Optimize commodity pricing and manage commodity risk


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Learn how commodity management solutions provide an integrated offering that supports collaborative planning and management. Volatile prices, growing regulatory requirements, and the increasing executive oversight demands of commodity management need solutions that integrate with other business applications.

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Optimize commodity pricing and manage commodity risk

  1. 1. SAP Solution BriefCommodity Management Solutions Objectives Solution Benefits Quick Factsfrom SAPOptimize Commodity Pricing andManage Commodity Risk
  2. 2. Objectives Solution Benefits Quick Facts Drive excellence in commodity management across processesDrive excellence in commodity In today’s world, effective commodity management has never beenmanagement across processes more critical to profitability. Companies need the best pricing as they buy or sell commodities while managing overall commodity risk. Commodity management solutions from SAP provide an integrated offering, resulting in one version of the truth that supports an environment of collaborative planning and management. Nearly all manufacturing-related companies ways for you to manage your commodity risk interact with the broader commodity market. by supporting business processes impacted Whether your company produces commodi- by commodities in the areas of sales, pro- ties for sale to the market, buys and uses curement, and risk management. The solu- commodities to make products, or does both, tions are part of the SAP® Business Suite the discipline of commodity management applications. They enable you to manage your is extremely important to your business commodity risk through integrated processes success. designed specifically for your needs, and to perform timely and profitable commodity You need to manage short- and long-term purchasing, selling, and hedging. pricing, profitability, and risks related to your commodity purchases and sales. Commodity management solutions from SAP provide 2
  3. 3. Objectives Solution Benefits Quick Facts Integrate business processes to derive benefitsIntegrate business processes Like you, many companies are searching for You can automate your current manual pro-to derive benefits ways to eliminate spreadsheets, produce cesses to streamline the workflow, reduce timely reports on commodity positions and errors, and save time. Moreover, you canGet the visibility you need exposures to market prices, increase trans- transform your business processes to reflect parency, and bring operating groups together best practices based on current market con-Drive commodity procurement with a common goal. That goal is to manage ditions and techniques.excellence a significant component of the company’s daily business as efficiently as possible. YouDrive commodity sales excellence can now do that with commodity manage- ment solutions from SAP These solutions .Drive commodity risk management provide you with standard, integrated soft-excellence ware for procurement, sales, and treasury tasks and functionality for invoicing, complexDevelop processes for effective commodity pricing, logistics, hedge manage-data management ment, and risk reporting. Automation can help you streamline business processes across multiple departments. 3
  4. 4. Objectives Solution Benefits Quick Facts Get the visibility you needIntegrate business processes With a clear view of your commodity portfolio, What’s more, you have the power to establishto derive benefits you are able to create and support an envi- the criteria for how you manage commodity ronment of collaborative planning and man- risk. You can create and define a standardGet the visibility you need agement. The commodity management view of commodities across multiple disci- solutions provide you with transparency and plines. This view provides you with the flexibil-Drive commodity procurement a 360-degree view of your business. You have ity to manage commodity risk in the mannerexcellence the ability to manage your commodity risk that fits your risk profile. on a real-time basis based on your uniqueDrive commodity sales excellence risk approach.Drive commodity risk managementexcellenceDevelop processes for effectivedata management Manage to the level of risk with which you are comfortable. 4
  5. 5. Objectives Solution Benefits Quick Facts Drive commodity procurement excellenceIntegrate business processes With the SAP Commodity Procurement The simplified process is less error proneto derive benefits application, you can improve the efficiency due to one central application used to view in how you procure commodities. The extend- all deals that need to be invoiced and whichGet the visibility you need ed enterprise resource planning (ERP) func- can pull data from multiple sources. Invoices tionality for advanced commodity pricing on can be sent as soon as a provisional price isDrive commodity procurement contracts, and support for provisional, differ- known, and incoming invoices can be verifiedexcellence ential, and final invoices, will automate your on your timetable. Because the commodity process. SAP Commodity Procurement en- pricing engine fully integrates with sales, dis-Drive commodity sales excellence ables a streamlined way to create invoices tribution, and procurement (materials man- before full delivery and full payment. Treasury agement) functions in the SAP ERP applica-Drive commodity risk management integration allows you to transfer accurate tion, the SAP Global Trade Managementexcellence commodity exposure positions to risk man- application, and the SAP ERP Financials solu- agement in real time. tion, events-based pricing is possible.Develop processes for effectivedata management Eliminate “out of system” calculations and post clear, concise invoice receipts for each purchase with SAP Commodity Procurement. 5
