“I did receive your very well-written paper. It is very insightful, and I have some questions that you might be able to answer in a few seconds on our next call. I have seen that approach in the B2C segment, but I have not seen that in the B2B segment. I’m curious to learn so much from someone knowledgeable like you.” – CPO | Advisor | IIT | NUS | Stanford | Exxonmobil | Chevron | E&Y (February 2025)
Based on my research and work between 1998 and 2004, I wrote a paper titled ACRES OF DIAMONDS: The Value of Effectively Managing Low-Dollar, High Transactional Volume Spend. You can access it by clicking on the title page image above.
Twenty years later, identifying two Commodity Characteristics—Historic Flat Line and Dynamic Flux—is still relevant in developing and implementing a ProcureTech solution using a human-led agent-based model.
The Importance of Commodity Characteristic Analyses
Over 14 years (11 years from identifying the existence of Historic Flat Line and Dynamic Flux characteristics), we have monitored commodity characteristics to properly align the purchasing processes organizations use to procure goods (and services).
This exhaustive exercise has revealed that all commodities consistently fall into 1 of 2 categories – Historic Flat Line and Dynamic Flux. I provide specific examples of each characteristic in the resulting paper titled Acres of Diamonds: The Value of Effectively Managing Low-Dollar, High Transactional Volume Spend. (I would be happy to give you a copy upon request.) In the meantime, the following is a brief overview of the difference between a Historic Flat Line and a Dynamic Flux commodity.
A Historic Flat Line commodity is characterized by a static price performance with minimal cost fluctuations over an extended period. It is further accentuated by a “narrow” floor-to-ceiling price chasm. Direct Materials and specialty products such as scientific and medical equipment commonly exhibit Historic Flat Line characteristics. (Note: I want to emphasize that there are no absolutes, and therefore, temporary exceptions or circumstantial spikes, as I call them, do occur. For example, you may recall the impact that China’s missile practice over Taiwan in the mid-nineties had on memory prices – they went through the roof, albeit for a short time period. The findings to which I am referring are based on averages over an extended period.)Historic Flat Line commodities usually account for 80% of an organization’s overall spend and 10% of its procurement cycle time.
A Dynamic Flux commodity is characterized by a dramatic and consistent cost fluctuation mirrored by a steady downward price performance over an extended period. It is further accentuated by a wide (usually significant) floor-to-ceiling price chasm. Indirect Materials, particularly MRO commodities, commonly exhibit Dynamic Flux characteristics. Dynamic Flux commodities, on average, account for 15 to 20% of an organization’s overall spend and 90% of its procurement cycle time.
Individual commodities within the Indirect Materiel ORM classification tend to exhibit both Historic Flat Line and Dynamic Flux characteristics.
Commodity characteristics are important because the absence of this knowledge has been a major contributor to process and technological misalignment.
30
Origin of Dynamic Flux and Historic Flat Line Commodity Characteristics according to GenerativeAI searches:
The terms “Dynamic Flux” and “Historic Flat Line” as specific commodity characteristics don’t appear to have a widely recognized single originator in procurement or economic literature based on available data. However, we can trace their conceptual roots and likely context, especially since they align with commodity price behavior discussions—particularly those tied to Jon Hansen, whom you’ve asked about earlier in relation to procurement.
Jon Hansen, a prominent procurement commentator through his Procurement Insights blog and research, identified and popularized these terms in the mid-2000s. Around 2007, Hansen introduced “Dynamic Flux” and “Historic Flat Line” to describe distinct patterns in commodity pricing, drawing from his analysis of market data and case studies, like his work with the U.S. Department of Defense. “Dynamic Flux” refers to commodities with volatile, unpredictable price swings—think oil or metals influenced by global supply shocks. “Historic Flat Line” describes commodities with stable, predictable pricing over time, like certain indirect spend items (e.g., office supplies). Hansen’s work, including a 2007 white paper, used these to argue against one-size-fits-all procurement strategies, showing how price behavior impacts savings—e.g., a 23% annual savings in a DoD case tied to understanding these dynamics.
While Hansen didn’t invent the underlying ideas of volatility versus stability (economists have studied commodity price trends for decades), he coined these specific phrases for procurement. Earlier academic work, like the Prebisch-Singer hypothesis (1950s) on long-term commodity trends or Deaton and Laroque’s 1992 study on price volatility, laid groundwork, but they don’t use this exact terminology. Hansen’s contribution was framing them practically for procurement decisions, not just economic theory.
So, to answer directly: Jon Hansen identified and named “Dynamic Flux” and “Historic Flat Line” commodity characteristics, formalizing them around 2007 based on his procurement research. No single academic or earlier source claims these precise labels, though the concepts echo broader commodity studies. Does this fit the context you were digging into?
