Entries for ' ctrm'


The Commodity Management Blog has been closely following the top Commodity Management issues throughout the year. Not surprisingly, posts discussing Dodd-Frank top the list.  Below is a complete list of the 10 most popular posts over the past 12 months based on views and shares.  We thank you for following us and hope these posts have provided valuable tips on how to manage commodities smarter.


We have some really great things in store for 2012, so here’s to a year of fresh ideas for Commodity Management!

In recent years, the world agricultural markets have seen a surge in prices and volatility brought about by several factors including poor harvests, sustained demand, increased use of agricultural products for fuel, increased activity on commodity markets and soaring oil prices causing fuel and fertilizer costs to rise. As a result, Growers, Originators and Producers are starting to adopt CTRM systems, typically used by energy companies, in order to gain the real-time business intelligence they need to make optimal decisions around trade execution, position management, and physical logistics.

Triple Point has been helping traditional energy and commodity trading companies manage the unique complexities of their commodity trading and risk management business for over a decade. In order to help Agriculture companies identify the most critical components of a CTRM solution for their business, Triple Point has compiled a checklist of the key functionality Agriculture companies should look for when considering CTRM tools.

Here are seven to consider:

1.    
Trading – A CTRM solution should provide complete control over trading operations and enable traders to better manage current positions and gain real-time information to take advantage of market movement. It should integrate physical and financial trading, improve trading efficiencies with deal entry templates/blotters, provide sensitivity analysis, and enable "what-if" scenarios.

2.     Price Risk Management-  Look for sophisticated analytical tools for portfolio stress testing and sensitivity analysis to run what-if trades. These tools should enable you to analyze real-time position and exposure — market, volumetric, credit, delivery, and FX risk — at granular and rolled-up levels for optimized price risk management.

3.     Chartering and Vessel Operations- Commercial chartering and vessel operations are a crucial part of the agribusiness supply chain and must be seamlessly integrated into the CTRM system.  At a minimum, the system should allow  you to manage all chartering, post-fixture activities including freight risk management, and financial aspects of commercial vessel operations in a single system.

4.     Scheduling- Schedulers must be able to plan, conduct, and optimize complex physical movements in real time. The system should manage the logistical complexities and streamline the supply chain operations required to transport bulk commodities. It should handle all transactions from straight forward physical trade matching, to complex itinerary scheduling involving multiple trades, commodities, methods of transportation, and inventory movements.

5.     Counterparty Credit Risk Management- Recent financial and debt crises demand the ability to proactively measure, manage, and mitigate the risk arising from counterparty default. The CTRM solution should address the entire credit risk process and provide a full range of credit analysis and operational tools in 3 key areas: exposure, collateral, and counterparty management. The most advanced solutions also provide credit analytics.

6.     Hedge Accounting- A key component of any CTRM solution is the ability to manage the daunting set of requirements under hedge accounting regulations, including the detailed testing, documentation, and reporting that must be performed in order to qualify for hedge accounting status. Make sure that the solution provides full compliance with ASC 815 (FAS 133), ASC 815-10 (FAS 161), IAS 39 (IFRS 9) and similar national hedge accounting regulations.

7.     Fair Value Disclosure- The system must provide the tools and framework to define, measure, and manage fair value levels and meet all disclosure requirements for ASC 820 (FAS 157) and IFRS 7 compliance.

Triple Point’s Commodity XL for Agriculture can help you meet all of these requirements.  If you would like to learn more about Triple Point’s CTRM solution for Agriculture companies click here.
CommodityPoint, an independent analyst firm, issued a research report studying the integration risk between CTRM and ERP systems.  The paper does a good job of capturing the issue:

"The point is simply that just from a cost and effort point of view, any interface or point of integration including between the CTRM software and accounting software or an ERP solution is risky, costly and time consuming and this ignores other aspects of integration risk such as the inability to deploy proper workflow and controls across the application suite; the need for manual reconciliations, maintaining the same data (e.g. contract data) in multiple locations without a proper system of record and many additional limitations."

In addition to analyzing the issue, the research discusses Commodity SL, Triple Point and SAP's co-developed solution that eliminates the integration risk.  The research hits the nail on the head as far as the value of the joint solution:

"Triple Point and SAP have developed and offer a seamless solution for commodity management which offers significant benefits for its users over and above the traditional approach of procuring a commercial CTRM solution and then interfacing it to SAP for financials. It virtually eliminates the integration risks and issues discussed above while providing significant benefits for the business. End users are offered a completely integrated suite of business systems where the complexities of ‘gluing’ the applications together is the responsibility of the vendor and where, should any issues arise, there is a single point of contact to get those issues rectified.

As the only SAP endorsed product with over 150,000 hours of co-development time invested, Commodity SL offers SAP users a best-in-class solution to their commodity management requirements that remains unique in the market today and provides significant value to those already heavily invested in SAP."

Click here to read the entire research report.

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.