Del Monte CPO Dave McLain gave Ariba LIVE Chicago attendees an in depth look at their commodity hedging operations yesterday. Frankly for many in the audience, it was likely an eye opening look at just how sophisticated some companies are at hedging against price volatility. Dave and his team are clearly ahead of many of their peers…if not, many commodity traders and speculators. As you can imagine, volatility can have a huge impact on Del Monte’s quarterly results. So their modeling of prices and risks, as well as the various “volatility management tools” they employ (forwards, cross-hedges, futures & swaps, etc) show how leading companies can insulate themselves from potential financial shocks.

But even with a top notch team of analysts working with sophisticated models and an arsenal of financial instruments, Del Monte doesn’t overestimate their ability to stay ahead of the markets. In fact, Dave said they “don’t try to find bottom of the trough. We try to buy in the bottom 1/3″.

At a time when companies are asking where the bottom is on commodity prices, it’s worth looking at how Del Monte does it. They don’t get greedy. They’re not going to miss a great time for sourcing simply to maybe squeeze out a bit more cost savings. Instead, they seem to know better (although Dave didn’t get into details of whether or not they learned the hard way) than to wait it out for too long while hoping for a lower price.

According to most category experts, including my colleague Pat Furey (who will cover the Top Categories to Source Now in a webinar on June 2nd), now is a tremendous time for sourcing and it won’t last forever. Don’t let it slip away waiting for a bottom…which may have already come and gone.

Justin Fogarty is Managing Editor of Supply Excellence. For any questions or feedback on the blog or its contributors, Justin can be reached at jfogarty[at]ariba.com.