Commodity Management refers to the strategic activities entailed in the process of the procurement of raw materials to the subsequent shipping of the commodities to their customers. There are other words you may come across while looking for Commodity Management such as Category Management, Strategic Procurement, and Merchant Management among others, but in this post, we are going to focus on the different components of commodity management and what one should look for in a good Commodity Management Software/Application.
A basic commodity management software/application should have the ability to capture both buyer and seller information. Also, it should have the ability to capture all types of commodities and their relevant attributes such as associated foreign materials, moisture levels, etc. A good commodity management software/application should be able to differentiate between the varying type of commodities, as well as be flexible in terms of individual and mass pricing of contracts such as the ability to lift futures as well as roll and cancel on contracts.
Types of Contracts
When managing commodities we often deal with a wide array of contracts. Some of these contracts present themselves under labels such as Flat/Fixed/Price, Futures, Storage, Flex, DP/Delayed Price/PLA and many others. Therefore, it is crucial that commodity management software be able to accommodate and generate these contracts.
Live Market Price
One of the greatest challenges in commodity management is that of handling market prices. Because market prices are often so volatile, a good commodity management application must have the ability to automatically keep up-to-date with market prices in the system.
Apart from live market price, there are other components which contribute to the contracts such as Freight fees, Broker fees, Loading and Unloading fees, and others. Therefore, a good commodity management application should have the ability to easily accommodate these additional pricing components and automatically calculate the final prices.
Weight Conversion and Currency Management
In Commodity Management, we often need to deal with different types of units of measure and currencies based on their varying countries and regions. Thus, it is crucial that commodity management software be able to automatically compute necessary weight conversions as well as support multi-currency and FX rates with their respective local currencies accordingly.
Commodity Attributes and Discount
As mentioned earlier, a good management software should be able to directly capture relevant attributes corresponding to commodities. These attributes can have an immense effect on the final weights of the commodities.
Commodity Management not only corresponds to the buying and selling of commodities but also deals with managing inventory. A good commodity management software should effectively analyze Daily Position Reports which give us the details on loads coming in and out of their warehouses.
Packaging and Shipment
Once we generate the contract, our next job is to pack the commodities and ship it to their final destinations. There are a lot of factors which come into play during packaging and shipping such as the associated vehicles/vessels, packaging materials, and bills of lading. Commodity management software must therefore include the ability to track these loads through capturing all relevant packaging and shipment information in an efficient and effective manner.
The final stage of commodity management is to generate a settlement or invoice for the corresponding contracts. A good commodity management system should have the ability to generate an individual settlement/invoice or combined settlements/invoices and all shipping related documentation within its system. Finally, a good commodity management application should allow us to quickly and securely sign the final contracts digitally.
You may be wondering how and if all the above functionalities can truly be covered within a single commodity management software/application?
Fortunately, with the advent of cloud computing and the advantage of state-of-the-art platforms such as Salesforce, Commodity CRM is an already proven commodity management application which we have expertly built to fit all the necessary requirements of good commodity management software. Our dedicated team is more than willing to work with you in implementing and even further optimizing Commodity CRM for your business.