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Looking to Manage Inventory Costs for Liquid Commodities Effectively?

Conventional manual methods and third-party systems might not provide the needed real-time accuracy for inventory costs and valuation. Additionally, calculating costs for individual units of inventory, especially within a range of contracts, can be time-consuming. The introduction of RightAngle’s latest version, S21.1, featuring the Daily WACOG by Contract capability, addresses the need for accurate, real-time inventory valuation.

Unlike traditional methods that struggle to reflect daily commodity price fluctuations, the new feature in the latest version of RightAngle closely aligns inventory valuation with market dynamics, benefiting businesses with high daily sales volumes. Implementing inventory valuation methodology of WACOG in an integrated system like RightAngle streamlines inventory management and enhances risk and accounting practices. We recommend that our clients embrace RightAngle’s WACOG method, as it offers a comprehensive remedy for efficient inventory management. This solution capitalizes on industry-specific attributes, tailoring options, and alignment with regulations, all of which combine to enhance effectiveness, accuracy, financial gains, and competitiveness. 

Addressing Inventory Cost Challenges

Challenges in managing inventory costs accurately are widespread. Manual methods can lead to inefficiencies, errors, and compliance risks that affect decision-making. The absence of real-time inventory data visibility can hamper competitiveness, and the complexities of calculating costs for liquid products are a recognized concern.

Current complexities involve disjointed systems, manual calculations, lack of integration with workflows, and the inability to capture frequent price fluctuations inherent in liquid commodities, which ultimately leads to inaccurate cost estimates. Additionally, the continuous flow nature of liquid commodities makes precise inventory tracking difficult, as factors like shrinkage, blending, and measurement inaccuracies can lead to discrepancies in quantity and cost assessments. Managing inventory across various storage facilities, determining appropriate pricing points for cost allocation, and adhering to regulatory standards further contribute to the complexity of the process.

  • Absence of real- time inventory data
  • Disjointed systems
  • Manual Calculations
  • Lack of integrated workflows
  • Inability to capture price fluctuations
  • Difficult inventory tacking

Commodity companies will employ specialized ETRM software and other peripheral systems to address some of these challenges however even then other issues like maintaining data integrity, resource-intensive inventory data updates, error-prone reconciliation processes, and the manual marking of transactions are prevalent in accurately tracking inventory costs and value. 

Benefit from Real-Time Insights, Customization, and Precise Reporting

Selecting RightAngle for implementing WACOG inventory valuation for liquids commodities offers several advantages over other ETRM solution alternatives. The integration of WACOG modeling into RightAngle is customized to suit the business’s needs, utilizing the platform’s robust reporting capabilities. This encompasses features like contract-based cost tracking, flexible pool-based cost calculations, and daily WACOG reports for precise cost insights.

To maximize the utility of RightAngle’s inventory valuation capabilities, we recommend crafting bespoke reports within the platform that consolidate diverse inventory data points. By doing so, businesses can streamline their inventory management processes effectively. A notable case involves our creation of tailored reports for a client within RightAngle, where we amalgamated data from various sources. For instance, this approach integrated information from multiple reports, yielding insights into tank-level inventory through the Physical Inventory Interface. This encompassed valuable details, including estimates of daily end-of-day inventory. Furthermore, our solution seamlessly incorporates the Terminal Data Staging Interface, which validates terminal data to facilitate reconciliation. Moreover, the Search Terminal Inventory Recon Interface was utilized to meticulously compare terminal net quantity against transaction records, ensuring the continual updating of reconciliation statuses to promote a well-balanced inventory control system.

Additionally, RightAngle solution provides risk assessment via daily WACOG risk mark-to-market reports. Notably, the “Use Zero Values to Market for WACOG” function refines inventory valuation accuracy. Additional advantages include prior period adjustments, efficient accounting, seamless system integration, tailored reporting, and real-time data access for adaptive decision-making. This tailored implementation ensures accurate cost management, risk assessment, and reporting while catering to the client’s distinct operational requirements.

We advise clients to focus on unique business contexts and leverage RightAngle’s specialized capabilities in WACOG by contract, WACOG by pool, and Daily WACOG calculations. This tailored approach, aligned with industry best practices, sets our recommended implementation of RightAngle features apart from other available options and ensures that it precisely meets the client’s current situation and needs.

