In the world of trading, most of the soft commodities play a vital role within the entire food supply chain, as they are used for a wide scope of food products & byproducts. In addition to their primary use as feed for livestock (including cattle, hogs and poultry) and their use as food for human consumption, an increasingly large share can also be used to produce ethanol for fuel.
Oil, sweeteners, bakery products, soft drinks,… are some of the many byproducts these ingredients can be transformed into. Evidently, these types of raw materials play a huge strategic role within the entire food supply chain.
If you yourself are a player in the nutritional industry, there is a high likelihood that you will be trading with these ingredients. In this regard, you will most likely need to deal with a large variety of forward- and future contracts. Since the prices of these commodities are changing rapidly, the risk of losing money as a result of price fluctuations is high. In order to report the margins properly, it is important to link the sales and purchase transactions in your ERP and not outside the system (i.e. excel sheets).
In the commodity world however, properly reporting margins can be particularly burdensome, especially when using all kinds of stock-exchange support mechanisms such as:
- Different price-, and currency-hedging strategies,
- Multiple contract matching;
- Swapping between the already matched contracts;
- Working via different brokers;
- …
If you do not have a proper ERP-system in place that supports margin reporting in the complex trading transactions, it is easy to make mistakes. Mistakes that will undoubtedly result in wrong business decisions and a loss of opportunities.
ADIFO offers a solution to this problem within its ERP-system “MILAS”. With a feature called “ADIFO Trading agreements”, you can easily match the different sales and purchase transactions in a ‘multi-multi relation’. The system guides you through the whole process, all while being able to see the predicted and realized margins between sales and purchases AT ANY TIME. The margin elements are also provided in great detail (i.e. product, cost, freight, insurance etc…).
With the ‘MILAS CTRM’ features (commodity trading & risk management), our software is one of the leading solutions in the field of new generation CTRM, setting new standards for: ease of use, flexible functionality, end-user performance, scalability, reliability, and provides a fast ROI in the nutritional industry.
ADIFO is a specialist provider of CTRM software solutions for feed/food producers and commodity trading organizations. MILAS (our ERP solution) is built on the “Microsoft Dynamics AX” ERP platform, and will be available in a “Microsoft Dynamics 365 for Operations” version as well.
Want to know more about how and why MILAS is the perfect ERP tool for feed business? Check our MILAS product page, download the MILAS ERP brochure or watch the MILAS webinars recordings.