In recent years, the metals CTRM debate has shifted away from “spreadsheet vs CTRM”, with CTRM technology the clear winner. Most organisations, even if they are not already using a CTRM, understand at least some of the benefits of efficient, process-automating commodity management technology.
There are many different options available for organisations looking to improve their commodity management through technology; from generic CTRM, to commodity-specific or to a fully-tailored commodity management ecosystem. At Gen10, we have completed over 100 technology projects for a wide range of commodities, and it is this expertise that leads us to create commodity management technology that is truly developed for the industries and clients we work with.
What is a metals CTRM?
A metals Commodity Trading & Risk Management system has more functionality for metals and concentrates than generalised, multi-commodity CTRMs are capable of offering. Whilst all commodities share some features such as contract management, invoicing and allocating stock that can make use of generic software, concentrates traders in particular are likely to discover that a generic CTRM does not have the full functionality they need.
A CTRM for metals and concentrates can include several features that make it stand out from more generic offerings. For example, when Gen10 began working with traders to develop a metals and concentrates commodity management app, we included a completely new contract management interface to allow for multiple premiums and discounts on each contract and new pricing automation workflows, offering more optionality than the apps used by our agricultural clients.
We believe that technology should improve operational efficiency and make your teams’ day jobs easier, which is why our metals functionality exists in its own commodity management app, not as part of one monolithic CTRM architecture that all clients are forced to use. This means that metals and concentrates clients are presented with the options they need, but are not weighed down with functionality that is only relevant for energy traders, and vice versa.
Why do I need a metals CTRM?
If your business is not already using commodity management technology, or if you are using a CTRM that doesn’t automate your processes and document creation you are missing out on a significant opportunity to improve efficiency, accuracy and profitability.
Different CTRM providers may offer less metals functionality and automation, but some of the advantages of Gen10’s commodity management technology specifically for metals include:
- A “component mode” for concentrates contracts that allows you to price all assays within one contract.
- A formula engine that automatically calculates pricing, premiums and discounts for all assays and populates your MTM, P&L, documents & systems with the results.
- A wide range of quality options including the ability to add premiums and discounts to assays, grades, shapes, delivery terms and more.
- Management of wet and dry contract types, weight/size conversions, and tiered fx and interest – all calculated automatically.
- The ability to update the contract and its associated documents if an assay changes after inspection. For example, if the arsenic value changes during an inspection, the user can check the draft invoice and update it with one click or create a new one, causing their MTM and P&L to update automatically.
- Provisional and final invoicing depending on the Quotation Period (QP).
- Automatically-calculated average pricing over the working days in a QP based on your chosen exchange.
- Average futures pricing between your chosen start and end dates.
What’s the difference between CTRM and commodity management technology?
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.
As an example, a powerful CTRM that automates and improves operations is just one of Gen10’s commodity management apps, which can be integrated with other technologies such as an ERP or ETRM to create a complete commodity management ecosystem. These commodity management solutions might go beyond CTRM to include fast deal capture, contract management, a risk engine, supplier audit or an integrated op-risk solution that powers your daily tasks, deadlines, document creation, invoicing, shipping and reconciliation. Gen10 provide these commodity management apps alongside our core CTRM because even though we develop features specifically for the commodities we work with, we know the greatest value is added when software works with your existing processes and is tailored to your business.
And using Gen10’s Commodity.Manager app as a stand-alone CTRM, you still benefit from greater commodity management functionality than many CTRM systems, including automated contract, logistics and risk management within the solution. Incorporating commodity management that benefits finance, operations and shipping teams also benefits traders and risk managers by providing complete real-time position visibility, reducing the risk of copying errors, and freeing your people from administrative tasks to focus on the activities that add value to your business.
A good metals CTRM therefore not only allows you to manage a greater number of complex trades faster and with better oversight, it also automates time-intensive tasks & reports and integrates with your other technology for reduced operational risk and more efficient processing.
It is no longer enough to simply state that metals and concentrates traders need a CTRM. To maintain their competitive edge in a time of shrinking trading margins, traders need commodity management technology designed specifically for metal and concentrates.
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