As mentioned in a recent blogpost, relying on old CTRM systems in today’s volatile commodity markets is a recipe for increased risk and lost opportunities. Today, we will dive into three apps that Eka has developed to help you speed up decision making – not just to make faster decisions, but to make smarter ones.

3 ways to make faster decisions with digital commodity management

18 October 2021 | BLOGS

As mentioned in a recent blogpost, relying on old CTRM systems in today’s volatile commodity markets is a recipe for increased risk and lost opportunities. Today, we will dive into three apps that Eka has developed to help you speed up decision making – not just to make faster decisions, but to make smarter ones.

Position

Commodity risk management starts with having a clear understanding of position exposure. Commodity companies need to manage exposure for physicals, derivatives and FX trades. Unfortunately, the data required to create a complete, accurate view of position often resides in multiple systems – spreadsheets, broker statements, CTRM systems, and more. Companies are forced to manually aggregate the data, often importing it into spreadsheets. This process can take hours, days, or even weeks.

Having access to the right data at the right time is key to good decision making. If you spend days collecting data, by the time you analyze it, the data is no longer accurate. Commodity markets don’t wait for you to analyze your position.

Eka’s Position app eliminates manual reconciliation, enabling companies to view exposure at the click of a button instead of waiting days for manual reports. It eliminates any chance of human error while aggregating, blending, and analyzing inputs from all data sources and provides one, accurate representation of position in real time.

With Eka, you can evaluate long and short positions across multiple price components to better understand exposure and simulate multiple scenarios, analyzing the pros and cons to view the impact on position before acting. Rather than spending hours, days or weeks creating analyses, you can quickly respond to ensure you meet your company’s goals.

P&L Explained

There is a lot of money at stake for companies that buy and sell commodities, and commodity trading companies need to keep a careful eye on profits to ensure they make the best decisions to drive their business. Accurately attributing profit and loss may sound simple, but commodity trading is complicated. A lot of different factors contribute to P&L, and many of these factors are interdependent. Data is typically maintained in multiple systems, so many companies spend hours (or days) collecting the data to analyze it to determine what is impacting P&L. Most companies still end up with a large unexplained bucket.

Eka’s P&L Explained app removes that uncertainly, enabling companies to reach 99% P&L attribution in moments, not hours or days. With the app, you can identify root causes in P&L and gain a clear understanding of P&L movement by drilling down to the individual transaction level, identifying inaccurate assumptions and measuring the performances of traders, books, and business units.

The app identifies factors for P&L at each entity level, including book, trader, origin, geography, and type and analyzes third-party data including market and weather feeds. You can analyze P&L change over time to identify causes and overlay data with external factors like market price, FX, and sentiment data to spot correlations and patterns between P&L change and external factors. You can evaluate outliers causing unnatural changes to P&L and monitor the highest P&L swings by counterparty, trader, business unit, or any other dimension.

All these insights can be created in real time with Eka’s customizable dashboards. You don’t need analysts and you don’t need spreadsheets, all you need is Eka for a quick and accurate accounting of P&L.

Procurement

Making the best procurement decisions can be difficult. An estimated 40 to 60 percent of manufacturing costs are related to raw material costs, so procuring resources at the right price is imperative. You need to evaluate budgeted spending, actual spending, projected spending and coverage across the organization. Shifting markets dynamics drive more FX exposure, complicated hedging strategies, and more stringent regulatory and risk policies. Constantly shifting political climates, trade wars, and political uncertainty complicate things further.

You need to analyze a lot of information to make the best procurement decisions – budgets, volume forecasts, physical coverage by cost component, derivative trades, forward prices, FX rates, cost models, market data, market news, sentiment data, and more. Once again, this information resides in multiple systems and must be aggregated for analysis – a process that takes time.

Eka’s Procurement app delivers real-time insight, enabling you to analyze all available procurement data in real time. Eka’s system enables all its apps to access data from across the value chain on demand, automatically and instantly. This eliminates hours, or days, of manual data collection, enabling quick analyses of options.

With the power of advanced analytics (AI, machine learning, etc.), you gain a real-time, accurate picture of coverage and price risk so you can quickly understand your options and make better procurement decisions. The app allows you to simulate projected spend and simulate market and business events before they happen to assess the potential impact on coverage, spend and variance. With all this data at your fingertips, you can make faster, and smarter, decisions.

Making faster, and smarter, decisions is really about using all available information to ensure you have an accurate, current understanding of your business and your options before you make any decisions. Eka’s Digital Commodity Management Platform enables real-time insight to help you drive profits.