  6. 6. Objectives Solution Benefits Quick Facts Drive commodity sales excellenceIntegrate business processes With the SAP Commodity Sales application,to derive benefits you can create the foundation for the com- plete logistical and settlement processesGet the visibility you need that enable you to sell your commodity and commodity-related products. The solutionDrive commodity procurement gives you extended ERP functionalitiesexcellence to handle commodity-based contractual pricing; provisional, differential, and finalDrive commodity sales excellence invoicing; and integration with treasury to transfer commodity exposure positionsDrive commodity risk management for risk management.excellenceDevelop processes for effective Get a firm handle on complex commoditydata management pricing, like average pricing over multiple weeks based on indexes, with the SAP Commodity Sales application. 6
  7. 7. Objectives Solution Benefits Quick Facts Drive commodity risk management excellenceIntegrate business processes By implementing the SAP Commodity Risk reporting of your commodity portfolio. Theto derive benefits Management application, you can assess the added benefit of this solution is that the deci- price risk of commodity positions and handle sion maker has the necessary information toGet the visibility you need the financial transactions used to hedge this evaluate and execute the appropriate hedge risk. With the solution providing for deal cap- for your company. You can then focus on theDrive commodity procurement ture and processing of commodity-based economic management of your company andexcellence financial instruments, supporting hedge understand the related impact on accounting accounting for derivatives, and allowing for and regulatory reporting.Drive commodity sales excellence storage of commodity-based transactional activity, you can generate comprehensiveDrive commodity risk managementexcellenceDevelop processes for effectivedata management Gain confidence in commodity risk hedging and reporting with SAP Commodity Risk Management. 7
  8. 8. Objectives Solution Benefits Quick Facts Develop processes for effective data managementIntegrate business processes When you implement commodity manage- business requirements. The solution providesto derive benefits ment solutions, you gain access to a consoli- worldwide management across multiple busi- dated solution where all commodity-based ness units to enable one source for transac-Get the visibility you need transactions follow a standard structure that tional data, market prices, and daily results. minimizes time for audit and increases data The secure processes of data managementDrive commodity procurement integration quality. With these solutions, you give senior-level executives confidence inexcellence can create core operating reports and use the knowing the results are accurate and audit SAP BusinessObjects™ portfolio of solutions ready.Drive commodity sales excellence to produce custom reports that reflect yourDrive commodity risk managementexcellenceDevelop processes for effective Custom reports let you seedata management the results that matter to you. 8
  9. 9. Objectives Solution Benefits Quick Facts Realize the expanded industry applicabilityRealize the expanded industry Commodity management solutions from SAP volatility in revenue stream, better pricing,applicability serve commodity producers such as oil, min- and will achieve a higher percentage of sales ing, and agriculture; commodity converters hedge. such as chemicals and oil and gas refiners; and commodity consumers such as consumer You will also be able to keep commodity price products, automotive, and high-tech companies. risk at a minimum, globally manage your net open commodity position while minimizing The solution will help you reduce volatility in the number of missed hedged transactions, raw material prices and obtain better execu- and minimize usage of working capital. tion pricing. You can also realize the percent- age of volumes hedged for longer maturities By using integrated solutions from SAP, and increase the number of hedged com- you can effectively manage commodity risk modities and percentage of hedged commod- on a timely basis, resulting in clearer insight ity spend. Commodity producers will have less into company profit streams for multiple segments. You deserve a comprehensive commodity management solution. 9
  10. 10. www.sap.com Objectives Solution Benefits Quick Facts Summary Solution With commodity management solutions from •• Direct transfer of sales and purchases SAP, you can optimize commodity procure- data to the treasury and risk management ment, sales, and risk management processes. solution These integrated SAP® solutions support a •• Rules for physical commodities and a consolidated, real-time view of commodity calculation engine that fully complements risk across lines of businesses so you can the solution react quickly to market changes. They also •• One version of the truth on a real-time basis provide process transparency so you have a complete view of commodity risk – a single Benefits version of the truth. •• Commodity business decisions fully integrated with the physical supply chain, Objectives financial risk management, and accounting •• Increase access to timely market data •• Improved authorization concepts, change- and lower the risk of over- or underhedging history tracking, and legal and regulatory •• Integrate logistics and finance systems compliance •• Provide real-time accurate data to formu- •• Real-time data collection and reporting late appropriate risk management solutions •• Correct pricing and invoicing and the •• Automate calculations and processes to flexibility to model new pricing improve pricing, settlements, and reporting Learn more To find out more, visit us online at www.sap.com/commodity. CMP19293 (12/06)Copyright/Trademark | Privacy | Impressum 10 ©2012 SAP AG. All rights reserved.