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cleanFiles/bookmap_SAP_Commodity_Management_Solution_for_Oil__en-US_learning-sap-com_lsc-prod.zip (MMCP-DROPZONE) - 2025-03-17T13:06:31.000Z

Using Risk Reporting for Physical Contracts

<div id="content"><div class="parentsection"><div class="section"><div class="kalturaVideoLessonWrapper"><div aria-label="" class="kalturaVideoLessonContainer" data-testid="video" id="1_x4zgc5ph"></div></div></div></div><div class="parentsection"><div class="section"><div tabindex="0"><h3>Lesson Summary</h3></div><div class="formalblock"><p tabindex="0">In this video you've learned:</p></div><ul style="list-style-type:disc"><li tabindex="0"><strong>Complexity in Physical Deals:</strong> Risk reporting for physical deals involves multiple inputs like contracts, orders, and inventory updates, making it complex.</li><li tabindex="0"><strong>Snapshot and Evaluation:</strong> End-of-day snapshots and evaluation dates are crucial for accurate risk reporting and position analysis.</li><li tabindex="0"><strong>Real-Time Updates:</strong>Physical side reporting updates positions in real-time without needing end-of-day programs.</li><li tabindex="0"><strong>Error Handling:</strong>Effective error handling is essential for identifying and resolving issues in risk reporting processes.</li><li tabindex="0"><strong>Integration and Consistency:</strong>Seamless integration ensures consistent values across different SAP modules and solutions.</li></ul></div></div></div>

Risk Reporting for Physical Contracts

SAP Commodity Management Solution for Oil & Gas and Metals & Mining

SAPIndustry_Day6_Part3.mp4

I think the last part of today's session is risk reporting again with the physical deals. Oops. Yeah, you can stop me if you have any questions. So and the concept here in both the physical and financial is almost similar. But, you know, there are some, of course, there are more complexities when it comes to physical deals. deals, more inputs coming in from different areas like, you know, contracts, orders, goods delivery, even, you know, your DSW exposures from scheduling or ticketing and inventory, and inventory, stock updates, and all those parameters makes risk reporting for physical site a little bit more complex. It's not straightforward and it's not same for each customers, right? So we try to, that's why we try to build as much as possible within our risk reporting solution. But many times, you know, customers have their own requirements where you would build the own reporting as well. So again, the same concept here, end-of-day snapshots, ad hoc snapshots based on DCSIDs, pricing is of course a use from the CP. So who needs this? I mean, it's a pretty much same risk analysis, risk managers or portfolio managers. So all these user groups may be interested in using these reporting standards. I'm sure we have seen this slide before as well. So all these parameters, which comes from CPE, they are all captured within the Treasury and risk management, sorry, within the risk management, risk reporting. architecture. So all the key dates, T.S. IDs, quotation prices, quotation periods. If you have manual prices, any curves, FX conversions, more details from, you know, CPE also, like date routines. It takes care of the date routines. Like, you know, if you have a three-day wrap, four-day app, whatever that is, it takes care of that information from the CPE as well. Conversion factors, you know, and every other information you use in your physical side and coming in from CP are used here and appropriately the positions and exposures are calculated. This is like a sample report. This is like the trade purchase order created VLOCP detail, which we have seen briefly yesterday as well, and how this gets translated into the reporting layer. So, it's an explanation on what is contract price and market price and how we will see into the next slides, how these market price and contract price are used up and, you know, MTMRPNL is calculated for physical deeds as well. So again, VLOC is the holy grail of physical side of the data. It stores literally everything from a physical deal, like everything. So what you find in your standard MMMSD tables, this, this B-Lock-P has everything. And that's why this table increases in terms of volume so fast. But since S-FOR HANA is capable of handling this performance and efficiency, it's not a problem, but we do suggest that, you know, over a period of time, you do archive this tables and the standard archiving tools as well so this is a sample query of end-of-day reporting these like and this is like a snippet from analysis for office which is excel based again so these are the input parameters you can generate you know based on an evaluation date so let's say i ran a end-of-end of their snapshot yesterday. And based on, you can either give company go commodity. So if you have more free characteristics here, like strategies or any other parameter that gets added here as well, you would see those parameters here. Of course, you would have to enhance your CDS query by using extensions. And then root document is the budget order document or whatever document, right? And then once you generated, it would show all these details with respect to that particular document. So these are just technical attributes, although this is part of the presentation, but this