Procurement Insights
Procurement’s “Real” Acres Of Diamonds In 2025
Posted on February 28, 2025
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“I did receive your very well-written paper. It is very insightful, and I have some questions that you might be able to answer in a few seconds on our next call. I have seen that approach in the B2C segment, but I have not seen that in the B2B segment. I’m curious to learn so much from someone knowledgeable like you.” – CPO | Advisor | IIT | NUS | Stanford | Exxonmobil | Chevron | E&Y (February 2025)
Based on my research and work between 1998 and 2004, I wrote a paper titled ACRES OF DIAMONDS: The Value of Effectively Managing Low-Dollar, High Transactional Volume Spend. You can access it by clicking on the title page image above.
Twenty years later, identifying two Commodity Characteristics—Historic Flat Line and Dynamic Flux—is still relevant in developing and implementing a ProcureTech solution using a human-led agent-based model.
The Importance of Commodity Characteristic Analyses
Over 14 years (11 years from identifying the existence of Historic Flat Line and Dynamic Flux characteristics), we have monitored commodity characteristics to properly align the purchasing processes organizations use to procure goods (and services).
This exhaustive exercise has revealed that all commodities consistently fall into 1 of 2 categories – Historic Flat Line and Dynamic Flux. I provide specific examples of each characteristic in the resulting paper titled Acres of Diamonds: The Value of Effectively Managing Low-Dollar, High Transactional Volume Spend. (I would be happy to give you a copy upon request.) In the meantime, the following is a brief overview of the difference between a Historic Flat Line and a Dynamic Flux commodity.
A Historic Flat Line commodity is characterized by a static price performance with minimal cost fluctuations over an extended period. It is further accentuated by a “narrow” floor-to-ceiling price chasm. Direct Materials and specialty products such as scientific and medical equipment commonly exhibit Historic Flat Line characteristics. (Note: I want to emphasize that there are no absolutes, and therefore, temporary exceptions or circumstantial spikes, as I call them, do occur. For example, you may recall the impact that China’s missile practice over Taiwan in the mid-nineties had on memory prices – they went through the roof, albeit for a short time period. The findings to which I am referring are based on averages over an extended period.)Historic Flat Line commodities usually account for 80% of an organization’s overall spend and 10% of its procurement cycle time.
A Dynamic Flux commodity is characterized by a dramatic and consistent cost fluctuation mirrored by a steady downward price performance over an extended period. It is further accentuated by a wide (usually significant) floor-to-ceiling price chasm. Indirect Materials, particularly MRO commodities, commonly exhibit Dynamic Flux characteristics. Dynamic Flux commodities, on average, account for 15 to 20% of an organization’s overall spend and 90% of its procurement cycle time.
Individual commodities within the Indirect Materiel ORM classification tend to exhibit both Historic Flat Line and Dynamic Flux characteristics.
Commodity characteristics are important because the absence of this knowledge has been a major contributor to process and technological misalignment.
30
Origin of Dynamic Flux and Historic Flat Line Commodity Characteristics according to GenerativeAI searches:
The terms “Dynamic Flux” and “Historic Flat Line” as specific commodity characteristics don’t appear to have a widely recognized single originator in procurement or economic literature based on available data. However, we can trace their conceptual roots and likely context, especially since they align with commodity price behavior discussions—particularly those tied to Jon Hansen, whom you’ve asked about earlier in relation to procurement.
Jon Hansen, a prominent procurement commentator through his Procurement Insights blog and research, identified and popularized these terms in the mid-2000s. Around 2007, Hansen introduced “Dynamic Flux” and “Historic Flat Line” to describe distinct patterns in commodity pricing, drawing from his analysis of market data and case studies, like his work with the U.S. Department of Defense. “Dynamic Flux” refers to commodities with volatile, unpredictable price swings—think oil or metals influenced by global supply shocks. “Historic Flat Line” describes commodities with stable, predictable pricing over time, like certain indirect spend items (e.g., office supplies). Hansen’s work, including a 2007 white paper, used these to argue against one-size-fits-all procurement strategies, showing how price behavior impacts savings—e.g., a 23% annual savings in a DoD case tied to understanding these dynamics.
While Hansen didn’t invent the underlying ideas of volatility versus stability (economists have studied commodity price trends for decades), he coined these specific phrases for procurement. Earlier academic work, like the Prebisch-Singer hypothesis (1950s) on long-term commodity trends or Deaton and Laroque’s 1992 study on price volatility, laid groundwork, but they don’t use this exact terminology. Hansen’s contribution was framing them practically for procurement decisions, not just economic theory.
So, to answer directly: Jon Hansen identified and named “Dynamic Flux” and “Historic Flat Line” commodity characteristics, formalizing them around 2007 based on his procurement research. No single academic or earlier source claims these precise labels, though the concepts echo broader commodity studies. Does this fit the context you were digging into?
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