Despite the abundance of commodity trading and risk management (CTRM) solutions available, spreadsheets remain an integral part of commodity management. In fact, in a Commodity Technology Advisory survey, more than half of respondents reported using spreadsheets extensively for risk management, operations planning, origination, scheduling, trends capture, treasury, inventory management, CRM, document management, and ERP.
Spreadsheets remain popular because they are convenient, easy to use and inexpensive. In under five minutes you can download a copy of Microsoft Excel for $139.99 and immediately create charts and graphs.
However, commodity management is complicated, dynamic, and data intensive.
Using spreadsheets – which require you to manually input and manipulate data – frequently results in data errors. In complex and constantly evolving commodity markets, the time spent entering and analyzing data in spreadsheets increases risk and wastes time. Teams that rely on spreadsheets to manage position and risk are making decisions based on outdated and sometimes erroneous insights – driving suboptimal results.
For example, many companies do not have a real-time consolidated exposure and coverage report. If they need an unscheduled report, they spend hours, or even days, creating one. In the time it takes to create the report, the market will keep moving. Commodity markets don’t stand still while you are creating reports, so you may miss opportunities or increase risk exposure because you are spending time creating reports instead of responding to real-time events. Missing out on an opportunity with better pricing can seriously impact your bottom line.
Multiple versions of a spreadsheet often exist because people make updates and share them with their teams. Therefore, you have different parts of the business running and reporting on different data sets.
Spreadsheets are a fantastic tool. Nothing is better for a creating a quick chart or comparing a few numbers. They just aren’t designed for the complexities of commodity management. The hours spent inputting data, reviewing that data to ensure you didn’t make mistakes, and analyzing the data could be spent analyzing the market to reduce risk or secure more profitable deals.
Modern CTRM solutions like iRely’s i21 deliver real-time views of inventory, P&L, exposure, and risk, so you have better visibility and control over your business. You can analyze data quickly, always know the status of your business, and make better decisions faster.