Understanding global exchange rates is essential for today's businesses in times of turbulent global economics, say procurement consultants Efficio.
In its latest Viewpoint article Efficio says companies have a lot to gain by examining their currency strategy when sourcing goods and services from abroad.
In the introduction to the Viewpoint, titled Exchange and deliver: The benefits of effective currency strategy, Efficio Principal Julian Catchick says: "It's no longer enough to know where you can buy goods and services at the best price. To achieve the most cost-effective deals procurement leaders must know about currency movements too."
There are broadly two approaches to currency risk, says Catchick. A company can pay in its own domestic currency or that of the supplier.
But within these two approaches there are several options including agreeing with the supplier to fix an exchange rate, hedging currencies by forward buying or agreeing a minimum and maximum range within a "collar".
Buyers can also consider a "macro hedging" policy by consolidating foreign currency requirements across several planned projects and buying the required currencies in bulk, thus securing better exchange rates.
Efficio stresses, however, that an effective currency exchange strategy is a two-way process and the supplier must be "fully signed up to the deal", otherwise they may attempt to rebalance the relationship by introducing hidden costs or reducing quality or service levels.
The Viewpoint concludes: "Remember too that the supplier has almost certainly had experience of such strategies and may be able to discuss which will be mutually most effective in a given procurement operation."
Notes to editors
Exchange and deliver: The benefits of effective currency strategy can be downloaded from: http://www.efficioconsulting.com/_uploads/documents/view-poi...
Efficio is a results-focused procurement consultancy with a track record of helping leading organisations achieve more value from their procurement. It is headquartered in London, UK, and also has offices in France, Germany, Switzerland and the US.
Comprised of experienced professionals with a blue-chip consultancy heritage, Efficio combines the credentials of a top tier firm with the depth of expertise of a flexible niche player. Clients include 3i, AstraZeneca, Barclays, BAT, Biffa, Deutsche Post, Ford, Goldman Sachs, HBOS, KKR, Nokia, National Grid, O2, Philips and Thames Water.
For more information please contact:
Georgina Golding, Marketing Manager, Efficio, on:
+44 20 7550 5681 or firstname.lastname@example.org
For further information on Efficio please see: www.efficioconsulting.com
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