Yet, in the brutal world of merchandising, far too many elevators seem bent on cutting margins to nothing and taking on unnecessary risk, just to boost volume. In the CCC years, you could ride out rough spots in merchandising, and mistakes were seldom fatal to the business. Many firms became complacent in their general business practices, and left their doors and safes unlocked, so to speak. The thieves had plenty of targets. Pursuing volume while disregarding the costs and risks it can bear can be worse than handling no volume at all.
Good managers buy prudently.
Put a face on the risks To manage risks, you must first identify them. You could be the best basis or spread trader in the business and lose huge amounts from contract problems or mismanaged logistics. But mediocre basis traders can be successful and quite profitable long-term if they manage their contracts and logistics professionally. Managing logistics is every bit as important, but is less exciting to discuss than basis trading. Logistics and transportation are linked, but logistics focuses on the internal aspects of managing and planning the orderly and timely movement of commodities.