With coal prices historically lower and more stable than oil and gas prices, coal is likely to remain the most affordable fuel for power generation in many developing and industrialized countries. However, in order to control costs, coal supply management will become increasingly important, with major coal businesses needing to focus on supply chain and inventory efficiency while also managing quality specifications from contract to delivery.
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.
Openlink enables companies to manage coal quality from contract all the way through to delivery, and quality specification management capabilities are second to none. Capture positions, inventory and volumes in-transit while also tracking balances by origin, product grade and quality – so you’ll have the visibility you need to optimize inventory levels. With Openlink, you can also track the financial impact of supplier default or force majeure events to identify exposures and devise measures to mitigate supplier risk. Crucially, Openlink provides automated, straight-through processing of both physical coal transactions and financial derivatives, providing you with an aggregated physical to financial view of coal positions, price risk exposure and opportunities to increase ROI.
Keeping track of inventory is very complex, and is typically managed outside procurement systems; each have to deal with multiple points of origin, massive volumes of coal in-transit and inventory stocks of variable grades. As a result, companies have to manually input data into fuel budget planning tools and often err on the side of holding too much inventory.
Both sides can be managed at once; deals that impact position or inventory can be captured while also tracking balances by origin, product grade and quality, storage and shipping terminals, freight district, delivery location and / or volumes in transit. Inventory costs are continually recalculated based on evolving conditions within calculated composition blend analysis.
The quality of coal available and on hand can add a great deal of complexity when it comes to price adjustments, delivery acceptance, and return on investment.
Openlink captures all necessary data required to decide whether to accept or reject coal based on contract quality specs. Terms from contracts are automatically measured against measured qualities form lab analysis on deliveries. Lab analysis inputs from multiple samples from multiple shipments from varied origins and shippers can be mapped back to contract terms – price adjustments can be automatically calculated for invoicing and payables. Accuracy and maximum ROI are ensured.
General economic conditions, the increasing price volatility of coal and a number of other factors continue to create risk among suppliers – making more important than in previous years to have plans in place to mitigate the possibility of supplier defaults that could adversely affect your business.
Openlink allows for sophisticated tracking of the financial impact created by supplier default or related supplier force majeure events. Using our customizable reports, you can quantify financial exposure by delivery period, supplier and /or origin.
Companies could benefit from having a singular view of positions across both physical transactions and financial derivatives used in hedging. However, these trades and transactions are often processed in separate system. As a result, data must be extracted from each system for off-system manual calculations, in order to determine mark-to-market or price risk exposure.
Openlink collects and combines information automatically for straight through processing with programmable, automated tasks that coordinate both physical transactions and financial derivatives used in hedging.
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.