Entries for March 2012

Are you struggling with disparate commodity trading systems, overuse of manual processes and spreadsheets, and underuse of third party solutions?  Have dramatic changes to the energy markets outpaced your technology capabilities?

If you know you need to upgrade your Energy Trading and Risk Management (ETRM) system, but are overwhelmed by the idea of ETRM vendor evaluation, ETRM system selection, and ETRM implementation, you are not alone. Structure’s Baris Ertan recently wrote an article on how to determine ETRM requirements.  He explains that if you ensure the right ETRM requirements, “you’ll be rewarded with a system that meets your needs and prepares the organization to take advantage of the opportunities afforded by today’s complex and ever-changing energy markets.”

A few tips that I found particularly useful include:

1. Create a process review that includes an “as-is” baseline and “to-be” vision.  Market demand, price volatility, and derivatives legislation continue to drive change in the energy markets. He smartly advises to incorporate planned growth in commodities, instrument types, physical assets, geographies, markets, currencies, etc.

2.  
Engage front, middle, and back offices in requirements gathering. The best solutions for staying ahead of the curve in today’s complex markets are end-to-end solutions. It is critical to involve IT, compliance, legal, procurement, and senior management in this strategic initiative.

3. Consider integration strategy early
. Does a best-of-breed or a single system approach best fit your resources and capabilities? Baris explains that “an early investment in time on this process pays dividends. It is a key input into a requirements matrix that feeds vendor evaluation, implementation planning and estimations, solution design, testing, and ultimately deployment.”

4. Conduct scenario
-based demonstrations.  Your business requirements are unique.  Baris advises, “it’s crucial to translate business requirements into detailed business scenarios that each vendor can model and use to showcase its solution.”  I couldn’t agree more.

Determining your ETRM requirements is vital in conducting a rigorous vendor evaluation that renders the best functional and technical fit for your organization. A company can’t underestimate the importance of doing
it right – taking shortcuts or rushing the process can have severe long-term financial and operational ramifications that are difficult if not impossible to rectify.    


For more ideas on how to determine ETRM requirements, view on-demand Triple Point’s recent Commodity Trading, Procurement, and Risk 101 webinar.  It highlights the latest must-have requirements for ETRM success.

The South African coal industry received a huge boost last month when President Jacob Zuma used his State of the Union address to back critical infrastructure projects in South Africa. He announced a much needed investment of R200bn ($26bn) to help upgrade the capacity of the state owned rail network, Transnet, which currently limits the amount of coal South Africa is able to export.

Transnet is crucial to the future of the South African coal industry. Today, the volume that the rail network can carry is below the export capacity of their largest coal terminal (Richards Bay). Transnet have started upgrading the network which has brought improvements but also some temporary fluctuations in capacity. This boost from President Zuma could not have come at a better time.

South Africa is the world’s fifth largest coal exporting country. Once complete, the upgrades in the rail network will mean that they can export the entire 91m ton capacity of the Richards Bay Coal Terminal. The industry is already starting to plan how they can expand their export capacity to at least 100 million tons.

Exxaro, South Africa’s second largest coal producer uses Triple Point’s QMASTOR supply chain management systems to manage the tonnage, quality and value of coal and minerals from their mines to the point of export, import or consumption. 

Freight-Risk-ManagementIf your answer to the above question is anything less than ‘very,’ your company’s future may be at risk.

In the turbulent seas of the shipping industry, understanding the true market value of your fleet is the difference between sinking and swimming. Performing frequent mark-to-market (MTM) valuations is an integral part of doing business. However, due to the volatile nature of the industry, the complexity of calculating freight rates, and flaws inherent in popular valuation methods and tools, companies often end up with inaccurate numbers. This provides an erroneous picture of financial standing that can result in lost profits, faulty decision-making, and ultimately the demise of an entire business.

To understand the challenges associated with calculating accurate MTM valuations and how to address them, I encourage you to read a new article in The Baltic by Javier Navarro, Triple Point’s Freight Risk Solutions Manager. It offers a detailed look into this subject that is intended to help companies gain a competitive edge and stay afloat in the rough waters of the cutthroat shipping industry. Read it now

Is your commodity trading and risk management system adequate for the “new normal?" New regulations in the US and Europe, extreme price volatility, capital constraints and shorter cycle times demand new risk management strategies.

Triple Point recently hosted a webinar with Accenture’s commodity trading and risk management expert, Alex Chandy, on the latest trading and risk management best practices. Triple Point’s own risk expert, Greg Leck, also discussed how Triple Point’s leading CTRM solution delivers up-to-the-minute risk intelligence to manage portfolio risk exposure, set limits, and control risk.

The webinar highlighted valuable tips on how to deal with today’s market chaos and uncertain regulatory environment. Key takeaways included:

1.     How to optimize risk and create opportunity in the face of
high frequency trading

2.     Tips on how to avoid losses and identify hidden risk with
broader scenario analysis

3.     A clear understanding of the Commodity Super Cycle and
what it means to your business

4.     Why it is NOT and Excel world anymore

If you missed the live event, don’t worry – we’ve got you covered. You can view the webinar on-demand here. Enjoy!

Events

Procemin 10th International Mineral Processing Conference

October 15-18, 2013 | Chile

XXV Brazilian National Meeting of Mineral Treatment and Extractive Metallurgy (ENTMME)

October 20-24, 2013 | Brazil



Opinions expressed on this blog are those of its individual contributors, and do not necessarily reflect the views of Triple Point Technology, Inc.