Optimize Your Agriculture Supply Chain with Smart Commodity Management

Optimize Your Agriculture Supply Chain
with Smart Commodity Management
John Schimelpfenig
Executive Principal,
AXCELERUS
Michael Schwartz
EVP & Chief Marketing Officer,
Eka

www.ekaplus.comwww.ekaplus.com
Agenda
2
Featured Speaker: John Schimelpfenig,
AXCELERUS
• 2014 trends in commodity markets
• Top 5 customer issues in agricultural trading,
risk and supply chain management
• How businesses can address these challenges
• Old business model vs. new business model
Eka Background and Solutions
• About Eka, Customers, Global Presence
• Next-Generation Smart CM Platform
• Eka Agriculture Solution
Join the conversation:
@EkaSoftware
#ekawebinar

Featured Speaker
3
John Schimelpfenig
Executive Principal, AXCELERUS
• 25 years of experience as a risk management
professional and trader in global commodities markets
• Provides expertise as an independent and objective
source of solutions for risk governance, trading,
operations, shipping & logistics, and technology for
commodity markets
• Prior to AXCELERUS, John ran his own successful
consultancy with projects covering risk policy/business
process improvement; CTRM system
functional/technical evaluation; and CTRM system
selection and implementation
• 11 years with Deloitte’s ETRM/CTRM practice providing
energy & commodity services to Fortune 500 & Mid-
Market companies

4
© 2014 AXCELERUS, LLC. All rights reserved.
Solutions for Commodity Markets
Optimizing Agricultural Supply Chain Webcast–July 22, 2014
A changing global landscape…
2014: Trends In Commodity Markets
Acquisitions &
Investments
Financing
Sources
Cross
Commodity
Asset Plays
Global
Commodity
Regulation
Uncertain
Supply &
Demand

5
¹ Source: RealEstateRama.com: 6/19/14
² Source: Dow Jones Business News 7/9/14
Acquisitions &
Investments
New Financing
Sources
Acquisitions &
Investments
 Private Equity investments in agricultural efficiency, farmland, CTRM
technology
 Low agriculture debt pushing farmland prices higher (especially irrigated)¹
 Vitol + Glencore + Cargill + Trafigura > $100B USD²
 New: Cargill/Copersucar JV forms largest sugar trading venture
 Mecuria buys JPMorgan’s physical commodities business
 Chinese companies continue to acquire commodity assets/producers
Global
Commodity
Regulation
Uncertain
Supply &
Demand
THERE’S A FLOW OF CAPITAL ENTERING

6
Cross
Commodity
Asset Plays
New Financing
Sources
 Not all banks have exited: BTG, Macquarie, Wells Fargo, CIBC, Standard
Chartered, Goldman investing in talent and portfolios¹
 Merchants (Mercuria, Cargill, Trafigura, Rosneft) taking a greater role in
highly physical part of market¹
 Common footprint: origination, supply, transportation, trading and
warehousing
 Sovereign Wealth Funds investing land, production, fertilizers (secure supply)
 “Best of Breed” CTRM trend in large participants
Cross
Commodity
Asset Plays
Global
Commodity
Regulation
Uncertain
Supply &
Demand
SUPERBROAD CAPABILITIES
¹Source: Forbes 4/29/14

7
¹ Source: Dow Reuters 7/13/14
² JournalGazette.net: 7/13/14
Acquisitions &
Investments
Financing
Sources
Cross
Commodity
Asset Plays
 Mercuria new $2.65 Billion USD credit facility
 Freepoint Commodities $1Billion USD credit facility
 Private Equity investing in farmland, food producers
 Large commodity traders such as Glencore, Vitol, Trafigura and Mercuria
are stepping in to plug the gap in trade finance¹
 About $5.9 billion was added to raw materials investments this year²
Global
Commodity
Regulation
Uncertain
Supply &
Demand
BANKS STILL LENDING

8
Acquisitions &
Investments
 Major US/EURO banks exit commodity markets
 Regulators turn attention to the “known unknown” commodity traders
 EMIR, Dodd-Frank, CFTC impact all market participants (yes, end users will
have compliance reporting)
 Regulatory scrutiny collateral of Chinese commodity loans ($160B)¹
New Financing
Sources
Cross
Commodity
Asset Plays
Global
Commodity
Regulation
Uncertain
Supply &
Demand
RELENTLESS INTERNATIONAL REGULATIONS
¹Source: Bloomberg 3/18/14

