As a provider of a Commodity Trade and Risk Management (CTRM) system. I am asking myself this question almost every day for many years.
Building such a system takes quite some courage and dedication, because it requires much dedication, effort and time to get it right. Capturing the world of commodity trade in a computer system is not so easy. This caused by the flexibility required compared to other business system such as ERP. Especially not when your dream is to do this with an easy to use interface. The latter I find most important as I believe that all great things should make complex matters easy to deal with.
Need for CTRM
So do need people who are involved in commodities and trade or purchase a system to help them doing this? In the last years I gained some experience and learned that the answer is not a simple yes or no. The answer depends on many situational factors such as the size of the operations and the number of trades or purchases. Although these look on the surface the most obvious reasons. I learned it is actually not. The real answer lies in the ambition of the commodity trading company or purchasing entity to grow and utilize technology to enable that growth.
Implementing a CTRM system nowadays is in the perspective of technology availability not even such a large effort anymore. This is particular true when the CTRM system is specialized at certain commodities. Here at Agiboo we have a real focus on sugar, cocoa, coffee, grains and oilseeds. With availability in the cloud a commodity company can be up and running in short amount of time. That is however just a technicality. Benefiting from CTRM and utilize it through the core of the organization does require to be determined and shape a foundation which allows growth. That foundation should allow extension of profitable trades or purchases, reduce the workload at the back office and give full control on risk and trading or buying positions.
I guess when things are stable and there is no ambition for growth a CTRM system does not make much sense. In that case the system is only considered as extra costs. When there is ambition a CTRM system is probably the right way to go as that ambition will also cater for the acceptance of a proper implementation and training. CTRM is not just a piece of technology, it also enforces you to think through your business processes. You might decide even to improve those or to alter them. From that point it is not a cost anymore but a valuable investment.
A different question?
Ambition for growth and CTRM go in my perspective together. I dare to say that it is a critical success factor at minimum for a CTRM implementation. It is there where business and technology meets and makes a difference. Maybe I asked myself the wrong question from the beginning. Should it not be if a commodity trader or purchaser can afford not to utilize CTRM so some extent?