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.
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.
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.
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.
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:
WACOG by Contract provides detailed cost insights for better financial control. WACOG by Pool offers market-responsive cost calculations.
RightAngle recalculates daily WACOG, aligning cost structures with market fluctuations. Crucial for industries like retail fuel, ensuring accurate decisions and risk management.
RightAngle's customization aligns tools with business goals, enhancing performance without compromise.
Seamlessly integrating RightAngle optimizes data flow, boosting efficiency across functions.
Leverage specialized WACOG reporting for real-time informed decisions and market competitiveness.
RightAngle tailors to client needs, offering a dedicated team for success. Partner with experts for a comprehensive solution that drives success.
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In the dynamic landscape of renewable energy markets, embarking on the journey toward a sustainable energy future requires more than just intention; it demands adept navigation of the market complexities and innovative solutions. Renewable markets characterized by their ebb and flow, underscore the necessity of robust risk management.
As the focus on sustainable and clean energy sources intensifies globally, the Energy Trading and Risk Management (ETRM) industry emerges as a crucial enabler of renewable energy adoption. Amidst the fluctuations and uncertainties, custom ETRM solutions become the cornerstone, facilitating efficient risk management and enabling decision-making. This blog delves into how Value Creed, with its tailored services, helped enable the implementation of renewable trading within RightAngle, unraveling a success story that goes above and beyond.
RINs trading stands apart due to its linkages with the environmental attributes of renewable fuels, adherence to regulations, and traceability, setting it apart from traditional commodities. Thus, conducting a thorough evaluation process is essential in determining the suitability of RightAngle, or any other ETRM software, for managing RINs business. The intangible nature of RINs, their role in demonstrating compliance, and susceptibility to policy changes contribute to their unique market dynamics.
We assist in precisely defining business needs, particularly concerning their alignment with broader energy markets and the intricacies of handling blending credits for various RINs categories. This proves essential to identify necessary functionalities while assessing RightAngle’s capabilities which involved scrutinizing features like data handling, EMTS integration potential, and scalability. We evaluate RightAngle’s fit with RINs trading, considering user experience and risk management. A comprehensive analysis and stakeholder input leads to an informed choice. Choosing RightAngle for current and future needs ensures effective RINs management within the organization’s framework.
Value Creed’s journey with RightAngle extends far beyond typical software implementation. We understand that true success lies in sculpting a solution that harmonizes with your unique business needs. Through meticulous customization, we have transformed RightAngle from a software platform into a strategic asset, seamlessly adapted for the intricacies of handling complex renewable portfolios.
Our focus extends to enhancing operational efficiency. We streamlined the management of renewable purchases and sales through tailor-made Renewable Deal Templates.
We introduced specialized templates for
The integration of an EMTS RINs Import Interface facilitated smooth data transfer, ensuring a seamless flow of information for informed decision-making.
Our solutions reach deep into the middle office, addressing key challenges.
Value Creed’s impact extends to the back office, where we resolved critical challenges.
Value Creed’s success story is not merely about implementing a product; it’s about crafting a tailored solution that transforms operations, enhances efficiency, and amplifies profitability. Our deep expertise in RightAngle reflects our commitment to solving the latest client challenges, propelling your renewable energy trading endeavors to realization.
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The world of Energy Trading and Risk Management is multifaceted, with each commodity presenting its own unique set of challenges. When it comes to liquid commodities such as crude oil and refined products, managing the intricacies of the market can be an uphill battle due to various reasons such as the high volume, fast-paced nature, complex logistics, diverse contracts, credit and risk considerations, and regulatory compliance. We’ve empowered clients to maximize Endur’s potential in liquid commodities space. Our expert team streamlines operations across front, middle, and back offices, unlocking value for your business.
In this blog, we will delve into some of the challenges that Liquid commodity traders face when it comes to managing their books in a ETRM system. We will also discuss, key functionalities of Endur and how we have leveraged them for our clients to optimize their liquid commodities business in Endur.
Endur offers capabilities specifically tailored for the dynamic world of liquid commodities. From managing production forecasts, capturing physical deals to valuing inventory and everything in between, Endur empowers businesses to navigate the complexities of the liquid value chain seamlessly. With our expertise, we aim to educate our clients on how to leverage Endur’s powerful functionalities to optimize their transactional lifecycle, streamline operations, and gain a competitive edge in the market.
