Optimize Commodity Pricing and Manage Commodity Risk Objectives Solution Benefits Quick Facts

SAP Solution Brief Commodity Management Solutions Objectives Solution Benefits Quick Facts from SAP

Drive excellence in commodity management across processes

Drive excellence in commodity In today’s world, effective commodity management has never been management across processes more critical to profitability. Companies need the best pricing as they buy or sell commodities while managing overall commodity risk. Commodity management solutions from SAP provide an integrated offering, resulting in one version of the truth that supports an environment of collaborative planning and management.

Nearly all manufacturing-related companies ways for you to manage your commodity risk interact with the broader commodity market. by supporting business processes impacted Whether your company produces commodi- by commodities in the areas of sales, pro- ties for sale to the market, buys and uses curement, and risk management. The solu- commodities to make products, or does both, tions are part of the SAP® Business Suite the discipline of commodity management applications. They enable you to manage your is extremely important to your business commodity risk through integrated processes success. designed specifically for your needs, and to perform timely and profitable commodity You need to manage short- and long-term purchasing, selling, and hedging. pricing, profitability, and risks related to your commodity purchases and sales. Commodity management solutions from SAP provide

2 Objectives Solution Benefits Quick Facts

Integrate business processes to derive benefits

Integrate business processes Like you, many companies are searching for You can automate your current manual pro- to derive benefits ways to eliminate spreadsheets, produce cesses to streamline the workflow, reduce timely reports on commodity positions and errors, and save time. Moreover, you can Get the visibility you need exposures to market prices, increase trans- transform your business processes to reflect parency, and bring operating groups together best practices based on current market con- Drive commodity procurement with a common goal. That goal is to manage ditions and techniques. excellence a significant component of the company’s daily business as efficiently as possible. You Drive commodity sales excellence can now do that with commodity management solutions from SAP. These solutions Drive commodity risk management provide you with standard, integrated soft- excellence ware for procurement, sales, and treasury tasks and functionality for invoicing, complex Develop processes for effective commodity pricing, logistics, hedge manage- data management ment, and risk reporting.

Automation can help you streamline business processes across multiple departments.

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Get the visibility you need

Integrate business processes With a clear view of your commodity portfolio, What’s more, you have the power to establish to derive benefits you are able to create and support an envi- the criteria for how you manage commodity ronment of collaborative planning and man- risk. You can create and define a standard Get the visibility you need agement. The commodity management view of commodities across multiple disci- solutions provide you with transparency and plines. This view provides you with the flexibil- Drive commodity procurement a 360-degree view of your business. You have ity to manage commodity risk in the manner excellence the ability to manage your commodity risk that fits your risk profile. on a real-time basis based on your unique Drive commodity sales excellence risk approach.

Drive commodity risk management excellence

Develop processes for effective data management Manage to the level of risk with which you are comfortable.

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Drive commodity procurement excellence

Integrate business processes With the SAP Commodity Procurement The simplified process is less error prone to derive benefits application, you can improve the efficiency due to one central application used to view in how you procure commodities. The extend- all deals that need to be invoiced and which Get the visibility you need ed enterprise resource planning (ERP) func- can pull data from multiple sources. Invoices tionality for advanced commodity pricing on can be sent as soon as a provisional price is Drive commodity procurement contracts, and support for provisional, differ- known, and incoming invoices can be verified excellence ential, and final invoices, will automate your on your timetable. Because the commodity process. SAP Commodity Procurement en- pricing engine fully integrates with sales, dis- Drive commodity sales excellence ables a streamlined way to create invoices tribution, and procurement (materials man- before full delivery and full payment. Treasury agement) functions in the SAP ERP applica- Drive commodity risk management integration allows you to transfer accurate tion, the SAP Global Trade Management excellence commodity exposure positions to risk man- application, and the SAP ERP Financials solu- agement in real time. tion, events-based pricing is possible. Develop processes for effective data management

Eliminate “out of system” calculations and post clear, concise invoice receipts for each purchase with SAP Commodity Procurement.

