Risk Management for Commodities with SAP

Increased security and cost stability in times of volatile raw material prices

Using the full potential of low price levels

The current development on the crude oil market makes it crystal clear that in comparison to exchange rates and interest rates, raw material prices are proving to be clearly more volatile. It is precisely such a deterioration in prices that offers possibilities for you to preserve the low price levels through the usage of appropriate hedging transactions and thereby create an advantage vis-à-vis the competition.

Your Goals

Safeguarding your results

Do you have to constantly adjust the prices of your products due to the ongoing price fluctuations on the raw materials markets? Do your company results depend on the evolution in the prices of one or several commodities?

Simple treasury procedures

Have you, up until now, shied away from commodity hedging because your existing treasury processes and systems could not, or only inadequately, map out hedging operations?

Process security

Are you already hedging commodity prices, but are not satisfied with your existing treasury processes? Do you appreciate a solution that is well integrated with your current system landscape?

Meeting regulatory requirements

Do different regulatory requirements (EMIR, Mi-FID, REMIT) pose difficulties for you with regard to your commodity hedging transactions? Do you want to generate the relevant reports from a single system without manual post-processing?

Our Solution

Integrated approach

With SAP's integrated approach, as the responsible treasury manager you can now create a risk analysis on the basis of physical commodities and thereby significantly increase the efficiency of your hedging strategy:

  • Procurement or sales orders for raw materials are captured in the material management or sales module.
  • An exposure report pulls current data and shows you all open risk positions.
  • Derivative financial instruments for hedging the risk positions are captured and verified in the treasury module
  • Finally, the transactions are posted to the general ledger as a valuation unit or hedge relationship according to German GAAP or IFRS.

Our offer to you

COMPIRICUS offers you an integrated approach throughout all the required process steps; from determining the commodity exposures, to the conclusion of hedging transactions, to the mapping in accounting we support you both in the process design and in the implementation of an efficient system solution. In detail:

  • Implementation of a consistent commodity hedging process for your treasury
  • Integration of this process with logistics (material management, sales, trade)
  • Mapping of your commodity derivatives in SAP TRM
  • Setup of new market data management according to contract specifications for the flexible procurement of commodity prices

Your Benefits

  • The hedging of raw material prices gives you more leeway for the active shaping of your business operations
  • Your company results fluctuate considerably less and can be better planned
  • Manual effort is minimized
  • All regulatory requirements can be met with a standard reporting tool

What are you waiting for?

Implement a professional commodity management system now, bring your SAP software up to date and enjoy all the advantages of this new development for the management of commodity prices.