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.

1. SAP Solution Brief
Commodity Management Solutions Objectives Solution Benefits Quick Facts
from SAP
Optimize Commodity Pricing and
Manage Commodity Risk

2. Objectives Solution Benefits Quick Facts
Drive excellence in commodity
management across processes
Drive excellence in commodity In today’s world, effective commodity management has never been
management 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
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3. Objectives Solution Benefits Quick Facts
Integrate business processes
to derive benefits
Integrate 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 can
Get 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. You
Drive 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, complex
Develop processes for effective commodity pricing, logistics, hedge manage-
data management ment, and risk reporting.
Automation can help you streamline
business processes across multiple
departments.
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4. Objectives Solution Benefits Quick Facts
Get the visibility you need
Integrate business processes With a clear view of your commodity portfolio, What’s more, you have the power to establish
to 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 standard
Get 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 manner
excellence the ability to manage your commodity risk that fits your risk profile.
on a real-time basis based on your unique
Drive commodity sales excellence risk approach.
Drive commodity risk management
excellence
Develop processes for effective
data management
Manage to the level of risk
with which you are comfortable.
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5. Objectives Solution Benefits Quick Facts
Drive commodity procurement
excellence
Integrate business processes With the SAP Commodity Procurement The simplified process is less error prone
to 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 which
Get 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 is
Drive commodity procurement contracts, and support for provisional, differ- known, and incoming invoices can be verified
excellence 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 Management
excellence 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 effective
data management
Eliminate “out of system” calculations and
post clear, concise invoice receipts for each
purchase with SAP Commodity Procurement.
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6. Objectives Solution Benefits Quick Facts
Drive commodity sales excellence
Integrate business processes With the SAP Commodity Sales application,
to derive benefits you can create the foundation for the com-
plete logistical and settlement processes
Get the visibility you need that enable you to sell your commodity and
commodity-related products. The solution
Drive commodity procurement gives you extended ERP functionalities
excellence to handle commodity-based contractual
pricing; provisional, differential, and final
Drive commodity sales excellence invoicing; and integration with treasury to
transfer commodity exposure positions
Drive commodity risk management for risk management.
excellence
Develop processes for effective
Get a firm handle on complex commodity
data management pricing, like average pricing over multiple
weeks based on indexes, with the
SAP Commodity Sales application.
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7. Objectives Solution Benefits Quick Facts
Drive commodity risk management
excellence
Integrate business processes By implementing the SAP Commodity Risk reporting of your commodity portfolio. The
to 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 to
Get 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 the
Drive commodity procurement ture and processing of commodity-based economic management of your company and
excellence 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 comprehensive
Drive commodity risk management
excellence
Develop processes for effective
data management Gain confidence in commodity risk hedging and
reporting with SAP Commodity Risk Management.
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8. Objectives Solution Benefits Quick Facts
Develop processes for effective
data management
Integrate business processes When you implement commodity manage- business requirements. The solution provides
to 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 management
Drive commodity procurement integration quality. With these solutions, you give senior-level executives confidence in
excellence 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 your
Drive commodity risk management
excellence
Develop processes for effective Custom reports let you see
data management
the results that matter to you.
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9. Objectives Solution Benefits Quick Facts
Realize the expanded industry
applicability
Realize 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.
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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)
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