Can Modern CTRM Solve Agriculture’s Top 5 Challenges?

We surveyed dozens of agriculture companies and asked them what their top five business challenges were. While many of these challenges have been plaguing commodity traders for decades, today’s modern technology delivers a path to overcome them.

The top five challenges these agriculture companies listed were:

1. Cash management
2. Risk/hedging effectiveness
3. Operational/supply chain efficiencies
4. Accurate & timely market intelligence
5. Regulatory compliance

Traditional commodity management

Traditional commodity management consists of monolithic CTRM systems that are isolated from other systems, using only data created in the CTRM system. This approach results in data siloes, with no real-time connection between procurement, logistics, plant management, commodity trading, accounting, etc.

Companies that use siloed systems are stuck using spreadsheets to aggregate and analyze data for reporting. The problems with spreadsheets have been discussed at length in this blog, but the quick answer is that manually inputting data into spreadsheets takes a long time and often results in errors due to human mistakes.

Spreadsheets inhibit good decision making. You cannot get real-time insight when it takes days, or even weeks, to collect all your data and run reports. By the time the reports are done, they are already outdated, because markets don’t stop changing while you run reports.

Modern CTRM

Modern CTRM ties your entire value chain together on one platform, providing real-time visibility and one true picture of truth across the entire organization. It automatically aggregates data from systems across your entire value chain – real-time, historical, structured, and unstructured data from internal and external systems including CTRM, ERP, accounting, spreadsheets, weather forecasts, market feeds, and more – to create more accurate insights and enable you to make better trading decisions.

Accessing real-time data from both internal and external sources enables commodity traders to analyze the impact of dynamic market movements quickly, identify areas of opportunity or concern, and plan accordingly – doing in minutes what used to take days or weeks.

Modern CTRM also takes advantage of the latest analytics tools, including AI and machine learning, enabling you to create meaningful insights quickly and easily.

How does this solve our five top challenges?

1. Cash management. With modern CTRM, cash flow management is easier. Using all available information about payments – both current and historical data – you can analyze payment history and behavior patterns to determine estimated payment dates. You can predict projected cash flow based on payment terms and analyze scenarios based on shipment start, middle, and end dates to evaluate various possibilities. This can help you distribute principal cash flows evenly and avoid near-term liquidity risks.
2. Risk/hedging effectiveness. With real-time data from across the entire value chain, you gain a current, accurate, and complete view of exposure, pricing, market conditions, and more, enabling more effective risk management. Real-time data, analyzed quickly, helps you stay on top of risk drivers. User-defined alerts notify you instantly when risk limits are breached, so you can take immediate action to address problems.
3. Operational/supply chain efficiencies. Modern CTRM connects information across your entire value chain, enabling more efficient planning and scheduling and improving operational awareness. Track inventory at each location and maintain values in real time. Use the complete view of inventory across the value chain to improve logistics and optimize movements across different modes of transport – truck, rail, barge, containers, vessel, etc. Match available time slots for expected deliveries to vehicle availability and reduce wait times and queues. Run simulations for freight interruptions so you know what your best options are when disruptions occur.
4. Accurate & timely market intelligence. Create real-time alerts to notify you when market shifts occur. Automatically collect data from external sources – Accuweather and aWhere for weather forecasts, Refinitiv, ICE or S&P Platts for market data, etc. – for real-time market intelligence. Use advanced analytics to analyze data, run simulations, and understand the impact of market changes on your business.
5. Regulatory compliance. Use automation to make compliance management easier. Automatic integration with your trade repository ensures you submit transactions and track the status in real time while meeting reporting deadlines. User-defined alerts on acknowledgments or rejections from the trade repository ensure you take prompt actions to resolve issues in regulatory reports across geographies, commodities and asset class (including EMIR, CFTC, MiFiD, ICE, MAR, Dodd Frank, and FinFrag).

Agriculture’s biggest challenges can be conquered using modern technology. You just need to replace outdated, inefficient systems with a modern, integrated CTRM platform that uses today’s technology to power your business. 

Mary DeFilippe spends her days creating engaging content – blogs, white papers, articles, and more – that helps readers better understand new technology. She can frequently be found walking around the office listening to heavy metal music while pondering ideas for her next blog.