wrong.[ This post was last edited by acrobatcn at 2008-4-9 16:51 ]
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Raw material suppliers also have very good resources to become feed companies, but they lack management capability, marketing systems, market brands and talent teams. These are unfavorable and uncertain factors for them. Therefore, raw material suppliers will not necessarily become good feed companies. This seems similar to how Intel is unlikely to become a computer manufacturer like IBM and Lenovo. Different parts of the value chain, as the saying goes, specialize in different fields.
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Original post by acrobatcn Published at 2008-4-9 16:50 Personal opinion: the definition of value purchasing must be clear. Does value purchasing mean only making profit through purchasing, or purchasing according to the value of various raw materials, purchasing after judging and comprehensively analyzing raw material prices? If it is the latter, then value purchasing is definitely not just a slogan to fool us ...

Profit depends on purchasing: from this sentence its definition can be seen. Purchasing raw materials below market price, needless to conceal, is what the vast majority of companies have in mind. Is there anyone who seriously follows the latter definition? Perhaps there is, but that kind of company is also a confused company. "When prices of different raw materials vary, which raw material do you actually use?" This is the formulator's business; what does it have to do with purchasing? In an ideal state, a company's formula system should have an early warning mechanism: when the price of a certain raw material rises, there will automatically be a corresponding substitute raw material. If a company has such a system, it shows the boss has vision and the company has strong technical strength. If not, it may be that the will is there but the power is insufficient. But no matter what, purchasing only executes according to orders. If even basic functions cannot be clearly understood, then if there are companies that insist on the latter definition of value purchasing, one can only say they are too confused. As for "the purchasing curve of each of our companies should converge with the market price curve, but if we can see half a step ahead, perhaps there will be some pre-production profit." Do not think about it; that is only a beautiful wish. Apart from God, perhaps only the god of gambling has hope, yet there is no God, and there is no god of gambling. No company says that one of its core competitiveness factors is "accurate raw material forecasting."