9
Acquisitions &
Investments
New Financing
Sources
Cross
Commodity
Asset Plays
Global
Commodity
Regulation
 High crop yields forecasted in US grains/seeds = surplus & low/stable prices
 Economic uncertainty in China, Emerging Markets & Europe = downward
demand & prices
 Bloomberg Index of 22 raw materials down 3.7 percent Apr-Jul 20141
 Oilseed crush margins trending lower – & negative in some regions (China)
 Forecasted higher global bulk shipping rates squeeze profit margins2
Uncertain
Supply &
Demand
OPERATING IN LOW PRICE/LOW VOLATILITY MARKETS
1 . Source Wall St Journal 6/19/14
2. Source Ag Professional 7/8/14

10
Cost management, smart hedging, and efficiencies in supply chain
operations are key client issues in today’s environment.
* Source: AXCELERUS internal research 2014
22%
15%
10%
26%
27%
Cost/Cash Management
Risk/Hedging Effectiveness
Operational Efficiencies
Accurate & Timely Market Intelligence
Regulatory Compliance
What Are the Key Issues in this Global Context

11
Common Business Objectives
Supply Chain
Management
Margin
Improvements
Innovative
Pricing Tools
Client
Relationship
Management
Brand
Enhancement
Cost/Cash
Management
 
Risk/Hedging
Effectiveness
   
Operational
Efficiencies
 
Accurate & Timely
Market Intelligence
    
Regulatory
Compliance
  
Key issues impact a number of common business objectives for our clients…
…with supply chain management critical in today’s competitive global markets.
Issue Impact on Supply Chain Objectives

12
e
Payments
(A/P, A/R)
Inventory &
Plant
Delivery &
Logistics
Supplier
Management
Procuremen
t Strategy
Need
Analysis
Settlements
Delivery &
Logistics
Risk
Management
Analytics/
Reporting
Credit
Risk
Trading &
Hedging
Forecasting
& Planning
Analysis
Silo 1: Procurement/Logistics/Plant Management
Focusing on operational risks: product flow, inventory,
manufacturing & processing
Silo 2: Commodity Trading & Risk Management
Focusing on trading, price and credit risk
management
Silo 3: Corporate
Accounting/Treasury
The traditional agricultural industry business model bifurcates
functions into separate operational and transactional activities…
…often utilizing
separate tools &
spreadsheets to
manage
business
operations and
develop reports
Old Business Model: Siloes & Spreadsheets

13
Inefficient coordination among processes and systems hits companies via
a continual erosion of bottom line margins…
…what we call death by a 1000 cuts:
 Where the razor nicks:
 High, recurring, unanticipated freight & logistics
costs (demurrage, bunker, port/customs fees)
 Contract defaults resulting from late shipments,
incomplete L/C documentation
 Trading losses from uncovered/under-hedged
inventory positions (WIP, Finished Goods)
 Inaccurate P&L attribution (multi-commodity positions)
 Interest costs of delays from manual cash processes in AP/AR processing
 Extensive (3-4 week) monthly financial closing process
 Unplanned cost of plant shutdowns due to inventory imbalances (high/low
stocks)
 Unbudgeted costs (technology/processes) for regulatory reporting
compliance
 Data quality - duplication and data re-keying
Old Business Model: Supply chain is slow and costly

14
The Role of Spreadsheets in Commodity Businesses
…..EKA and AXCELERUS
recently co-authored a
white-paper on the 8
ways commodity
management systems
should be used instead
of spreadsheets and
manual business
processes
*The Information Olympics:, Commodities Now, Vol. 18, Issue 2, June 2014 . Commodities-now.com
 Commonly used for:
Data Analysis
Official Reporting
Data Integration
Systems of Record




Manual Data Entry Error
Not Secure
Lack of Audit Trail
Reference Integrity Issues
Stale Business Logic

15
Complex markets, multi-asset operations, and global distribution channels are
driving agricultural companies to move toward a more cohesive view of their
supply chain risk management…
…with a focus on improved decision-making, profitable operations,
operational efficiencies driving competitive advantages in global markets
Market
Intelligence
& Analysis
Procurement
Strategy
Transportation
& Logistics
Trading &
Hedging
Risk & Credit
Management
Accounting,
Settlements,
Financial
Reporting
Risk Reporting &
Compliance
Plant &
Inventory
Management
Product
Channel
Management
New Business Model: An Integrated Approach
AXCELERUS has several tools (CTRM IQ™ & AppRat™) to assist aligning/optimizing your CTRM
value chain

