Commodity Insights

2022-2024 Case Study

Overview

Leading a team of 15 engineers, UX designers, and researchers, I created the vision, strategy, business use case, and 3-year roadmap for a commodity tool that simplified commodity data for merchants and sourcing managers. By creating a centralized database for 700+ benchmark commodity indexes from multiple 3rd party data vendors and leveraging GenAI to surface personalized commodity insights, our users successfully initiated $xxM cost decreases on their item assortment. For this work, I received the “Made-A-Difference” Award in 2023. After presenting to the CFO, CMO, and CTO for additional funding and resourcing, this work is now being leveraged to create an enterprise-level platform experience for all business units with a potential cost savings of $xB.

Merchant of the Past

Merchants and their sourcing managers lacked an efficient way to evaluate the impact of the commodity markets on their item assortment leading to $xxM increase to COGS.

Meet Tim.

Tim is a merchant with ~4.5 years of merchandising experience. His is very busy managing the health and lifecycle of the items in his assortment with the goal of providing the best items and experiences for the members. Tim knows commodities have a significant impact on his COGS but lacks the knowledge and tools to leverage the markets consistently.

Goals

provide the best items with the best cost to the members
maintain strong relationship with suppliers
maintain favorable P&L

Frustrations

suppliers constantly pushing cost increases (never decreases)
limited knowledge of relevant commodity indexes for his items
no consistent tool to identify commodity opportunities

"The biggest challenge is knowing and connecting the commodities listed on [commodity platforms] to what is actually being used as raw materials."

-merchant

Merchants, like Tim, were spending valuable time searching for commodity insights and may have been missing cost decrease opportunities due to the lack of a robust tool.

Unbalanced Cost Changes

Suppliers constantly reached out to merchants for cost increases when the markets were rising, but never offered cost decreases when the markets dipped.

Fragmented Experience

Merchants were forced to scour over 100,000+ commodity indexes across multiple 3rd party data platforms to identify a commodity index of interest.

Item Data Gaps

Cost component data for items was not always available, and when it was, mapping a commodity index to item components required extensive supplier & commodity knowledge.

Path Forward

With the support of my UX designer and researcher, we conducted 20 user interviews, analyzed 7 competitor platforms, initiated a 120 participant survey, completed a buy vs. build analysis, and facilitated a design thinking workshop. The results led to the vision, strategy, and desired outcomes below.

Vision

Merchants have easy access to comprehensive commodity data with personalized and proactive insights.

Strategy

centralize benchmark indexes for 3rd party data providers
create consistent display for data
pair commodity index to cost components

Simplify

Automate

surface cost lowering opportunities to merchants
integrate into existing ecosystem to create E2E experience

Desired Outcomes

increase merchant-initiated cost decreases
reduce impact of supplier requests for cost increases
build better relationships with suppliers

Merchant of the Future

Given the vision, strategy, and desired outcomes, I created a 3-year roadmap for the commodity insight product from MVP to full automation with a KPI of $ saved per commodity negotiation. Within the first year, we saw $36M cost savings. One example is detailed below.

Trigger

Merchant recognized decreases aluminum prices from the commodity insight tool.

Negotiate

Using data from tool, merchant negotiated the cost of steam pans based on the decreasing commodity markets.

Cost Savings

Merchant successfully initiated an annualized $11M cost decrease and was able to pass the savings to the members.

Next Steps

We presented our results to the CFO, CTO and CMO, and as a result, our work expanded into an enterprise platform initiative. We conducted a design thinking workshop to align on the vision and strategy for a single solution across three business units for an estimated cost savings of $xB.

Consistent Components

Central Database

Downstream Products

Insights

Data Contracts

Item Data

Indexes

What I Learned

From this project, I learned the following:

implementing GenAI to generate insights
managing 3rd party stakeholder relationships
leveraging enterprise relationships