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  January 31st, 2021 | Written by

The Need for Commodity Analytics in Commodity Management Software

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  • The commodities industry has always been a big data business.
  • To remain competitive, today’s commodities companies need next-generation systems.
  • Commodities companies can no longer afford to wait days and weeks to understand market changes.

The management of commodities and the risks associated with this activity have evolved since the introduction of Energy Trading and Risk Management (ETRM) software in the 1990s. Over time, the type and quantity of data to be managed changed and these solutions later evolved to Commodity Trading and Risk Management (CTRM) software in the mid-2000s that grew in scope to include support for commodities other than energy. In addition to support for additional commodity types, ETRM and CTRM software has grown further into the supply chain and the functional footprint of these systems has dramatically increased. Now, we are seeing another generational shift from what were primarily transaction-based systems to solutions that provide sophisticated, real-time, analytics along with transaction management.

Commodity Management is a Big Data Business

Inherently, the commodities industry has always been a big data business. Physical trades that are hedged with financial derivatives create thousands of individual data points. And each of those data points represent multiple decisions to be made and perhaps reconsidered before the trade is eventually closed. Prices move, markets change, and regulations are updated. For example, as a market data provider, GlobalView is constantly adding new data sources to meet the needs of commodity market participants. Today’s focus on analytics is driven by the need for more data.

All of this data drives complexity in decision making. Those companies who are best equipped to leverage the data available to them to make the best decisions will gain a competitive advantage. It’s a whole new world. No longer is the typical CTRM software system adequate for companies exposed to commodity market risk. While the ability to capture the data that surrounds each transaction or engagement is still required in CTRM software, that functionality alone is not enough. As margins tighten and conditions get tougher, commodities companies need systems that do more.

A Generational Shift from Data Capture to Data Analytics

To remain competitive, today’s commodities companies need next-generation systems that support real-time decision making to move beyond data capture to data analytics. The ability to analyze information to create predictive models allows firms to develop accurate, repeatable formulas that take into account market conditions to identify optimal scenarios. Using advanced visualization techniques coupled with user-controlled, predictive analytics, commodities companies can optimize operations.

Commodities companies can no longer afford to wait days and weeks to understand market changes, analyze the alternatives, and make decisions. Instead, all business users need the power to analyze data the way they want. The solution that will enable real-time decision making requires two components: the right technology to handle the large volume of data generated by the commodities industry and built-in commodity specific intelligence to analyze the data. In addition, the most useful analytics solutions will enable business users to start using the solution immediately without an extended and costly implementation project.

Today’s Next-Generation Commodity Management Solution is Smart Commodity Management

Smart Commodity Management includes Commodity Analytics Cloud, an advanced data aggregation and analytics tool, and InSight CM, an integrated system for managing commodity transactions end-to-end. These two solutions together provide the analytical and operational solutions that commodities companies need to manage in today’s complex and volatile markets.

Analytics are the future of commodity management. Commodities companies need to look at advanced analytics solutions to ensure future success. Geared specifically for commodities companies in the agriculture, manufacturing, energy, and metals industries, Commodity Analytics Cloud provides traders, risk managers, analysts, supply chain/logistics managers, IT specialists, back office personnel, and executives with previously unavailable insights into key business areas.

Commodity Analytics Cloud brings together data from multiple internal and external sources including ETRM, CTRM, ERP, CRM, spreadsheets, and market data, including GlobalView’s MarketView data, which is available in a special bundled package price.

Eka Software Solutions is a global leader in providing digital commodity management solutions, driven by cloud, blockchain, machine learning and analytics.

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