In today’s increasingly globalized and liberalized markets, traditional values like stability and predictability have gradually been phased out. Food and agricultural markets have always been affected by unpredictable weather. Due to global interdependency of food supply chains, food raw material prices have become as volatile as ever. In October 2017, to mention but one example, the EU butter market price dropped 30% within one month.
In companies, the new normal of price volatility should not lead to resignation. Volatility should rather be seen as opportunity—the opportunity to outperform competition by better predictive analytics of future raw material market prices. Erik Elgersma details how a global food company uses multiple sources of monthly actualized data and smart algorithms to predict future commodity prices, describing the journey of discovery to develop a data-based dairy product forecasting model that predicts prices up to nine months forward and the steps taken to implement the model’s outputs in the company’s commercial policies.
Erik Elgersma is director of strategic analysis at FrieslandCampina, one of the world’s largest dairy companies, where he has led the company’s strategic analysis practice for 18 years. Previously, Erik held positions in corporate strategy, business development, and innovation management at FrieslandCampina. He speaks and lectures frequently on the topics of strategic analysis, data management, data science, and competitive intelligence to clients including the Royal Dutch Association of Information Professionals, the US Navy’s Center for Naval Analysis, Cimi.Con, the Institute for Competitive Intelligence, IAFIE-Europe, and Brunel University, London.
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