is somewhat a little bit technical. I would not like to spend more time on this, but since you have the list of queries, we can go through these. And in that terms, it's pretty straightforward. and these can be consumed as I said with any of the content tools so again you have you know implementation points where for specific scenarios like price fixation right so you can use that's a future or a basis price manually and then you know you can use some kind of a period quotation period also to fix these price fixation and whenever that particular deal is executed then you know the deal can be realized in terms of price fixed quantities and you know subsequent activities like invoicing or deliveries and will happen and that relevant will be triggered in quoting as well. So it just gives you the idea of what each date means, like snapshot date or evaluation dates or date on which the snapshot is carried out. So if I run my end of day snapshot for yesterday, that's a that's not date with the timestamp based on the cutoff time which you have provided. So every time a snapshot is carried, a snapshot ID is a unique identified key is generated and assigned to each trade. And that is in in a conjunction with the versioning of the particular trade as well. So anything before the snapshot date, like if you have a month average, so if I'm running the snapshot as of yesterday, so any dates before yesterday would be considered as past days or also the system consider these as fixed days and the position with respect to those past days will be calculated as a fixed position and anything equal to or above the snapshot date will be an unpriced position again the same concept of market currency document currency the status currency apply here, and the system is able to report in all these currency conversions. Some more details on the flow, basically, within the MM contract, the system is capable of doing a risk distribution plan. So what it does basically is provides you with a schedule, like a quantity schedule if you have to have reference with a certain terminology. And then it breaks it down in each tranche of you know a distribution plan so let's say if it was a year-long delivery scheduled so every month so-and-so quantity will be delivered or scheduled so this comprises of the risk distribution plan basically and then this is captured in the exposures as well accordingly and each of these exposure will have its own exposure due date exposure start and due dates based of the you know delivery plan so and once you you know within this plan then once you call out the purchase order and goods receipt and invoice then everything the positions get updated or whenever the whole quantity is then consumed at the end of the distribution plan then the particular contract also gets you know consumed and it no longer shows as exposed quantity on your exposure report So this is just, it shows the flow, how it flows within the reporting layer and, you know, what happens when goods receipts, then what kind of exposure is updated after this particular step and similarly after invoice, what happens? So it's quite detailed level of reporting what we perform here. Similarly, the same process is on. sales side so it's the same process what we see saw earlier how each step affects our key figures into our exposure management this this flow chart will show you that um so some of this reporting also supposed gtm contracts um and the same methodology is applied here When you do a pre-contract, the exposures are updated accordingly, and then the call-off trading contract happens, and the exposure again is get, you know, updated. Similarly, when the shadow order is done or a sales order or delivery, all the key figures are then updated. And because all these key figures are so consistent and it's within SAP system, they are so integrated and, you know, you always see a consistent values across your no matter which solution you're using right whether it is Gtm MMSD doesn't matter so since the key figures are same you know you you would get that kind of information from everywhere regardless of what module you use so this just shows how we you know have our position reports that generate positions or get data from different sources. Again, we do have, get this via DCSNMIC because that is the core of the CP pricing terms based on the DCSNMEC, you determine the price and then associate that price with the quantity and make it as a risk quantity. So basically that gives us an idea and how to bifurcate the quantities between priced and unpriced. So that's how we did a mine and we would see this detail into upcoming slides. Again, the same logic holds good for your stock updates as well. So whenever you do any goods received or deliveries, and it not only updates your exposure in terms of, you know the overall exposure but it also updates your stock in hand quantity and inventories and so on and so forth so and those kinds of key figures are also available within the risk reporting as a standard similarly once you invoice and exposures are no longer available you know then those move away and it no longer shows you as a risk exposure or a stock exposure if that is sold already So that kind of functionality is also incorporated in the disk reporting. So this is a screen where we have seen in our CP sessions, right? So we do have all these