Let’s explore the key challenges of managing liquids in ETRM systems and how we assisted numerous clients in leveraging the Endur solution and empower their businesses to thrive in this fast-paced environment.
|✔||Production forecasts are crucial in liquid commodity trading, enabling efficient supply chain management, informed trading strategies, and risk mitigation. Integrating production forecasts into ETRM systems empowers companies to make data-driven decisions, optimize operations, and succeed in dynamic energy markets.|
|✔||We have used Endur’s Data Series module that provides the ability to model and analyze various forecasts and probabilities associated with deals. This has empowered our clients to make well-informed decisions and manage positions effectively.|
|✔||With global variance in equalization calculations rules, crude production forecasting can be hard to model with Endur’s OOB capabilities but with customizations that is also possible.|
|✔||Liquids market participants engage in diverse contractual structures for transportation and storage, including take-or-pay agreements and throughput arrangements.|
|✔||Furthermore, these contracts are complex to manage due to factors such as long-term volume commitments, price fluctuations, diverse shippers, and regulatory compliance.|
|✔||The interconnected infrastructure, force majeure events, and the long-term nature of contracts further add to the intricacies, requiring expert oversight and strategic planning to ensure smooth operations and adherence to contractual obligations.|
|✔||We have helped several of our clients use Endur’s customizable contract management modules to accommodate various complex contract structures in different regions, ensuring precise contract settlements and reducing contractual risks.|
|✔||In liquid commodity trading, counterparties can include various entities, from large corporations to financial institutions and small traders. For some of the medium and small trading shops, managing credit risk in liquid commodity trading presents significant challenges due to counterparty risk, short-term contracts, and logistics complexities.|
|✔||With a high volume of transactions occurring rapidly, assessing the creditworthiness of diverse counterparties becomes crucial to mitigate potential losses.|
|✔||Additionally, short-term contracts demand constant credit evaluations and adjustments to accommodate changing market conditions, while intricacies in logistics pose logistical challenges in ensuring timely and efficient deliveries.|
|✔||To navigate these complexities successfully, market participants must employ robust credit risk management strategies, real-time monitoring tools, and seamless integration with logistics operations to optimize their trading activities and financial stability.|
|✔||We empower clients with Endur’s robust credit management tools for better risk mitigation, including setting credit limits and enforcing blocks based on credit exposure. Our expertise enables accurate OTC derivatives credit valuation using overnight index swap rates, while also computing weighted credit exposure by facility, legal entity, and maturity bucket for comprehensive risk analysis.|
|✔||Managing liquid commodity trading is a complex task, especially when dealing with the diverse contract structures and intricate pricing strategies involved. The wide range of contract types, each with unique terms and specifications, demands a flexible system.|
|✔||Additionally, the complexity of pricing strategies, influenced by factors like geopolitical events and supply-demand dynamics, requires sophisticated deal modeling and real-time deal analysis within the ETRM system to ensure accurate pricing and risk management.|
|✔||Using Endur’s flexibility in deal modeling allows for customization of pricing and payment formulas for physical deals, providing traders with comprehensive and tailored solutions.|
Out of Scope
|✔||Logistics complexities in liquid commodity trading stem from high trading volumes, geographical dispersion, and diverse transport modes. Managing the movement of significant quantities across multiple regions and modes of transportation demands efficient planning and coordination.|
|✔||Moreover, seasonal demand patterns introduce fluctuations in transportation requirements, while adherence to specific quality standards during handling and storage is crucial to meet contractual obligations and ensure commodity integrity throughout the supply chain.|
|✔||Endur’s logistics and scheduling capabilities go beyond traditional systems. With the ability to handle regrades, blending, and redirection of deliveries, our clients have effectively managed changing market conditions and optimize their supply chain.|
|✔||ETRM systems need to integrate with multiple market data sources to access real-time and historical market data, including commodity prices, indices and other relevant information.|
|✔||Consolidating and analyzing data from different sources can be challenging. Furthermore, liquid commodity pricing complexity arises in markets with less liquidity, where trader marks play a crucial role in determining accurate pricing due to limited buyer and seller availability.|
|✔||Ensuring effective decision-making for traders requires a flexible and robust ETRM system capable of seamlessly managing and integrating data from various sources.|
|✔||For non-liquid markets, Endur allows modeling of market values, though stress testing in such cases may require careful consideration.|