Strategic Edge: Enabling WACOG Implementation

The utilization of RightAngle for WACOG implementation for an organization brings a multitude of advantages, specifically tailored to meet the unique needs of the liquid energy industry:

Effective Cost Allocation

WACOG by Contract provides detailed cost insights for better financial control. WACOG by Pool offers market-responsive cost calculations.

Daily WACOG by Contract

RightAngle recalculates daily WACOG, aligning cost structures with market fluctuations. Crucial for industries like retail fuel, ensuring accurate decisions and risk management.

Customization

RightAngle's customization aligns tools with business goals, enhancing performance without compromise.

Smooth Integration

Seamlessly integrating RightAngle optimizes data flow, boosting efficiency across functions.

Strategic Insights

Leverage specialized WACOG reporting for real-time informed decisions and market competitiveness.

Holistic Approach

RightAngle tailors to client needs, offering a dedicated team for success. Partner with experts for a comprehensive solution that drives success.

Cash Application & Disbursement Module in RightAngle
RightAngle Customizations for Inventory Reporting Process

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Enhancing NGL Management with RightAngle

In today’s ever-evolving business landscape, the imperative for streamlined, interconnected solutions to effectively manage the multifaceted intricacies of Natural Gas Liquids (NGLs) has intensified. Within the dynamic energy sector, NGLs have evolved into widely traded commodities, their significance underscored by their ecological benefits and remarkable versatility throughout the refining process. However, the intricate process of refining Y-grade products into an array of diverse sub-products introduces a labyrinthine challenge. A web of spreadsheets and documents struggles to navigate the intricate logistics spanning the entire lifecycle, right up to the end consumer.

In this blog we will talk about how we bring in together NGLs complexity and RightAngle’s out-of-the-box functionalities together through Value Creed’s expertise. We strongly advise choosing RightAngle for managing NGLs due to its specialized focus on energy and commodity trading, seamless integration capabilities, high level of customizability, efficient refining and distribution tracking, enhanced risk management features, proven track record in the industry, ease of integration, and dedicated support services.

Navigating the Complexity of NGL Management

The intricate market dynamics of NGLs arise from the distinct behaviors, demand drivers, and price correlations among ethane, propane, butanes, and pentanes, coupled with their ties to crude oil and natural gas prices. Managing NGL portfolios requires delicate balance due to these interconnected fluctuations. Seasonal demand variations, driven by factors such as heating needs and summer driving, further compound the complexity.

Blending and regrading requirements also add to the intricacy. NGLs often require blending to meet specific product specifications and market demands. Each sub-products may consist of specific blends of various hydrocarbons, including ethane, propane, butanes, and pentanes, each with its distinct chemical properties. These components are blended in varying ratios to create different sub-products with desired characteristics for different applications. Proper management and tracking of these NGL components are essential to ensure the quality and suitability of the resulting sub-products. Inaccuracies or gaps in tracking these compositions can lead to inefficiencies, sub-optimal product quality, and difficulties in meeting market demands.

Moreover, the storage types required for NGLs are diverse and specialized, ranging from underground storage facilities to pressurized vessels. The need for proper storage adds complexity to the logistics, especially considering safety regulations, volume considerations, and compatibility of stored components.

RightAngle stands out as the optimal solution, offering specialized features for NGL storage, blending, and monitoring. It ensures seamless accessibility to a wide array of sub-products, meeting diverse customer needs. Its strengths lie in integration, customization, risk management, and a solid industry track record. However, prevalent use of third-party tools like Excel introduces inefficiencies, data disparities, and operational obstacles, impeding scalability and precise decision-making.

Elevating NGL Management with Value Creed’s Customized Solutions

Fusing our expertise with the intricacies of NGL complexity seamlessly integrates with RightAngle’s out-of-the-box functionalities. We have advised a client to implement a solution designed to elevate the management of Natural Gas Liquids (NGLs) through the utilization of the RightAngle system. Our efforts entailed product setup, integration of blending/storage deal options, and modeling of the bespoke transactions, movement tracking and invoice management within the RightAngle framework. These bespoke enhancements complement RightAngle’s core features and reports, orchestrating a cohesive & integrated NGL lifecycle management that eliminates dependency on 3rd party tools and manual data interfacing. 

Integrated Inventory Reconciliation Tools

Optimizes inventory management.

Enhanced Visibility

Amplified insights into sub-product refinement and distribution for informed decision-making and risk management.

Reduced Operational Costs

Enhances efficiency by eliminating dependency on 3rd party tools.

