Most traders are aware of Commodity Trading and Risk Management (CTRM) systems and the advantages they can provide, as a good CTRM can improve risk management, trade volumes and profitability.
But commodity trading involves more than simply trading and risk functions, and this is why commodity management software involves more than just CTRM.
CTRM vs Commodity Management – what is the difference?
Commodity management technology is broader than CTRM, providing solutions to challenges that a traditional CTRM would not address. Indeed, some analysts now state that CTRM is becoming a subcategory of commodity management.
For example, Gen10’s ecosystem of commodity management apps allows you to manage your supply chain through the same commodity management system as your CTRM functionality. The added logistics features mean that operations experts can manage all incoming and outbound shipments, including shipping instructions, transferring cargoes between different modes of transport and warehousing documents.
Adding this logistics and supply chain management to your CTRM means that the information input by the trader as they create the deal can be used by operators immediately to add maximum value to each trade, and Gen10’s apps automatically use data input once to populate the associated steps in your process, including creating any documents you need. This reduces the risk of errors and omissions as well as friction between traders and operators, with less need to clarify information or correct typing mistakes.
Because front-, middle- and back-offices all use the same commodity management apps in one complete ecosystem, interactions between teams are faster and all teams can view the progress of each trade or shipment instantly, without the need to wait for end-of-day reports.
What are the benefits of commodity management apps?
As well as the benefits of improved logistics and better interfunctional coordination above, commodity management apps empower your teams to progress each trade across all offices faster, leading to a greater asset turnover and increased opportunity for profitability. And the enhanced risk management that comes from comprehensive commodity management technology means that less time and resource is spent on risk management, gaining approvals and fixing errors when things do go wrong.
Another advantage of commodity management apps is the ability to add only the functionality you need, with APIs providing instant data-sharing with the rest of your technology ecosystem such as a CTRM, ETRM or ERP system. For example, from our conversations with the biomass industry, the Gen10 team often find that companies using an ETRM do not have modern procurement software and would see an immediate benefit from implementing Gen10’s Contract.Manager app.
This app allows biomass traders and energy procurement teams to manage their contracts and counterparties, including documents such as sustainability certificates. Pre-approved contract templates are automatically populated with your data and contracts are automatically progressed through the workflows you create, for faster approvals and a clear picture of every contract’s outstanding actions.
Other commodity management apps that provide advantages beyond CTRM include procurement, offer/bid and deal capture apps that populate your CTRM once a deal is agreed. Risk.Engine allows you to combine price and premium curves with credit limits and operational risk controls to manage your exposure to market, square your hedges, and align your financial, commercial and operational activities. Gen10 also offer Aud.IT, an app designed to provide assurance for your due diligence and sustainability initiatives.
Why do biomass traders need commodity management technology?
The biomass commodity landscape faces several unique legislative challenges including sustainable sourcing commitments and greenhouse gas emissions limits that include lifecycle transportation emissions and are highly influenced by the political landscape. It is therefore essential for traders to ensure complete traceability across the entire value chain, have assurance of each shipment’s provenance and maintain clear document and audit trails.
As well as the need to monitor and update greenhouse gas emissions, biomass involves several other assays that may change throughout the supply chain. Calorific value and therefore burn forecasts can change based on moisture or how long the product is left in storage, so these factors can all be managed in Gen10’s commodity management apps. The apps also allow you to specify when inspections must occur and update assays to reflect the results.
In this time of shrinking profit margins, traders also need to maintain a commercial competitive edge through their use of data. Through their connected nature, commodity management apps provide reports and analytics that can help traders add value to every trade, whilst improving compliance with risk policies. Reports in Gen10 apps include mark-to-market, P&L and position reconciliation, all updating throughout the day as soon as a change is made to any contract or data.
Commodity management technology provides traders with the process automation and efficiencies across front- middle- and back offices– to improve operations, create more value from every trade, manage risk and ultimately improve profitability. And Gen10 apps provide these benefits in a system designed specifically for biomass management.
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