|✔||Our clients have achieved their goals through our expert utilization of Endur’s capabilities, which include accurate fee modeling and the flexibility to replace default MTM pricing with more precise benchmarks based on intended sale or inventory locations.|
|✔||Leveraging the Mark to Intent (MTI) approach within Endur, we provided multiple deal views, catering to the specific needs of various stakeholders within their organization.|
|✔||Capturing actual volumes into a system for liquid commodities presents complex challenges due to data accuracy, timing, and integration from multiple sources.|
|✔||Timeliness is crucial to accommodate real-time and intraday trades accurately. Integrating data from diverse sources, handling quality specifications, and reconciling physical delivery and inventory management add further intricacy.|
|✔||A robust system, along with effective data governance and validation processes, is essential to ensure accurate risk management and decision-making in the dynamic world of liquid commodity trading.|
|✔||While some customization may be needed based on the business model, for one of the biggest pain points where the actual tickets need to be automatically associated to the right deal, Endur offers out-of-the-box functionality to autolink movement tickets.|
|✔||The liquid commodity inventory valuation in ETRM systems is complex due to dynamic pricing, different valuation methods, and quality adjustments. Fluctuating market prices and the need to consider specific quality specifications add intricacy to the valuation process.|
|✔||Additionally, reconciling valuation with actual volumes after blending/regrading products, managing storage costs, and complying with regulatory requirements further contribute to the challenges of accurately valuing liquid commodity inventory within ETRM systems.|
|✔||We have empowered our clients with effective inventory management solutions by harnessing the capabilities of Endur.|
|✔||Through our expertise, we have guided them in implementing various inventory valuation methods, such as FIFO, LIFO, LCM adjustments, spot adjustments, and market value inventory, ensuring accuracy and efficiency in their operations.|
With extensive experience in Endur implementation and optimization, Value Creed is committed to empowering our clients with the knowledge and expertise they need to thrive in the liquid commodities market. With Endur’s cutting-edge capabilities and our tailored solutions, our clients can unlock new opportunities, streamline operations, and make informed decisions. Partner with us today to discover how we can help transform your business into a dynamic and thriving force in the industry.
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RPA technology in ETRM systems enables organizations to optimize processes, reduce manual intervention, improve data accuracy, ensure regulatory compliance, and enhance risk management capabilities. It empowers your in-house resources to focus on more strategic and value-added activities, leading to increased operational efficiency and better decision-making.
In this blog we highlight how RPA can be leveraged within Allegro for two critically manual processes; Counterparty Confirm Uploads and Day Credit Exposure Changes.
The counterparty confirm upload is crucial for accurate data, risk management, trade settlement, compliance, and reporting. Challenges like data compatibility, integration complexity, and manual intervention can be addressed using RPA, enhancing efficiency and compliance in confirm uploads while improving operational effectiveness.
The current process is highly manual and requires users to follow a 4-step process for each confirmation upload.
There are several benefits of the RPA technology used to address the concerns around Counterparty Confirm Upload:
RPA bots excel in executing tasks with unparalleled accuracy, eradicating the possibility of human errors in data entry, validation, and processing. This leads to a substantial decrease in discrepancies, minimizes the requirement for manual intervention, and guarantees dependable confirmations.
RPA bots operate tirelessly 24/7/365. They possess the capability to swiftly handle substantial volumes of confirmations, allowing organizations to accelerate their entire workflow. Through the automation of mundane tasks, employees are liberated to concentrate on more strategic and value-added activities.
Implementing RPA for automating counterparty confirm uploads can lead to significant cost savings. Through the reduction of manual labor and the mitigating of associated errors, organizations can streamline their operations, optimize the allocation of resources, and decrease operational costs.
RPA can be configured to adhere to stringent compliance regulations and standards, guaranteeing that all confirmations align with regulatory requirements and internal policies. This proactive approach reduces the risk of non-compliance and potential penalties.
Accurate mapping, testing, and validation are crucial to ensure proper calculation and reflection of Day Credit Exposure Changes. Several challenges such as data mapping, differences in functionality, integration with third-party systems, testing, and user training also hamper the risk assessments. Diligent planning and execution are vital for overcoming these challenges hence, automating this step not only saves time but also aids in accurate credit exposure calculations, reporting, and analytics.
The current process is highly manual and requires users to follow a 5-step process for each day credit and exposure change.