16
The sweet spot is a point where processes and systems are aligned as a front-
to-back solution…
… to provide the appropriate level of transparency, efficiency, accuracy to
be competitive and profitable as a player in the global markets.
Business Goal: An Integrated Solution Architecture
…Good CTRM
vendors may
provide much
but not all of
required
functionality!
…spreadsheets
used for analysis,
but limited as
reporting tools
and definitely
not as primary
repositories of
data

17
Summary
 5 Key Sign-Posts to Watch For:
 Are you “old business model” (silos/spreadsheets) or “new
business model” (integrated data and reporting from
centralized, reliable sources)?
 Are you re-aligning functional processes to improve
integration across your entire supply chain?
 Are you focused enough on the bottom line? - margin/cost
management is important for trading, logistics, plant
operations, and payments processing
 Do your systems and tools fully support agile, transparent,
and profitable business activities or are they impediments?
 The rise of the Stoners – when will the world’s most valuable
cash crop evolve from private bi-lateral trades to OTC?
Commodity risk management is now a total supply chain effort. Success will
require agility to respond quickly to the known-unknowns and new
opportunities of the global marketplace.

18
5 Key Measures of Optimization In Smart Commodity Mgmt
1. What is your MTM exposure today and everyday –
aggregated and by commodity?
2. How accurate and detailed is your P&L –
aggregated across commodities, by strategy, by
trader, by vessel?
3. How closely do cost estimates match cost actuals
and what are the trends?
4. How long is your monthly financial closing process?
5. Do you have the comprehensive reports you need,
when you need them, to understand your risks and
execute profitably in response to market signals?
Ask yourself how efficient is your organization to manage and profit
in the reality of competitive global commodity markets…
…if it takes more than five minutes to respond, ask yourself why.
Daily Exposure Data
Detailed P&L
Trending Information
Efficient Processes
Risk Awareness in
Decision Making

19
We are an advisory practice, led and staffed by people with experience in global
commodity markets. We specialize in technology, process, risk advisory, and
regulatory compliance solutions for companies who transact, regulate, and/or
make significant profits via commodities. We have deep competency across all
commodity classes, agriculture, energy, metals, and financial.
AXCELERUS is currently comprised by 3 principal partners from consulting and
industry backgrounds with a combined total of over 60 years of experience in the
following:
We are your Trusted Advisors:
From strategies to projects, we are the experienced commodity transacting and
risk management advisors you need.
Strategy
Risk
Management
ETRM/CTRM
Technology
Project
Management
AXCELERUS: Who We Are

Eka Smart Commodity Management
Eka Agriculture

21
Timeline – ETRM to Smart Commodity Management
1990 2003
2003
2014
2008
2008 2014
ETRM
Energy Commodities
• Oil
• Power
• Natural Gas
Additional Commodities
• Ags
• Metals
• Biofuels
Broader Footprint
• Supply Chain
• Compliance
• Manufacturing
Data to Foresight
• Predictive Analytics
• Visualization
• Optimization
CTRM
CM
Smart CM

Eka Software Solutions: Company Profile
Position: Global leader in on premise & cloud served Smart Commodity Management solutions
Founded: 2004
Employees: 315
Global Offices: 7 offices. 3 development & support centers
• Americas: Stamford CT HQ, Calgary AB
• Asia Pacific: Bangalore India, Singapore, Adelaide & Perth AU
• Europe: London UK
Investors: Silver Lake Partners - GP Group - Nexus Venture Partners
Customer Base: >50 leading global enterprises on 4 continents
• Cargill, Rio Tinto, Mitsui, Bunge, BMA, EDF Trading, Graincorp, Viterra, Louis Dreyfus, Noble,
CBH, Mitsubishi, Pinnacle Foods, Twin Eagle, Boliden, Tata Steel
Solution: InSight Commodity Management (CM) Platform
• End to end financial and physical transaction management
• Cross asset trading and position management – Ags, Energy, Metals, and Bulk
• State of the art enterprise risk management
Commodity Analytics Cloud
• Analytics specific to commodities
• Multiple data sources internal and external to Eka
• Prebuilt and custom apps
22

www.ekaplus.comwww.ekaplus.com 23
Customers
A G R I C U LT U R E
M E TA L S & M I N I N G
E N E R G Y

Perth
Global Market – Global Customers – Global Engineering & Support
Singapore
London
New York
(CT)
Adelaide
Development & Support Centers
Bangalore
Eka Offices
Calgary
24

Intelligent. Integrated. Innovative.

