Analyst firm ComTech Advisory recently wrote a blog defining Commodity Management as “the superset of software that encompasses both CTRM and ERP for Commodities.” Software that supports trade management with additional ERP-type functionality for supply chain processes is Commodity Management.
- ERP for Commodities focuses on physical commodities and emphasizes production/procurement/origination, movement, storage, and handling of bulk and packaged commodities. Functionality usually includes contract management, procurement, production, logistics, inventory management, pricing and fixation, hedging, settlements, and accounting. The primary users of this type of software are producers, industrial consumers, and processors.
- CTRM has a trade-centric design with a focus on capturing and tracking both physical and financial trades, with configurable book and reporting structures, position calculation and valuation, P&L, and various aspects of risk, including market and credit risk. The primary users of CTRM software are traders and merchants.
- Commodity Management includes functionality from both CTRM and ERP for Commodities.
The Benefits of Commodity Management
Combining the power of CTRM with ERP provides tangible benefits to you.
When you combine CTRM with ERP, all essential commodity management processes are connected in one system. This decreases time you must spend merging data from different systems, so you can react more quickly to take advantage of new opportunities or mitigate risk and exposure.
In fast moving markets, time delays result in making decisions based on information that is no longer accurate. If you spend hours or days merging data, the final analysis is outdated before you read it, so your decisions are not optimal and could decrease margins. At the same time, manual data aggregation produces copy-paste errors, resulting in more inaccuracies.
With all your information in one system, you can evaluate position, mark to market, exposure, and other risk factors in real time. With on-demand risk reports, you gain accurate, real-time insight into areas of concern, so you can react faster to mitigate risk. With real-time alerts, you know the moment you need to act to decrease risk.
In the words of a recent ComTech Advisory white paper, “Commodity Management solutions, with integrated workflow and approvals, document management and ERP-like functionality, can help commodity firms ensure that time frames are met, risks are managed, and costs controlled. They help increase the efficiency of supply chain operations and alert users and management to potential issues. Furthermore, they can aid in collaboration – not just between departments – but also with partners and business associates.”
At iRely, we offer a comprehensive commodity management solution covering the entire commodity management lifecycle.
We go beyond traditional CTRM software to help you reduce risk and gain efficiency. Read this white paper to learn how comprehensive commodity management systems like iRely can help you.