These issues point to a clear fact: tracking market dynamics for spend categories and their sub-commodities will become an increasingly critical capability for supply management organizations.

Supply management leaders are developing hedging strategies to protect against or mute cost increases. This practice has been common among large aerospace and automotive companies for years, particularly for commodities that have high price and supply volatility, such as steel, plastics, and rubber. In fact, Tom Stundza, Executive Editor (and metals market guru) at Purchasing Magazine, has done a great job reporting on metal hedging practices in use by supply management organizations.

However, these practices are proving to be an antidote to global supply market uncertainty. For example, food giant Sara Lee has hired former pork traders onto its supply management squad in order to monitor and hedge pricing and supply for pork products, which are a key input for many Sara Lee products.

If prices continue to increase and availability stays tight (as ISM members expect), supply management organizations would be wise to add some day traders to the payroll.

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