• Procurement can negotiate savings via scale leverage, discounts, tough discussions, etc. on raw commodity component of total cost.
• However, raw commodity optimization/productivity initiative is currently reported within the inflation line. 

• Can we bucket shift savings out of raw commodity inflation to Productivity?
• When savings are not achieved and costs get higher; do we leave in Raw Commodity?
• How does the market price fluctuation play into it?

• Historically, this would be captured in Raw Commodity (outside of Productivity), however, compression of rates/prices should be carved out. 

Raw Commodity cost reduction can be counted as P&L Productivity if we can determine a sound baseline, tease out the market traded rate and demonstrate that there is a YoY rate reduction. 

Governance:

• Isolate any market driven price fluctuation driving the costs down as it cannot be recorded as Productivity. 
• Fit, form, function and specifications of the raw commodity should be same as PY. 
• Eliminate any changes due to currency or exchange rates. Use constant currency rates. 
• Only recognize productivity for controllable improvements, such as negotiation or sourcing savings (better supplier terms)
• Document assumptions and reference data sources (e.g., price indices, volume reports). Align with finance to ensure consistent measurement across categories and markets.