Tailored to the client’s unique trading needs and challenges, our solutions provide an all-encompassing perspective of NGL operations within RightAngle. Furthermore, streamlined business scenario mapping is achieved through seamless integration of the core application, resulting in reduced costs and complexities. This integration includes customizable deal templates featuring integrated chemical tables, ensuring accurate sub-product tracking. Additionally, movement document templates provide meticulous oversight over refining and distribution processes. Through workflow optimization, heightened precision, and advanced risk calculations, our solution consistently delivers optimal results for the client’s NGL asset management needs.

Employing RightAngle Functionalities to Advise and Deliver Tailored Solutions

RightAngle stands out as the preferred platform due to its capacity for multifaceted customization. While these tailor-made enhancements necessitates careful upfront design, and development, QA testing – they are pivotal to align the solution with the client’s business demand and system prerequisites. These personalized enhancements have yielded a favorable impact on the overall business performance, enhancing data accuracy, streamlining processes, increased user adaptability and fortifying the overall risk management capabilities. 

By gaining a comprehensive understanding of NGL operations within RightAngle, the client is empowered to make well-informed decisions confidently, thereby enhancing operational efficiency and driving profitability. Through the convergence of intricate market dynamics, seasonal fluctuations, blending complexities and a tailored technological solution, businesses such as yours can effectively navigate the complex NGL landscape and position for sustainable success.

Strategic Market Risk Management in RightAngle
Tailored Solutions for RightAngle's Unsupported Versions

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Leveraging ETRM Solutions for Effective Risk Management

In the ever-evolving landscape of the energy industry – navigating market volatility, regulatory shifts, credit risks, and operational challenges demands a robust set of enterprise risk management capabilities to effectively monitor and address relevant risk factors. Effective risk mitigation is vital for safeguarding financial positions, maintaining compliance and driving well-informed trading strategies.

Depending on the business segment that you transact in, ETRM Solutions such as  RightAngle provide the ability to generate insights and manage trading risks specific to an organization’s needs and requirements via risk reports and analytics, businesses identify, measure, and monitor risks according to their requirements. Integrating with external systems and real-time monitoring is often required to develop a holistic view of the risks. With modern technologies, workflow automation, effective risk mitigation, and decision-making can be managed in near real-time.

Enhancing RightAngle's Functionality: Unlocking Customizations

RightAngle utilizes standard risk management reports including default Mark-to-Market, risk exposure, and current exposure reports. These reports offer limited customization options resulting in a generalized perspective of risk exposures.

Furthermore, the prevailing approach to risk analysis and report interpretation heavily relies on manual efforts by risk analysts. Consequently, potential drawbacks arise, including errors in analysis, delays in identifying risks or not identifying relevant risks, and hindered decision-making due to the lag in obtaining and processing information. These limitations collectively emphasize the need for enhanced customization and automation capabilities within the RightAngle system.

Value Creed has helped extend the software functionality to bolster the out-of-the-box functionalities and optimize the system to deliver customized results and generate relevant analysis aligned with the company’s risk tolerance. We’ve successfully leveraged various 3rd party reporting tools for advanced risk management that can extract data from the system into the data warehouse and run through various digital reporting tools.

Comprehensive Advanced Risk Management Solutions

We focus on the intricacies of market volatilities, credit risk, regulatory compliance, and other complex factors that can significantly impact an organization’s financial performance and stability. It also encompasses comprehensive stress testing, scenario analysis, and enhanced risk quantification methods, such as Value at Risk (VaR) and Conditional Value at Risk (CVaR) by using 3rd party tools like Lacima, as mentioned it can extract data from RightAngle and move it into data warehouse where the data is analyzed and reported via with advanced reporting & analytical tools like Power Bi or Tableau.

Enhanced Mark-to-Market Reports

Comprehensive Risk Exposure Reports

Customized Search Reports

Our range of solutions encompasses enhanced Mark-to-Market reports, both with and without Real-Time FX Conversion, along with comprehensive risk exposure reports and customized search reports. The enhanced Mark-to-Market (MTM) reporting offers comprehensive trade position insights, displaying risk distribution across parameters such as strategy, product, and location. Custom MTM report views incorporate calculated columns for profitability assessment, while the options view incorporates sensitivity metrics for better evaluation of options risks. Real-time FX conversion eliminates manual conversions, ensuring transparent P&L reporting in local currency. Enhanced risk exposure reports offer in-depth views of various aspects, and custom search reports streamline risk adjustment tracking, limit setting, and alert generation. 

