White Papers Commodity Management and ERP | Page 6

Commodity Management and ERP A ComTech Advisory Whitepaper SAP COMMODITY MANAGEMENT SOLUTION The leading provider of ERP software globally is SAP. With thousands of implementations across almost every industry, SAP has conceivably seen almost every business need imaginable in terms of ERP requirements. At the request of its customers, SAP has created a strategic investment area within SAP Business Suite applications complete with a dedicated development and solutions team to collaborate with customers on commodity management. The SAP Commodity Management solution is able to leverage SAP’s core strengths in logistics, finance and industry solutions as well as any and all work on platform, analytics and performance. SAP Commodity Management is already licensed by more than 70 SAP customers around the world. Figure 1 | SAP Business building blocks for Commodity Management ANALYTICS ANALYTICS QUALITY mgt. COMMODITY PURCHASE PROCESS WAREHOUSING TRANSPORTATION COMMODITY SALES PROCESS MANUFACTURING COMMODITY RISK MANAGEMENT ACCOUNTING The result is a solution that has addressed the three key areas needed in a commodity management solution as follows, COMMODITY PRICING – SAP’s pricing capabilit ies within a commodities or raw materials context were already very robust and configurable but SAP has added a special price calculation for commodities that are traded at exchanges. Commodity pricing with SAP offers tremendous flexibility in terms of building formulas and rules, building in other pricing criteria such as quality attributes for example, utilizing quoted market prices, calendars, currency exchange rates and much more. It is at the heart of the SAP Commodity Management solution and it supports the assessment of fees, taxes, differential pricing, fixed and floating pricing, derived forward curves and many of the other complexities © Commodity Technology Advisory LLC, 2014 traditionally found in commodity transactions. Added to that functionality is the ability to track the status of a price; as the final price cannot often be determined until some point in the future either due to fixation timing issues or a need to validate quality attributes, for example. Figure 2 | Aspects of Commodity Pricing 1 QUALITY QUANTITY MARKET DATA Flexible Price Calculation RULES FRAMEWORK