(37a) Raw Materials Price Forecasting at Dow Chemical

The Dow Chemical Company is a leading chemical manufacturer in the world. In order to meet customer demand with its diverse product portfolio, Dow spends billions of dollars annually on raw materials. Purchasing decisions can be complex as chemicals can be sourced from a variety of vendors as well as other internal Dow plants. In order to efficiently manage working capital for the business, a market driven forecast for chemical prices is required. This price outlook gives the strategic sourcing organization the information it needs to make better business decisions for the company. Dow has employed a variety of modeling techniques leveraging information from key market drivers to create accurate statistical price forecasts for more than 85% of its sourcing spend. In this talk, you’ll learn about the forecasting challenges for Dow, the data and statistical methods/tools used to implement the forecasts, and the value it’s delivering to the company.