There are several benefits of the RPA technology used to address the concerns when dealing with credit exposure changes:
RPA facilitates the integration of data from diverse sources, including internal systems, external databases, and financial statements. This integration streamlines data-gathering processes, automates them, and guarantees the availability of accurate and current information for credit exposure calculations.
RPA bots can perform tasks at a much faster pace compared to manual efforts. They can retrieve credit data from multiple sources, analyze it, and update the system in real time. It can also handle high volumes of credit exposure changes efficiently, allowing for scalability as the business expands.
RPA technology provides greater control and reduces the risk of credit exposure errors. It enforces standardized processes and ensures compliance with credit policies and regulations. By automating credit exposure change workflows, RPA minimizes the risk of unauthorized changes or fraudulent activities.
RPA bots can generate personalized reports and dashboards that offer valuable insights into the evolution of credit exposure over time. These reports empower stakeholders to make informed decisions and identify emerging trends or risks, facilitating proactive measures to mitigate potential challenges.
While RPA technology provides numerous benefits for automating processes in Allegro, there are also some challenges and considerations to keep in mind. Here are a few:
Overall, while RPA offers significant benefits for automating Allegro processes, careful attention should be paid to process complexity, data quality, maintenance, and many other factors to overcome challenges and ensure successful implementation.
Value Creed’s robotic process automation services eliminate data flow bottlenecks and minimize the need for human intervention in performing routine and repetitive tasks. This advanced technology streamlines business processes, mitigates the risk of data corruption, and maintains data integrity. Moreover, RPA integration with ETRM systems automates critical and time-consuming tasks mentioned earlier, enabling improved analytics and reporting capabilities.
Get in touch with us today to discover more about our robotic process automation services. Benefit from our expertise in automating your system processes and unlock the potential for increased efficiency and productivity.
ETRM applications such as Endur is a highly complex application that plays a central role in a company’s vital business operations. Managing complex enterprise applications necessitates specialized expertise to maximize their potential and ensure optimal performance.
Scaling an on-premises infrastructure entails substantial downtime and disrupts the workflow of application users. Ensuring seamless integration and interoperability between different applications, databases, and technologies while safeguarding on-premises hardware, network, and physical elements can be expensive and reliant on human intervention.
Moreover, keeping complex enterprise applications and on-premises infrastructure up to date with patches, bug fixes, and upgrades is a continuous task. It requires careful planning, testing, and coordination to minimize disruptions and ensure the entire system remains stable and compatible with other components. This leads to setting up and expanding or upgrading components within one’s domain which is complex and pricy.
IaaS (Infrastructure-as-a-Service) and PaaS (Platform-as-a-Service) are two cloud computing models offering different infrastructure and application management levels.
IaaS provides virtualized computing resources, giving users control over infrastructure and application environments. PaaS, on the other hand, abstracts infrastructure complexities, offering a platform for application development, deployment, and management without worrying about underlying infrastructure details.
Ultimately, the choice between IaaS and PaaS depends on the business’s specific requirements and preferences.
Consider the following factors when choosing the most suitable cloud solution for your business needs:
Control your data hosting – cloud subscription and geography, tighter security and more control over various component of the infrastructure.
Cloud subscription and geography are controlled by the Cloud Provider and you have much lesser control over the customization individual components of the cloud.
Tighter control and security on enhancements, bug fixes, and deployments with seamless integration with CI/CD processes.
Custom code hosting on PaaS servers necessitates extra configuration between client and provider, increasing reliance on PaaS for CI/CD integration and ensuring a graceful deployment.
Easy integration with Endur, ERP, supply chain management (SCM), production scheduling, financial reporting tools, and datalakes.
Additional connections must be built with hosted infrastructure to communicate to PaaS provider to integrate these applications.
Automated Endur maintenance and monitoring using inbuilt cloud features and tighter control of application security.
Dependency on PaaS provider like – SLA for maintenance, customization, and less control of application security.
Configured based on SOX compliance and auditing requirements.
Dependency on PaaS support to cater to SOX compliance and auditing.
Provides the flexibility to migrate your software licenses, as-is with minimal or no modifications required, ensuring a smoother migration process to the cloud without repurchasing them.
May require license optimization for your current license or re-architecting your applications to align with the platform’s usage model, potentially leading to cost increases or license adjustments.
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