Companies in the nutrition supply chain have an essential part of their total cost in soft commodities (contracted or in stock). To make well-grounded decisions, your management needs to be well informed about the financial state of your commodities. A big challenge is the high price volatility of the most important ingredients. This challenge became even bigger in the last year.
The raw materials which take the lion’s share of the animal feed or human food costs are often traded in international stock exchanges. This is because you need to ensure your access to those ingredients (for example: wheat, corn, soya…). As a trader or a manufacturer, you need to make long term forward contracts for those commodities. These contracts can be fixed price contracts, where you know the price that you are going to pay in advance, or can be basis contracts, where the prices are linked to a stock exchange futures price (such as CME, or Euronext). In both cases you need updated information about the market prices, since commodities are traded in different stock exchanges, in multiple periods and units. Managing this without a proper integration is a challenging exercise.
Barna Ugroczky, Sr. Solution Architect at BESTMIX says: “A business decision maker needs to be able to monitor the raw material prices of their own contracts in comparison to the international market price. An ERP, where you manage your contracts must provide mark to market reports and automatic basis contract valuation out of the box. This is only possible if you have the live market price in your ERP system. BESTMIX -software partner in the whole nutritional chain- provides an industry best practice ERP, called BESTMIX Enterprise (based on Microsoft Dynamics 365 for Finance and Operations). To support our customers in the forward contracting business process, we have developed an interesting feature on top of modules Advanced contract management and Commodity and risk management, called market price integration. By using this module, you can integrate your ERP with all major stock exchanges, such as Chicago Board of Trade, Euronext etc… You can set up how often you need to import the commodity prices (daily, hourly, etc…). After import your mark to market dashboards are automatically updated, and your premium (basis) contracts are automatically re-valued. “
