Issue: Concern over pricing policy and hedging strategy

Hypothesis – Performing Weekly or Fortnightly review of pricing would provide favourable pricing
and hedging against risk for the company. Medium- and long-term hedging strategies, such as
locking in raw material-to-product spreads where differentials are favourably wider than when
budgeted or forecasted

Evaluation of hypothesis –

The shift from monthly/quarterly review of pricing to Weekly/Fortnightly review of pricing has
shown improved results in the stainless-steel industry in following parameters by companies that are
have adopted them,

1. Better control over the pricing

2. Better mitigation the risk related to pricing

Such innovative pricing allows the customers to capture value. This restructuring of the price review
system has also been quite feasible for the major industry players.

Hence, there is enough data to accept this hypothesis.

Therefore, we can say that performing Weekly or Fortnightly review of pricing would provide
favourable pricing and hedging against risk for the company along with proper medium and long
term hedging strategies.

Issue: Sales Team Order book Position

Hypothesis – Striking long term deals will result in a stable order book and increasing the share of
loyal customers

Evaluation of hypothesis –

In 2016, Government initiatives like Smart Cities development and demand forecast in the Emerging
Sectors market shows an opportunity for the sales team to better their Order book position for the
upcoming period.

The industry data shows that having long-term contracts is essential in a volatile market to have a
stable starting order book position. The major players are looking more after such contracts to have
a stable demand.

The long-term deals will reduce the strain on sequencing issues of manufacturing department,
inventory planning of PPC and Sourcing team and will help in creating viable hedging strategies for
Finance team.

Hence, there is enough data to accept this hypothesis.

Best case scenario: Striking deals with construction companies responsible for smart city building
and few other long term contracts.

Output: Reduction of sequencing issues of manufacturing department, inventory planning challenges

of PPC and Sourcing team, Increases our cash position and thus improving sales and supply chain
efficiency

Worst case scenario: Sales team not able to convert any such long term deals

Output: Supply chain difficulties remain

Issue: Optimal strategy needed for avoiding raw material price risk

Hypothesis – Take into account Availability & Prices for Weighted Average to arrive at hedging
strategy

Evaluation of hypothesis – All types of risks involved with the procurement of raw materials have to
be taken into account for doing the hedging strategy.

Weighted Average of all Price, Quality and Availability risks will accommodate majority of the risks in
the procurement process. This helps in mitigating the risks

Index-based trading policy can be introduced in the organization to mitigate counter-party

performance risk. Indices enable end-users to hedge their forward procurement costs and also
provide domestic steel mills an effective means of managing their exposure to export markets

Hence, there is enough data to accept this hypothesis.

Best case scenario: The finance team adopts the new strategy for hedging and implements it
efficiently throughout the organization

Output: Price risks associated with the raw materials will reduce

Worst case scenario: The finance team fails to adopt the new strategy for hedging or integrate it
with the existing one or fails in implementation

Output: Price risks associated with the raw materials remain

Issue: Overdraw credit limits; Trucks unavailability; Receivables increase; Customer Management
Hypothesis – Contract Management and Holistic approach to supply chain

Evaluation of hypothesis – Improved contract management and holistic approach to the supply chain
will result in decreasing receivables, increase payable days, thus reducing the overdrawing of credit
limits

Keeping the suppliers and customers in the loop by sharing data with them will promote the
relationship and help in them understanding our risks and in the end take some part in the risk
ownership. Automation wherever possible and periodic reviews and communication will help gaining
the trust of suppliers.

Long contracts and better contracts with trucks vendors so that there are trucks available when the
demand peaks at end of the month, thus reducing the need to deal with spot market.

Providing discounts for faster repayment will promote customers to pay sooner, thus reducing our
receivable days, which in turn will help in our cash flow and balance.

Customer Experience Management for improving customer experience will result in reduction of
complaints and increase in loyal customer base.

Hence, there is enough data to accept this hypothesis.

Best case scenario: Contract Management methods are implemented by the personnel and all
suppliers and customers are on board with the same.

Output: Reduction of receivables days, result in better cash flow, improved customer management,
reduction in quality diversion complaints, reduction in sourcing risks, availability of trucks.

Worst case scenario: No supplier or customer is on board

Output: Effort and time of personnel wasted

Issue: Streamline inbound process needed - Logistics and Sourcing challenges

Hypothesis – Range Forecasting and Supplier Capacity Management tools and Transportation
Management System will reduce the challenges faced by logistics and sourcing team and streamline
the inbound process

Evaluation of hypothesis –

In market driven demand environment, Range forecasting provides better control than pinpoint
accuracy. A range of potential outcomes based on prior sales and considerate actions to the high and
low demand side can be used to range forecast our demand for sourcing and procurement.

Mapping out multiple scenarios will help the supply chain to be ready and responsive to the changes
in the demand during the month and helps logistics in better inventory planning.
Supplier Capacity Management tools can provide an effective power management system to ensure
that you have the required power providers necessary supplier capacity at a part-level to meet the
changing predictions of demand.

Transportation Management System helps in establishing standards, parameters, and consistency

across our vendors and carriers.

Hence, there is enough data to accept this hypothesis.

Best case scenario: Sourcing team able to range forecast demands well and the supplier capacity
management tools are integrated into the supply chain efficiently.

Output: Logistics and sourcing challenges are reduced, supplier relationships are improved and help
in providing a responsive supply chain

Worst case scenario: Sourcing team unable to range forecast demands and the supplier capacity
management tools are not able to be integrated into the supply chain efficiently

Output: Costs increase for implementing the tool and efforts by the departments wasted