Commodity Price Risks: Strategies to Increase Supply Chain Resilience

Abstract

The uncertainty of the future development of commodity prices is one of the main risk sources in manufacturing. Although these so-called commodity price risks are mentioned frequently in general supply chain risk research, there is very little research that focuses on them. This article is about the mitigation of these risks. It provides, based on the current research state, a comprehensive overview of strategies to increase supply chain resilience to commodity price risks. They range from well-known measures, like warehousing, forward contracting, and financial hedging, to some less frequently described, like contract diversification, price formulas, and recycling. In total 17 strategies, from the departments of procurement and finance, but also from production and sales side, were found and are described and compared to each other in this article. Thus, managing commodity price risks efficiently seems to be a cross-functional task that requires in-depth knowledge and information from all across the supply chain.