attributes within the quotation rules or period determination rules where you have a time period and in the quotation you select what is your selection types, you know, quotation based, which price type you will use. And whether time to maturity dictates, whether you are referring to a prompt month price or, you know, a second nearby, third nearby. So whatever is your pricing terms and contractual terms with this particular order. So based on this, the whole reporting logic is determined, right? Because this is the reference date. And then based on this time period, it will also determine what are the working days based on the calendar. and all those variations, what days to select, what price is available, gets calculated and assigned in the reporting layer automatically. And the report then gives you up-to-date position analysis functionality. So this is just a few advantages of how we bifurcate the price risks. So, as I was saying, for all the periods or dates which are equal to an above your evaluation date, those get categorized as unpriced. And for old before prior to those dates, those are priced position. And if one of the old days does not have a price, then it gives you an hard error saying, hey, price is not available, go fix that. And that happens on the contract as well. CPE also returns those kinds of issues if the prices are not. available same goes for stock exposures as well so you know I the system is able to identify what type of whether it is a floating price risk or you know fixed price risk and it shows you appropriately all the commodity price risk moments so this is like a different report when it specifically shows now what's the unprised, undelivered quantity, delivered quantity, overall unprice quantity, priced quantity, if there was any price fixations or, you know, if the fixation has happened over the period of the delivery window and, you know, stock in hand, a realized stock, I'll try the exposure quantity. So all these key figures are pretty much standard, right? And again, as we said, you can even add your more key figures based on your customer's requirements. So this is just the first step. And now if you move ahead, now it looks like there was some goods delivery done. So some of the stock now moved to unprised, delivered quantity because this was delivered. And the balance is still shown here. The total quantity, which was exposed earlier, is still shown here. And accordingly, everything else get updated perfectly and, you know, in a consistent way. So now, you know, in this case, now the quantity which was delivered is likely invoiced. And then now this whole thing moves into price quantity, delivered, price delivered quantity. And the unprice quantity is still shown as, you know, the balanced one which was not delivered. And that's how, you know, the moment, during a life cycle of any document, the exposures and quantities will move from one key figure to another. And, you know, this is, I mean, the queries which we give are pretty straightforward. There are not much complications added to this because, as I said, every customers have their own way of reporting. So for some of those, you know, you would have to create your own queries or reporting. You can even use the standard delivered queries, copy to your own and add some more flavors to it. So this is, again, how these queries looks like. So this is current position query. Again, current means it does not need a snapshot to be executed. On the physical slide, the architecture is slightly different. You do not need to run any ad hoc program. As soon as you generate a create and save a. particular contract or any activity related to that and you generate this position query, current position query, it will automatically update everything. So it's kind of like a real time on the physical side. And this is the query information. The input parameters are pretty much the same. If you would have your three characteristics, it would show you here. You can bring those here by using the extensions. And again, unit of measure, you can choose whether to show the unit of measure, the commodity, based on commodity unit of measure, or you know, you can even show it, choose to show in mass or volume. And this is the end of day query. So this has evaluation date now. So this requires the end of day snapshot to be executed before running this query. So once that is done, so this query will then generate the results appropriately. So this is now like a day over day query, right? This is a sample day over day query. So, so you You can give a current evaluation date and previous evaluation date, and the system will show you what was changed from yesterday till today. And you can even modify this, you know, give the difference like week over week, month, over month, year to date. It's quite flexible in that sense. And then you can do a comparison of how basically the market values change and impacted your position over a period of time. Similarly, the same information is also available for calculating your mark to market. So every, as we saw earlier, every logistic contract has, you know, we add condition types like contract value condition type, which basically goes through your invoicing phase. And there is a mark to market condition type, which is a statistical condition type, but it allows you to see how your particular