Are You Prepared for the Volatility to Come?
January 06, 2017
Donald Trump has vowed to reshape trade policy on day one of his administration – renegotiating NAFTA, stopping the Trans-Pacific Partnership, and attacking “unfair” trade deals. The United States is the world’s largest importer, and a shift in US trade policy could have far reaching consequences. The US imported $2.309 trillion worth of goodsin 2015, including oil ($201.2 billion), metals ($60.2 billion), and chemicals ($52.1 billion). Commodity markets are already volatile, and no one knows what will happen come January 20. Have you adopted best practices for commodity trading? If not, you may not be prepared for what’s next.
Adopting best practices
Mitigate the impact of increased volatility by harnessing the power of big data and advanced analytics.
1. Invest in a next-generation CTRM solution and implement it for every commodity and every location to gain a clear picture of all commodity transactions throughout the company.
2. Choose a commodity-specific intelligence engine for advanced analytics. Generic business intelligence tools do not provide answers to the questions commodities companies need to ask, like ‘what type of profits or losses will result in the future if I need to change my trading strategy?’ Only commodity-specific solutions answer the right questions.
3. Add predictive analytics. Analysis that provides trends in oil prices last week are not useful to an oil trader trying to decide whether or not to book an order, but analysis that compares different alternatives and forecasts how to make a better deal is. That information is actionable. Oil traders can choose to lock in prices today based on that analysis, securing a lower price and potentially gaining an advantage over slower competitors.
4. Choose self-service analytics. For truly useful analytics, business users should be able to create their own analytics and customize those analytics when their business needs change. In fast moving markets, delays caused by relying on the IT department or other specialists to create analytics render the results useless.
5. Make sure analytics are accessible on mobile devices. Volatile markets don’t wait for you to reach your desk. You need decision support wherever and whenever you are working.
Technology to help
A next-generation CTRM system is essential for navigating the upheaval ahead. You need an end-to-end transaction management platform such as Eka’s InSight CM to manage commodity trading, raw material procurement, risk & compliance, and supply chain & operations. Add an advanced analytics solution like Eka’s Commodity Analytics Cloud to aggregate critical data from multiple systems (including CTRM, ERP, CRM, treasury, accounting, and spreadsheets), and quickly process and analyze that data for critical insights. Together, these systems provide the insights necessary to operate profitably in volatile markets.