Functional Map
Origination Grownet Physical Trade Management Derivatives Risk Analytics General
Setup
Grower
Mgmnt
General
Features
Trans-
action
Mgmnt
Physical
Trade
Logistics Inventory
COG-
M2M-
P&L
Settlement
Commodity
Derivative
Derivative
P&L
Risk
Limits/
Exposure
Stress
Testing
Derivative
Analytics
Fx & Cash
Flow
Analytics
Grower
Analytics
P&L
Analytics
Position
Analytics
Alerts &
Reminders
Market
Data
Grower
Acquisition
Setup
Grower
Cash
Payments
Portal User
Account
Management
Delivery,
Invoice,
Payment
Allocating
Sales to
Purchase/
Stock
Back To
Back
Movement
Discrete &
Pooled
Stock
COG A/R & A/P
Broker
Manageme
nt
Commodity
Derivative
P&L
Counter
Party Risk
Stress
Testing
Reports Reports Reports Reports Reports Alerts
Commodity
derivative
prices
Grower
Profile
Grower
contracts
Online
contract
writing
Contract
Amendment
&
Cancellation
Processing
and
Blending
Negative
Inventory
Physical
M2M and
Unrealize
d P&L
Cost
Accruals
Exchange
support
FFA Trade
P&L
Credit Risk
What-If
Trades
Domain Domain Domain Domain Domain
Alerts/
Reminder
Managem
ent
Freight
Derivative
Prices
Price
Setting &
Publishing
Grower
Deliveries
Portal
User
Requests
Contract
Approval
Flow
Commodity
Movement
Order
Stock
Holds
Realized
PNL
Credit &
Debit
Notes
Hedge
Allocation
To
Physicals
Fx Trade
P&L
Derivative
Trading
Risk
VaR Dashboard Dashboard Dashboard Reminder
Fx &
Interest
Rate
Interaction
with
Grower
Portal
Grower
Pool
Payments
Published
Price
Sheet
Contract
Capture
Documen-
tation
Stock
Insurance
Monthly
Costs
Instrument
Support
FFA
Market
Risk
Loans to
Grower
Contract
Confirmation
Flow
Domestic &
Export
Movement
Stock
Swaps
Payments
&
Receipts
Margins
Fx
Forwards,
Options
Risk Limit
Setup
Pool EPR/
Equity
Contract
Price Fixing
Internal
Movement
Stock
Transfor-
mation
Prepayme
nt
Invoicing
Options
Valuation
Settlement
Risk
Measure
Tracking
Basis
Manageme
nt
Ocean
Freight
Managem
ent
Weight
Adjust-
ments
Provisional
& Final
Invoicing
Settlement
Trade
Capture
Ticket
Handling
Quotations
Trade
Capture
Trade
Managem
ent
Title
Transfers
without
Movement
Secondary
Costs
Trade
Managem
ent
Weight
Finalization
Washouts,
Strings,
Circles

29
Typical Process Flow
Credit Risk
Market Risk
Trade life Cycle
Operations Risk
Business
Intelligence
CP Limit
Trader Limit
Quality
Deviation
Accurate costs
for M2M
Real-time Pos
Real-time PNL
Simulation
Workflow
Component
PNL
Signed/Unsigned
Alerts
Pending Shpt
Alerts
Pending Price
Fixation Alerts
Contract
Quality PD
Est. Costs
Der. Hedge
Ship. Inst
Recv. Shpt
Cost Accruals
AP Invoicing
Sales Cont.
Allocation.
Sales Planning
Sales Delivery
AR Invoicing
Payments
Overfill/Underfill
Over/Under
accrual correction
Overdue
Payments
CP Limit
Stop
Delivery
Update
Credit Risk
M2M
Exposure
Flat
Price
Risk
Basis Price
Risk
M2M
Exposure
Unhedged
Pos Risk
M2M
Exposure
Flat
Price
Risk
Basis
Price
Risk
Hedge
corrections Leverage on
tolerance
Overfill/Underfill
Unallocated
contracts
PNL
Attribution
Trade PNL

