80% of Commodity Businesses are Missing the Mark on Inventory Management
The inventory management component of energy trading and risk management software (also known as ETRM Software or CTRM software) is critical to any commodity business’ success. However, many companies often wait until after initial ETRM software implementation to integrate this component or worse, have no integration plans for it at all – and that’s what we’re setting out to change.
Allegro recently co-hosted a webinar with capSpire on unleashing the power of Allegro’s inventory management, where industry experts discuss why monitoring inventory within an ETRM software solution is essential for enhancing a company’s commodity business. In this webinar, we asked our 107 participants what percentage of their inventory is tracked in Excel or other off-systems processes; and over 80% reported they are tracking a large portion of, if not all of, their inventory in Excel or other off-system processes. If you are part of this statistic, know you aren’t alone, but know that you are exposing yourself to greater risk and missing out on big opportunities to streamline your business processes.
Managing inventory in spreadsheets or other off-system processes is not the answer.
Inventory underlies everything you do in a physical business; and a commodity company’s current and future success is dependent on its ability to provide the entire organization with real-time, accurate inventory information and management capabilities. However, many businesses are still using manual processes and dated systems to manage inventory throughout the entire organization. As a result, they are missing critical strategic insights on trading, risk management, and accounting.
Inventory management in spreadsheets or other off-system processes is not conducive to the objective of being faster, more agile, and more accurate. Here are some common problems that occur when businesses do not fully track inventory within their commodity management software:
- Trade capture errors
- Manual processes are labor intensive
- Details get lost in translation as documents are distributed and turnover occurs
- Employees working in and preparing these documents are multi-tasking, which means they are even more prone to entering the wrong data
Is your business looking for ways to decrease your use of Excel or other off-system processes for inventory management? Consider this: You need CTRM software that is configured with inventory in mind at the onset of implementation so that when you get to inventory calculation, it is working correctly and you can avoid having to change configurations and business processes.
Turning Inventory Valuation into a value-added commodity is possible with the right tools.
The process of unwinding transactions from front to back office can be tedious and costly. With the right commodity management software solution, you can relieve those headaches and improve your business controls and processes with a comprehensive, fully scalable solution that tracks inventory throughout its entire lifecycle in real-time and in one place. An effective inventory tracking solution within your ETRM software is key to ensuring you gain full control of your business across front, middle and back offices.
The right commodity management system should provide you with information that:
- Pulls in your operational data and then updates those builds and draws that occur in operations to then recalculate your inventory both currently and in the future
- Supports inventory valuation methods such as FIFO, WACOG, and Market for accurate and streamlined accruals
- Computes WACOE and renewable energy credits
- Automates generation of net forward and net back calculations, including sales margins to analyze profitability
- Allows for real-time and flexible reporting of weighted average sales price and weighted average cost of goods net back and net forward, providing you with the ability to easily query ,sort, and select key data for reporting.
Once you fully integrate your inventory tracking into your ETRM software, you will have one source of truth that provides your entire organization with greater portfolio control, resulting in time saved, decreased errors, scalability, and enhanced risk management capabilities.
Are you ready to take the next step toward inventory management success? Contact us today.