The disruptions and extreme
complexities of the commodity supply chain create great risk that needs to be
managed, as well as equally great opportunities if prices move in a favorable
direction. The interior (North America) agricultural commodity supply chain is
heavily based on various events, such as weather impacting supply and
transportation, scheduled/unscheduled maintenance of railroad tracks, and planned
and required federal transportation restrictions. Global demand for agricultural
commodities, the impact of regional weather, and economic and geopolitical
events can also dictate interior transportation requirements. As with other
commodities, transportation and storage costs can have an adverse impact on
agricultural commodity prices. By responding quickly and efficiently to
observed and expected changes in the supply chain, commodity market
participants can optimize their business operations, reduce risk, and increase
profit potential.
Traditional, disparate software
systems are becoming insufficient in this complex business environment as they
are not built to be responsive and adaptable to the ever-changing, highly-event-driven
dynamics of the agricultural supply chain. Our market research indicates a
complete software solution in addition to other external variables need to:
account for the impact of storms or extended weather events on crop production
and transportation; monitor crop condition; manage progress and storage data;
track price movements in the cash and futures markets; and assess how global
economic and geopolitical events are driving demand. They also must do so more
quickly, on a single platform, and with an easy-to-use interface. In order to
support demand in a rapidly-changing environment, software systems must be designed
to provide Straight Through Processing (STP) capabilities and business process
support for increased market visibility, reduced errors, and a more holistic
view for market participants; not only manage risk, but to also capitalize on
market movements.
Ray Asif
DTN
Trading and Risk Management Product Manger