Heraeus_GB15_Magazin_EN_RZ_29_04_lowRes - BELIEVING IN THE IDEA

I t’s really quite simple: “When products are sold at a fixed price in the market, manufacturers want to purchase their upstream products at a fixed price as well,”says Florian Richardt. “That’s the only way for them to predict their production costs and thus also the cost-effectiveness of the product.” Florian Richardt is head of Precious Metal Solutions at Heraeus. His colleague Bikash Agarwal describes what they do: “Our job is to make sure that when customers need precious metals, they come to Heraeus – and no one else.” In 2013, automotive supplier Continental, which pur- chases a variety of products from Heraeus business units, expressed a desire to purchase those products at a fixed price. Its motivation was obvious, since precious metal prices are extremely volatile. The price of silver, for example, fluctuated by more than 40 percent in 2013 – a nightmare for industry calculations. As a rule, Heraeus passes on price differences to its customers. As a result, a product’s final price fluctuates with the price of precious metals in the commodity markets. Understandably, Heraeus’ cus- tomers would like to find a solution to this challenge. A team seeks a solution Heraeus had received many such requests in the past but had been unable to accommodate them, given the volatil- ity of the markets. Florian Richardt decided to look more closely into the issue. “We met with sales colleagues from three Heraeus business units and a customer. What came out of that meeting was Flexible Forward.” It was quickly apparent how the basic mechanism should work – like a forward, with a fixed price and a fixed quantity to be pur- chased. But fine-tuning this approach required cooperation among Precious Metal Trading, Heraeus’ production units and the customer. With Flexible Forward, the hedging of the precious metal price is linked to the product, and the customer has complete flexibility in taking delivery of the agreed quantities of the product within a period defined by the contract. In other words, the service provided to Even when an idea is good and benefits all concerned, it’s a long road to success in the market. Florian Richardt and Bikash Agarwal describe how their innovative pricing model, Flexible Forward, breaks down old ways of thinking and outdated organizational structures. 17 HERAEUS | MAGAZINE 2015 | FOSTERING COLLABORATION

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