James Ray, Senior Consultant at ICIS, will deliver today’s keynote address. We often hear the term “working smarter”. But how do we translate this into actions that can improve the bottom line?

Understanding the market price drivers, and how to leverage them, is the first step to working smarter. Granted, we cannot control the market, but we can understand it better, predict it and be prepared.

The biggest cost driver for most producers is raw materials. Yet it typically has the smallest supporting budget and is managed by a small percentage of our human resources. We hire marketing specialists, efficiency and technical experts to improve our processes and save fractions of a penny per unit, but we could invest more to reduce our biggest cost, especially as supply and demand on many products are changing.

When oil prices increase and drive up raw materials, it is difficult to negotiate such increases away, unless you are over paying. But when new capacity comes on line, shifting the supply and demand balance from a sellers’ market to a buyers’ market, we see the greatest opportunity to reduce our cost and increase our sales prices/margins when there is a shift to a sellers’ market.

When we reduce our raw material cost, we improve our bottom line and our competitive position in the market, enabling us to increase sales and revenue. This creates a snowball effect to grow our business and profits. This is working smarter.