Use case: Integrated Market Risk Management and Analysis Report

Our customized Market Risk Management (MRM) and analytical solution is integrated with RightAngle. This integration allows the extraction of essential risk data from primary reports and enhances analysis for liquid and NGL product traders, generating detailed sub-reports based on refined information. While the analysis and reporting are seamlessly executed within RightAngle, an external tool developed by our team undertakes the specialized task of Value at Risk (VaR) computation using the Variance-Covariance method. This tool, although separate, efficiently integrates data from our custom Integrated Market Risk Management and Analysis Report to generate a robust statistical representation of potential financial setbacks during unfavorable market conditions, enriching the comprehension of market risk.

The report efficiently assessed risks by consolidating primary data, providing a holistic risk overview for real-time monitoring and mitigation. It aided decision-making with daily risk insights, enabling analysts and traders to optimize strategies. VaR (Value at Risk) calculation was streamlined using an external tool, projecting potential losses based on historical data. Back-testing was enhanced by comparing projections with historical outcomes, ensuring accuracy. The report offered customizable market risk insights within the RightAngle platform, promoting transparency, compliance, and improved risk management.

Navigating the Renewable Energy Landscape with Custom ETRM Solutions
Tailored Solutions for RightAngle's Unsupported Versions

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Robust Program Management

We believe in “no-surprises” when it comes to project delivery and the number one way to achieve this is through program management. A collaborative project culture is established that encourages transparency and adherence to the communication protocols outlined in the program management procedures.

Guiding Principles

Success Drivers

  • Transparency along the way​
  • Honest with feedback and outcomes ​​
  • Utilization of SME expertise and industry standards along the way​
  • No surprises – ensure detailed communication beyond surface-level metric tracking​
  • Establishment of a Steering Committee with regular touchpoints ​
  • Access to key resources ​
  • Acceptable level of access to relevant documentation, systems, and reports​
  • Strong stakeholder communication throughout the process ​
Value Creed Endur Training Service
Value Creed's Endur Upgrade Service

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Training Approach

Training is integrated from inception to the end of the project. We engage the users in training during phases 1 and 2 of the upgrade process. Our team will work side by side with the users to validate the system, and provide informal one-on-one training as well as knowledge-sharing sessions, essentially helping the users “learn by doing”.​

Just as testing does not begin with UAT, training does not begin with UAT.  During the Upgrade Assessment phase, we establish a collaborative culture with the message, “Endur expertise is on site, feel free to engage with your questions about Endur.” We engage the users during phases 1 and 2 of the upgrade process. In addition to the training embedded in our methodology, formal training at the start of UAT is provided. We edit our training materials to use actual examples to provide a meaningful training experience.  The training experience does not end at go-live. 

The training approach has four elements to execute training. The first element is Training Plan & Documentation. During this, a training plan is developed based on the impact assessment and changes. The second element is testing the training material and identifying individual training needs and deficiencies. The third element focuses on training delivery, where the training participation is tracked. The last element is about refreshing and reinforcing training which details additional training if required.

Our Hyper Care team will ensure that your users are trained in any new functionality or changes to the system. It’s a support phase that follows immediately after the Upgrade Go-Live to ensure seamless adoption. 

Endur Program Management Service
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Finding the right CTRM Solution for your business

Choosing the right software for your organization can be a difficult assignment, particularly in regards to CTRM software. The requirements can be different and might be as unique as the business itself. An ideal software should  meet the needs and prepare the organization to take advantage of the opportunities in the complex and ever-changing energy markets.

The solution you carry out should follow a holistic approach and has to be dynamic in nature. It should be able to engage front, middle, and back offices in requirements gathering and should provide end-to-end solutions.

Common misconceptions about CTRM software selection process and how to avoid them

Prior to getting down to the prescribed procedures, It is very important to know what has to be avoided. The following are normal misconceptions about choosing the right CTRM software that is suitable for your business model. 

Misconception #1

What worked for others might work for you as well. 

Each business and business process is unique. This is the actual reason why businesses and management spend more time on “Differentiating their strategy”. Since every business strategy  is unique, system implementation should also be different. It means a lot to maintain the attention on your requirement while assessing CTRM software.

Misconception #2

CTRM software selection is all about evaluating the technical and functional aspects of the software. 

While it is very important to select a solution that meets your technical and functional requirements. It is also critical to look at the flexibility and ease of use that places functionality in the hands of your business users. 

