White Papers Analytics to Address Agricultural Market | Page 4

Analytics to Address the Increasingly Complex Global Agricultural Market the most up-to-date market information and a set of technology tools that provide the analytical capabilities necessary to maximize value for any given portfolio of assets and commodities. Throughout that value chain, daily and intraday decisions must be made as to how to manage supplies, facilities, and product movements to ensure profitability in a market in which small movements in commodity prices can have a profound effect on profitability. These decisions can include, among many: /H  ow to optimally manage inventory levels and costs across a complex network of warehouses and bulk storage facilities /B  alancing costs of commodity purchases and inventory movements against the need to maintain adequate supplies of feedstocks, intermediate products (like flours or edible oils), and finished consumer products /O  ptimizing recipes for finished consumer products or animal feeds A ComTechAdvisory Whitepaper T hese firms must have the ability to react quickly to price changes, not only for inputs or finished products, but also for intermediate products. Comprehensive and real-time visibility into current market conditions, inventory levels and valuations, and operational costs, combined with advanced analytics will allow these companies to determine the highest value for each intermediate and finished product and make a rapid determination as to whether to sell the intermediate or to continue processing/improving into stocks of finished goods. Maintaining the balance between costs and realized value requires a fundamental set of tools for optimizing profitability – price feeds, market intelligence solutions, and the appropriate software systems that can track, value, and measure profitability throughout the value chain all backed by a full set of advanced analytic tools that allows producers, traders, and merchants to test any number of scenarios related to inventory requirements, costs, and market prices. ADDRESSING COMPLEXITY WHILE MAINTAINING PROFITABILITY Though traditional CTRM solutions can capture and value many of the transactions associated with wholesale purchases or trading of agricultural and soft commodities, these systems have proven inadequate in managing the complex value chains found in most of these markets. With the development of the first generation of commodity management (CM) solutions, merchants, food processors, and CPGs did have a solution for tracking and managing commodity trades, inventory movements, and transformations. Additionally, these systems were able to provide valuable information and feedback regarding cost management and some of the optionality that might exist along that value chain. The first generation of CM systems were primarily architected as transaction based systems and were not designed to address sophisticated analytics. The growing complexity and globalization of the ags and softs markets has stressed these early generation systems’ abilities to model, manage, and provide the critical real-time data, information, and analytics required by commodities businesses. The necessity to capture, model, an- alyze, and optimize the many assets, commodities, intermediate products, and finished goods that flow through global operations often exceeded the capabilities of these companies’ CM systems, particularly as most of these systems are not capable, and usually not intended to capture the entirety of the operational and financial inputs necessary to truly optimize complex global supply chains found in today’s ags and softs markets. © Commodity Technology Advisory LLC, 2016, All Rights Reserved.