Procurement Risk
Procurement is an essential activity
at Symrise. In its daily business, the Company deals with a complex and
very large portfolio of raw materials of both natural and petrochemical
origin. On the one hand, it seeks quality and reliability; on the
other, it seeks low prices. This constellation involves several risks,
which are described in more detail below.
Unexpected increases in energy and petrochemical commodities prices that could negatively impact the costs of goods are mitigated by means of dynamic and intelligent sourcing strategies.
Market or weather conditions may result in highly volatile prices for some important raw materials. These can also have a negative impact on their quality and/or their availability. Aside from negotiating long-term global contracts and having alternative suppliers whenever feasible, Symrise is continuously working to extend its international supplier base, including supplies from Asian markets.
At the same time, stricter legislation requirements may endanger the sustainability of some vendors and narrow Symrise’s list of raw material suppliers, forcing changes in sourcing activities and negatively impacting the costs of goods.
In particular cases, on top of actively monitoring the best sourcing opportunities, Symrise takes advantage of its expert knowledge to develop technical solutions, on its own or in cooperation with key suppliers, to find answers to the newest challenges in line with the company’s interest for health.
To manage availability and resulting price increase issues, whenever possible, we pass along those costs to the customers or work with the research and development team to find more cost-effective substitutes.
Moreover, for key raw materials, we have completed acquisitions that guarantee access to our own sources.
Nevertheless, it is also important to indicate that, overall and due to the broad raw material portfolio, procurement risks in our business are rather leveraged.