How can we dig value from database and intelligence?
Three points comes into my mind. There are three principles for predicted analysis by which the team could have higher possibility to capture the future and make the right decision for value creation or stoping losing.
The first principle is “Let go of cost saving and stop losses in time”.
We need to win more when we are right, but most importantly we need to stop as quickly as possible when deviations from reality occur. If you ask me the purchasing of Glyphosate at beginning of 2021, I would say go ahead as quick as you can. By the end of 2021, there were still strong demand from overseas. But if you ask me the purchasing suggestion of Glyphosate in Q3 2021, I would say “stop”.
Actually I emphasis my explanations of future trend for Agribusiness Global very extensively. Because the contract between ABG and I, we cooperate to help global buyers to monitor the “almost perfect” competition burn down herbicides. Glyphosate and Glufosinate are very unique. The sales of Glyphosate and Glufosinate are related to the seed program down to the farmers’ application. Everyone in agribusiness pays attention to them. And it is easy for buyers to distinguish if my team can make the right conclusion or not. Till now, I am very proud that our team’s analysis is still ahead at least three months of such two AIs’ price trend.
Frankly speaking, pesticide procurement in China has been a bit of a gamble in recent years. Each of us purchasers as well as sellers must place a bet at some point in time. Demand and supply are in a constant gaming, with suppliers betting on resources and purchasers betting on timing. Since both glyphosate and glufosinate have strong producers overseas, like Bayer and BASF. So, the two products have commonalities in their strategic supply circumstance. This was also the reason why I chose to publish these two active ingredient for openness analysis, which could save my time and energy.
Two outcomes after betting comes into my mind. One is a consistent win. And the other is to lose the game. Winning consistently is a way to win, and stopping looses in time is also a way to win when we execute the purchasing strategy. However, the most crucial difference between the two kinds of “win”, is that the decision to win consistently is easy to make, while the decision to stop the loose in time has resistance. Just like a gambler who loses his chips, he always wants to pawn something of value and go back to the game to win back what he lost. For individuals, this way of thinking is a disaster, which will ruin your life. And for the business, this inertia of continuous betting will put that financial balance sheet under constant pressure. It's hard for someone within the team to stand up and object, suggest in front of the procurement team to "stop it now!” .
As an independent third-party analyst team, I really like to think independently and use critical thinking to question the decisions that most people thinks are "right". I used to work in the marketing department of Bayer China. And I am still proud that I was in a team meeting opposing the license-in of a Chinese company’s products, through my analysis. Because they were misrepresenting sales and had quality issues with their WG products. I still maintain to this day that even ordinary people in large companies can object to certain leaders' decisions in the interest of the company. From my professional experience, I can also conclude that what is the criteria for evaluating a good team? That is whether there is someone within the team who is brave enough to express a different opinion from the leader. And leaders are broad-minded enough to accept such internal dissidents.
The 2nd principle is “Continuous & quick adjustment of point of views”.
With so much uncertainty of the world, teams need to maintain a high level of sensitivity to changes in the environment. We need the team to be able to trace the hidden reasons when facing subtle market changes, and assess whether the impact of such hidden factors on environmental changes is disruptive. On the other hand, the team needs to remove environmental “noise” and be determined enough to remove events that are not enough to affect the state of equilibrium.
Thus, predicted analysis is an ongoing process of evaluating variables. It is worth pointing out here that the analyst's focus cannot be limited to just one active ingredient integrated by the upstream and downstream changing. The analyst should consider the whole society and geopolitics in the context of the general economic cycle, social development, national policies, industrial policies, practitioners' mentality, and market competition on the demand side. Key indicators that can guide decision making should be selected, quantified, and evaluated regularly. Based on the relationship between variables and results, they can support the creation of analytical thinking models. Of course, what I personally believe most critically is that the analytics team needs to have the ability to gain insight into the sales behavior of suppliers and the sourcing strategies of buyers. In my past experience, what has benefited me most is that my team is market-minded. Compared to a typical analytics team, we can use the real-world thinking of a multinational marketing team to sandbox possible focused results. We then summarize the intervals of possible variations based on the possible outcomes to find the optimal solution.
The third principle is to focus on inflection points.
There are two key aspects in the inflection point, one is the “cycle theory” and the other is the “tipping point”. the cycle theory is more clear before the COVID19. In the context of the global demand for food and protein, global agricultural development, especially in South America, has been rapid. But after COVID19 hit global, the cycle was broken by the supply chain disruption. It took time for the new balance to be constructed, and thus a reconfiguration of supply occurred across the agrochemical industry. Coupled with geopolitical influences, a second supply option other than China was bound to happen. All these factors have an anchoring effect on the new cycle. The new cycle is a long process of gentle change. Like a pendulum, the emergence of one extreme will inevitably lead to another extreme with it. Clearly, many big event could be the tipping point, such as China's double control policy in September 2021, Federal Reserve interest rate hikes in 2022, and the sudden reduction in freight costs recently, etc.. For tipping points, what needs to be done is to analyze the cause-and-effect relationship, assess the drivers, challenges and opportunities, and the subsequent impact on the industry. However, specific issues require specific analysis of the cause and effect relationships.
By the way, before the tipping point, we most often see signs of risk before it comes. As an analyst, you need to be the risk whistle blower. Risk point may also be potential tipping piont, but they are more likely to have a local impact on the supply of a niche productt. It may not be enough to affect the big picture, but it is enough to cause significant fluctuations in the cost of purchasing the portfolio. This is also worthy of close attention by sourcing team.
Some friends of the industry thought that my team is just focusing on Glyphosate and Glufosinate because we are always updating Glyphosate and Glufosinate market on Agribusiness Global. But it is not true. I hope my explanation could let all of friends to know what my team is doing for the crop protection industry.
To be honest, analysis of Glyphosate and Glufosinate just showed our capability. With the vision and confidence to be the leading predicted analysis team with future insights in China, we have to scout and monitor more than 100 AIs in China market. It helps our partner to dig the value from China's agrochemical price trend database and our intelligence. And our analysis can also guide them to monitor the market competition for the right decision-making. It looks like a "training course" to integrate competitive advantages from Chinese manufacturers into the procurement team. And my goal is to become the coach for our partners’ team.
Sounds great?