Commodity Management and CTRM

Commodity Management has gained acceptance in the market, the term is increasingly used to describe the entire breadth of processes involved in handling commodities including trading and risk management to the point where CTRM software is essentially becoming a subcategory of Commodity Management. This evolving terminology is causing some confusion in the market. Historically, Commodity Management emerged as a set of business processes related to the handling of commodities in the context of supplier-relationship management and procurement in entities that essentially utilized raw materials and created finished goods. To that end, it could naturally be seen as an extension of ERP as it included managing supplier relationships, inventory, movements/supply chain, accounting, purchasing, processing and so on. As commodity and raw material prices became more volatile and as more regulatory oversight was introduced into commodity markets, many manufacturers and commercial packaged goods companies slowly began to look into hedging strategies for price risk management. Such activities required functionality not usually included in an ERP solution and were perceived to offer competitive and strategic advantage. CTRM software however, did offer risk management and derivative trading functionality and was often selected as an add-on to the ERP solutions already used in house. Meanwhile,

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Source: CTRM Center

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