product move against a certain benchmarked market product right so that is the importance of having that market condition type and market mark to market basically does exactly the same so the whatever benchmark product you have in your market condition that gets you know it gets evaluated too and then at the end you would see the result how your the product which you are trading behaves against your benchmark product or benchmark standard you know exchange product so all these and this is just a simple example which I gave but you can have more variations in your mark -to-market calculations you can have multiple you know terms and whatnot and you know the system then behave exactly the way it should be and provide you with up-to-date idea and it helps risk or risk team to even you know update their hedge policies and figure out what kind of hedging instruments they need to take against their physical exposures. So this is, you know, again, what market basically does. And it shows all these parameters, right? What prices you have defined, any surcharges or, you know, discounts or premiums have been added to quality, even the CPF integration, which we saw. a couple of weeks back so those kinds of integration is also done so all those quality deviations are also incorporated within risk reporting and other stuff like location differentials basis differentials so all these are integrated seamlessly within risk management solution so this is again the same calculation concept what we saw previously on the financial side, you know, how basically mark to market is calculated for sales and purchases. It's market value minus contract value or contract value minus market value for sales. So that's so that we retain the appropriate signage for each of these calculations. So and again, if you decide to generate your own reports, you can have your own calculations and trigger your key figures. So there's, as I said, there's several other calculations also, right, for fixed quantities, unfixed quantities, future quotation days. So all those complications are taken into consideration, what we saw in the position reports, all those parameters based on dates, calendars, holidays, everything are taken into consideration and calculate. You know, and when you decide for future days, like we discussed early in CP presentation, that you can even use a commodity curve here as well, so that for forward prices, it calculates a price based on a curve, or you can use a last available price and propagate that for the rest of the delivery days. I'm sorry, I think we are running over time, but I think I have like five minutes remaining. I can quickly run through over this is a large topic so anyway so again this example just shows there is a contract condition CPF condition type and market value and these these details we have seen part of CPE details as well and as I said all these information are part of your risk reporting so quantity price from market effects if applicable, effects not only for the market price, but also dock currencies, and then values converted into statistical currencies and, you know, payment currencies as well. So all these, whatever information you provide in your CPE, details, everything gets calculated and you consume so that appropriate positions are calculated always. The last part is. error handling of course without error handling in you wouldn't know what issues you're facing so not only at commodity management provides you error handling on the documents but it also shows the same kinds of errors in your queries as well so it shows wherever for example in this one market rate is not loaded or fx forward curve is not loaded so it shows you that error and so that you can go ahead and dissolve and then the query can be regenerate it again. So here is another example of what could be missed out during a RDP creation. So it shows here there are some delivery dates which are highlighted that, you know, that does not have been created for all the RDP items, right? So you see there are so many RDP distribution plans available, but the system does not show all of them here. So it basically gives you an error. are in SLG 1 also or basically it shows what missed, what has happened. So in this case, it looks like there was an issue with the DCSID. Key date was not valid, you know, or something changed, calendar change. So all these issues can be analyzed within this by using SLG1 and using these object type here and, you know, the system will show you those errors. You can create also even a report based of these SLG1, which can be sent out every day and for an ID team to analyze and if there are any errors to be rectified. And this we covered in a CPE that you can click on these analyzed pricing and it brings up more errors, more information about the error. Since, as I said, everything is done by a background RFC calls. So using this decode, it also shows, you know, errors which you might see in the SLG1 as well. So once you fix those errors, you can come to this T code and just click on restart unit and it will automatically update your exposure. Or you can just go to the contract, going to change mode and save it again. So both these options are available. So these are the summary of the ripple error handling what we saw and, you know, what the system could do and think, yeah, that's that's all for today.