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Drive commodity sales excellence

Integrate business processes With the SAP Commodity Sales application, to derive benefits you can create the foundation for the complete logistical and settlement processes Get the visibility you need that enable you to sell your commodity and commodity-related products. The solution Drive commodity procurement gives you extended ERP functionalities excellence to handle commodity-based contractual pricing; provisional, differential, and final Drive commodity sales excellence invoicing; and integration with treasury to transfer commodity exposure positions Drive commodity risk management for risk management. excellence Get a firm handle on complex commodity Develop processes for effective data management pricing, like average pricing over multiple weeks based on indexes, with the SAP Commodity Sales application.

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Drive commodity risk management excellence

Integrate business processes By implementing the SAP Commodity Risk reporting of your commodity portfolio. The to derive benefits Management application, you can assess the added benefit of this solution is that the deci- price risk of commodity positions and handle sion maker has the necessary information to Get the visibility you need the financial transactions used to hedge this evaluate and execute the appropriate hedge risk. With the solution providing for deal cap- for your company. You can then focus on the Drive commodity procurement ture and processing of commodity-based economic management of your company and excellence financial instruments, supporting hedge understand the related impact on accounting accounting for derivatives, and allowing for and regulatory reporting. Drive commodity sales excellence storage of commodity-based transactional activity, you can generate comprehensive Drive commodity risk management excellence

Develop processes for effective data management Gain confidence in commodity risk hedging and reporting with SAP Commodity Risk Management.

7 Objectives Solution Benefits Quick Facts

Develop processes for effective data management

Integrate business processes When you implement commodity manage- business requirements. The solution provides to derive benefits ment solutions, you gain access to a consoli- worldwide management across multiple busi- dated solution where all commodity-based ness units to enable one source for transac- Get the visibility you need transactions follow a standard structure that tional data, market prices, and daily results. minimizes time for audit and increases data The secure processes of data management Drive commodity procurement integration quality. With these solutions, you give senior-level executives confidence in excellence can create core operating reports and use the knowing the results are accurate and audit SAP BusinessObjects™ portfolio of solutions ready. Drive commodity sales excellence to produce custom reports that reflect your

Drive commodity risk management excellence

Develop processes for effective Custom reports let you see data management the results that matter to you.

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Realize the expanded industry applicability

Realize the expanded industry Commodity management solutions from SAP volatility in revenue stream, better pricing, applicability serve commodity producers such as oil, min- and will achieve a higher percentage of sales ing, and agriculture; commodity converters hedge. such as chemicals and oil and gas refiners; and commodity consumers such as consumer You will also be able to keep commodity price products, automotive, and high-tech companies. risk at a minimum, globally manage your net open commodity position while minimizing The solution will help you reduce volatility in the number of missed hedged transactions, raw material prices and obtain better execu- and minimize usage of working capital. tion pricing. You can also realize the percentage of volumes hedged for longer maturities By using integrated solutions from SAP, and increase the number of hedged com- you can effectively manage commodity risk modities and percentage of hedged commod- on a timely basis, resulting in clearer insight ity spend. Commodity producers will have less into company profit streams for multiple segments.

You deserve a comprehensive commodity management solution.

9 www.sap.com Objectives Solution Benefits Quick Facts

Summary Solution With commodity management solutions from •• Direct transfer of sales and purchases SAP, you can optimize commodity procure- data to the treasury and risk management ment, sales, and risk management processes. solution These integrated SAP® solutions support a •• Rules for physical commodities and a consolidated, real-time view of commodity calculation engine that fully complements risk across lines of businesses so you can the solution react quickly to market changes. They also •• One version of the truth on a real-time basis provide process transparency so you have a complete view of commodity risk – a single Benefits version of the truth. •• Commodity business decisions fully integrated with the physical supply chain, Objectives financial risk management, and accounting •• Increase access to timely market data •• Improved authorization concepts, change- and lower the risk of over- or underhedging history tracking, and legal and regulatory •• Integrate logistics and finance systems compliance •• Provide real-time accurate data to formu- •• Real-time data collection and reporting late appropriate risk management solutions •• Correct pricing and invoicing and the •• Automate calculations and processes to flexibility to model new pricing improve pricing, settlements, and reporting Learn more To find out more, visit us online at www.sap.com/commodity.