Any solution that that is flexible and can be used for future business requirements offers more prominent long-term value to your business or business users.

Misconception #3

Demos and very nice presentations are proof of good software. 

Generally, demos/presentations are good ways to get introduced to the software. It is when you would need to dive deeper into the evaluation process and analyze what best suits your business needs. Having a good and detailed business scenarios that covers your business is an essential for a good demo.

 

Useful hints to assist you with your software vendor evaluation and RFP Process

Tip #1

It could appear evident yet getting a clear understanding of the business, and how it makes sense to add value for the stakeholders now and in the future, and inside the organization’s related governance structures is basic for choosing the right trading and risk solution(s).

The requirements of an energy marketer that is advancing to consolidate a hedging program and a small bunch of trading methodologies are totally different from a complex trading house looking to venture into new commodities, new business sectors, outlandish instruments, or carefully empowering their trading and risk arrangement system. A tailored solution to the present companies might be rapidly growing without an insightful perspective on needs five to seven years down the line. It needs to be beneficial for your business today, but also  aligned to your business strategy ready to support the future state of your business. 

Tip #2

CTRM applications are niche in the market. Software vendors and software integrators are the ones who have an impeccable source of information about these products from their extensive offerings and experience. Before you start your selection process, you will need to spend time on the latest trends, CTRM market, Options available and so on, to ensure the potential fit for your business.

Ask your vendors “what is important?” 

You might know what is exactly important or required for your company, however, ask for this. It is very important to talk to your vendors ahead of the tender process and build up knowledge before you go for the tender process.

Tip #3

 Any software vendor typically can build and deliver the functionality more than you ask about. It is all about how the functionality is implemented in your software or your process for your future needs too. You just need to challenge your vendors. 

The manner in that you challenge your vendors is to give them tasks. For example: Describe how the functionality is implemented or define your implementation process and scope of your software in the future. Ask them for a guide/document so that you can understand the business model, and whether you can implement this in your organization.

Tip #4

Nowadays, for business and IT pioneers, the event of an extraordinary framework implementation like another ERP, CTRM, or other enterprise solution might be the rare opportunity to step back, look at the innovation, technology landscaping, and, possibly take new steps in building a new architecture. Is the IT department wanting to advance in a cloud or digital native direction in terms of application strategy?  Is the basic postmodern ERP approach that tries to use broad API-based integration among the reasons fabricated, leading tools? This kind of task can give the impulse and resources to digitalize the process. 

 We know that you or the vendors need high-level details while implementing CTRM software, but most of the times stake holders are not really ready to disclose those details. That’s where vendors try to lock the projects in the design phase to fix the design. So, once the design is fixed, you cannot make any changes because they will be building the data warehouse based on the fixed design. 

What we understood is that you’re not ready to give them all the details. Since it will change constantly – Application Management – Strategy Management & Application performance management – is about change. Along these lines, don’t go into this trap of agreeing “I locked the designing phase of the project, I locked the planning stage,” since, in such a case that you do that, they will give a change request constantly, for each time you are changing the scope.

Tip #5

It’s not just about the good demos and nice PowerPoint presentations. What you need is evidence. You will need to ask your vendors about evidence to create and show you the KPI’s and KRI’s of the application or how to create the KPI’s & KRI’s of the process. This gives a comfort that you need. Asking more and more questions to your vendors on their business cases might help you to relate your business process and build up more knowledge.

Tip #6

We think CTRM solution is not just a software or a project, it is an ongoing process. It should continue even after vendor leaves you, need the consultants to work on the application support and manage the application from multiple factors. 

The important questions that should come to your mind are “who will be managing your CTRM while or after implementing your software?” “Has the implementation team delivered you enough documentation?” Have they shared you enough knowledge, so that you are able to operate by yourself on daily basis?”. Also, you need to add these your tender documents.

A brilliant method for separating vendors is to request a POC. In the event that the software is adaptable and simple to use, it ought to be simple for the vendor to set up a POC in light of your prerequisites. Making this solicitation a piece of your merchant determination cycle will help an objective evaluation of the solutions.

Critically, it is very important to think about the traditional CTRM Software selection and procurement process and tailor them to deliver that is best lined up with your plan of action and business model, Software capabilities, technology strategy and needs. digitalization is troublesome commonly and applying to many years old selection, Procurement, and implementation techniques to these sorts of undertakings are probably not going to yield significant advancement.

Value Creed will assist you in choosing the right software, that is a best fit for your resources and capabilities.

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