Essay --

Currently in international market and domestic market, there are two types of the purchasing methods purchaser uses. One method for the buying the products from the market is â€Å"spot market buying† and the second method of buying the products is with â€Å"future contract†. The on the spot method is also called â€Å"cash market† or â€Å"physical market†, where the products, currencies or commodities sold for cash and delivers the products immediately or within short period of time. For example, â€Å"oil, grains, silver, beef, sugar, natural gas, milk, and gold are done through the spot market, where the prices are the set by open market and the transfer of cash and goods takes place immediately†, and deliver as requested date in the future or within short period of time. The spot market is an instantaneous exchange for the current list or spot price for a particular commodity. With the integration of internet technology, the spot market has be come even more efficient and useful especially in the energy industry. If energy companies have large surpluses of energy, the internet can give them a chance to find buyers in current need almost immediately. Though the spot market is good for company I need â€Å"right now†, its drawback is the fluctuating prices that can cause chaos when calculating the logistics over the long term. There are several pros and cons of on spot buying, such as; it conducts the market research and supplier identification quickly in new market. Also, it provides easy access for lower value purchases. Moreover, it improves the sourcing productivity; as well as alleviates the capacity issues that enhance the productivity of plant and category buyers. Also, it provides easy platform ability for market tests across geographies Though apro... ...vent of the futures contract negotiated by Calpine, it did not fulfill the need for sodium hypochlorite, which implementing the spot market as a way to assure the efficiency of operations that would be the decision most logically made. If Calpine’s buyers or sellers know that they will be buying certain chemical in future, and selling certain number of products or energy, then they should consider taking a long term future contract for purchasing, and short tern future contract for selling the products which hedge its positions in market. So, operations ramp up, more energy needs to be supplied for the increased demand that was not accounted for in the purchase of the particular chemical Calpine ordered. Supply of the chemical dwindles and it up to the men and women at Calpine to search the spot market to find a company with a surplus looking to sell â€Å"on the spot.†