Commodity Risk Management

Due to the volatile nature of commodity prices, many businesses in the manufacturing industry find it difficult to align operating and profit margins, and are often faced with uncertainty and risk at every step of the buying and selling process. By demonstrating how uncertainty in this niche sector impacts different industries, the author of this article explains different commodity risk management strategies that can be supported with SAP technology. The article discusses how SAP Commodity Management software in particular allows businesses to price procurement and sales contracts based on market quotes and complex formulas, settle with counterparty offers, perform risk assessments of physical and financial transactions.
After reading this article you will be able to:
- Understand how to perform risk analytics by creating a data model using SAP Commodity Management;
- Explain architecture considerations for risk reporting in a SAP S/4HANA database; and
- Explain architecture considerations for risk reporting in a sidecar HANA database