Procurement - EBS (MOSC)

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Steel manufacturer procurement case - buying raw materials at unknown prices

edited Sep 10, 2012 11:10PM in Procurement - EBS (MOSC) 1 commentAnswered
Dear experts

I have a customer requirement that is supposed to be pretty common in this industry so I was wondering if somebody encountered (and hopefully solved) it before.


The case:
The customer occupies a niche producing some specific steel products like electrical steel, carbon steel etc.
The main production process inputs that are bought are (stainless) steel scrap and various alloyed metals. The industry norm when buying these materials is not to have a negotiated price but instead to agree on a formula that will be used to calculate the final price.

The formula can look something like this:

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