Strong P&L Analytics
Unrealized
Open
Contract
P&L
Realized
P&L
Component
P&L
Combine
d P&L
Allocated
P&L
Trade P&L
Top /Bottom
5 P&L trades
On
Demand
P&L
P&L
Attribution
Realized but
not price
fixed
P&L By
Counterparty
P&L by Trader
Month End
P&L
M2M
Exposure by
Counterparty
P&L By
Product
Customer/
Supplier
Analytics on
P&L
Loss Limit
Valuation
Simulated
P&L
P&L Trend

Global Risk: Empowering Best Practices
Eka.Risk
DECIDE: Configure A Risk Policy
SET: Set Limits by Dimensions
ACT: Monitor and Alert
Decide Best Practice Risk Policies
Management can define policies on which risks
need to be covered across the entire
organization.
Set Limits by Dimensions
Define quantity or monitory limits across
multiple dimensions such as profit center,
customer, corporate, strategy, line of
business and commodity.
Act on Risks
Empower corporate users to monitor and act on
Managements Risk Policies by monitoring
breaches.
Senior
Management &
Executive Levels
Risk Managers
and Business
Heads
Permissioned
Users
Single, unified access to all
risk information across all
businesses.
31

Global Risk: Configurations
Functional
Limits
Quantity
LImits
Daily Contract
Limits
Limits to buy
at a price
Don’t exceed
Unpriced
quantity
Don’t exceed
priced
position
Value Limits
Don’t exceed
contract
value xxx#
Loss
Limitation
value for
realized P&L
Value at Risk
P&L Limits
Physical M2M
Derivative
M2M
Credit Limits
Open
Contracts
Stop
Deliveries if
credit limit
not available
Organizati
onal
Structure
Corporate-
1
PC-1
Commodit
y-1
Commodit
y-2
Corporate-
2
Corporate-
3
CEO
VP-1
Trader-1 Trader-2 Trader-3
VP-2 VP-3
Group it here
Receive Alerts at these levels
1
2
3
Setup Risk Policies
32

33
Summary
Single
version of truth
High functional fit
Leverage on Enterprise
 Web based solution for multi user accessibility
 Integration with ERP & Accounting sys.
 Electronically store the documents
 Email output documents from the system
 Extensive reports on Position, P&L, Exposure
eliminates use of EXCEL
 Global consolidation for reporting and risk
management
 All commodities in one system
 All Business Units: Origination |Processing |Trading
 Well defined workflows for seamless data flow
 Good coverage on physicals and derivatives
 Advanced Risk Management
 Real-time analytics for decision making
 Very high product fit
 Global Risk Management specifically for
commodities
 User configured reports, alerts & reminders
 Heavy focus on analytics
 Leading next-generation Smart CM

35
• S top the information Olympics - gain confidence in the data
• M onitor coverage in real-time and understand needed actions
• A nalyze performance versus market
• R un real-time, complex simulations and scenarios
• T rack variances from budget and forecast
• C ompare suppliers performance vs. plan and forecast
• M anage with real-time or near real-time decision making information
Compliance / Risk PolicyBenefits
Eka Delivers:

USA
Two Harbor Point Square
100 Washington Boulevard,
Stamford, Connecticut 06902
United States of America
T: +1.203.810.4250
EUROPE
2 Sheen Road
Richmond , TW9 1AE
United Kingdom
T: +44.208.973.2683
AUSTRALIA
Level 5 185 Victoria Square
Adelaide 5000 SA Australia
T: +61.0.4479.77831
SINGAPORE
17 Phillip Street
Grand Building 05-01
Singapore 048695
Tel No: +65.8363.2635
INDIA
Embassy Tech Village, Phase II
Aster Building 2A, East Tower
Devarabeesanahalli, Outer Ring Road
Bangalore 560 103 India
T: +91.80.40819200
CANADA
Suite 730, 734 - 7th Avenue SW
Calgary, AB , T2P 3P8
T: +1.403.237.7740
Download Webinar Recording:
http://info.ekaplus.com/optimize-agriculture-supply-chain-recorded-webinar

Optimize Your Agriculture Supply Chain with Smart Commodity Management

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