Today’s agricultural businesses need an agricultural software solution that will handle a proliferation of contract types – each involving a different step along the value chain and the supply chain. Different contracts and contract types cover purchasing, storing, shipping and trading of agricultural commodities, and each is faced with increased complexity in inventory management and forward commitments of agricultural commodities.
The opportunity for improved profits lies within the operations of the business itself – within the chance to create a single resource including all relevant data, by breaking down silos within the organization, and through applying and sharing deep expertise up and down the enterprise.
With Openlink, you’ll be working with a complete front- to back-office solution for agricultural commodity management. Assets, such as grains, sugar, cocoa, coffee, cotton, pulses, oilseeds, nuts, rice, feed, flour, biofuels and even livestock, are covered with custom features across procurement, inventory management, costing, transportation, logistics, ticketing, settlements, storage, contract management and merchandising. All are covered through position management, hedging, FX risk, accounting, treasury management, reporting and compliance. In other words, the total and complete package.
Vendors and suppliers are becoming increasingly volatile, and increasingly defaulting on supply contracts for a variety of reasons. These external economic conditions and high price volatilities can create risk for your enterprise; risk that can be mitigated with proper foresight and planning.
An Openlink solution allows you to completely model the effects of possible supplier failure in order to properly analyze and fully comprehend your potential future exposure (PFE). With the proper foresight, Openlink can help you devise strategies to mitigate the impact of supplier defaults; using methods such as collateral management and supplier concentration management.
Many large companies are faced with varying resources and workstreams for purchasing, storing, shipping and trading agricultural commodities. Keeping track of inventory and commitments across all these commodities at multiple locations is a complex operation, and is often tracked using manual spreadsheets or even whiteboard-based approaches.
An Openlink solution captures deals and tracks movements of agricultural commodities at every staging point along the chain. Movements can be grouped so each can be reconciled to third party statements and/or physical inventory readings. The value of inventory can also be calculated using these same movements. With Openlink you get real-time visibility over positions and inventory levels across all commodities in storage or transit, at all locations. This means you can minimize the risk of supplies not being available at the right place at the right time – for example to load a ship or to meet customer demand – and avoid issues around supply delays, substitutions and penalties.
Freight logistics require a significant manual effort by most companies in order to manage the movement of commodities. For example, ensuring producers, freight operators, storage facilities and customers all have the same knowledge of relevant movements can be quite an undertaking. Also challenging is manually matching freight carrier invoices to bills of lading – a significant clerical task.
With an Openlink solution, auto-generated notification documents go out to all interested parties – from freight operators, storage facilities, customers and more. You can schedule movements, tag freight rates to known movements and the system will automatically create an accrual in the system based on the freight carrier, cost and weight. This automates a lot of the work around freight logistics; streamlining processes, reducing operational risk and tightening payment controls.
Prices for agricultural commodities continue to be volatile - and fewer long-term purchasing contracts are generally available. For shipments that don't have back-to-back supply and purchase contracts, this can expose commodity management companies to absorb price risk, which may in turn need to be hedged. But hedging is typically undertaken by the finance team using spreadsheets to determine requirements; this is separate from the procurement function.
An Openlink solution supports business processes that parallel the workflow from planning and procurement and through to hedging. With a comprehensive overview, purchasing and finance teams get a complete view over company wide inventory and forward commitments when purchasing and hedging outstanding commodities. This enables effective hedging strategies that mitigate the effect of price volatility without adding unnecessarily to hedging costs.
Agricultural Commodity Management often requires companies to trade in both physical and financial instruments. Contracts for commodities can be quite complex; with different pricing mechanisms governed by different boards of trade or other restrictions. This can prove problematic because of the need to invest in and maintain individual systems and instrument types needed to trade effectively. Disparate systems require information hand off between systems, and as a result, data need to be extracted and processed at a granular level and then standardized and integrated into reporting tools. And then, should an issue need to be addressed, it means going back to the source system.
An Openlink solution covers physical commodities faced with an array of complex pricing mechanisms and restrictions as well as additional financial contracts. Our flexible structure supports virtually any type of transaction and contract, from a simple physical one to structured delivery driven by complex derivatives. With our real-time reporting tools, you can see your aggregated positions, risk and P&L across commodities and financial instruments and then drill down to investigate areas of concern to the transaction level, all at the click of a mouse.
To learn more about how Openlink Solutions can work to improve ROI and streamline operations in your business, contact us for a free consultation or no obligation demo.