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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

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

<div id="content"><div class="parentsection"><div class="section"><div tabindex="0"><h3></h3></div><div class="kalturaVideoLessonWrapper"><div aria-label="" class="kalturaVideoLessonContainer" data-testid="video" id="1_4w8mcr51"></div></div><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>Global Trends and Volatility:</strong> SAP Commodity Management addresses the need for solutions to manage volatility in demand, supply, and pricing due to geopolitical and environmental factors.</li><li tabindex="0"><strong>Integrated Solutions:</strong> Utilizes core SAP modules like SD, MM, and FI, with embedded commodity pricing and risk management to meet industry-specific needs.</li><li tabindex="0"><strong>End-to-End Value Chain:</strong> Supports comprehensive solutions across industries such as oil and gas, metals, mining, and agriculture, covering the entire value chain from supply to customer.</li><li tabindex="0"><strong>Real-Time Risk Management:</strong> Provides real-time exposure analysis and risk management through integrated SAP Treasury and Risk Management solutions.</li><li tabindex="0"><strong>Training Focus:</strong> Covers master data, commodity pricing, risk management, and financial transactions, emphasizing complex pricing and real-time reporting.</li></ul></div></div></div>

SAP Commodity and Risk Management Introduction

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

SAPIndustry_Day1_Part1.mp4

Good morning, everyone, good evening, good afternoon, wherever you are from. And today we have gathered to go through overview of the SEP commodity and risk management. And I shared the breakdown of the topics what we are going to cover in the next six days. And this would be a overview, we'll be brushing up through the topics of commodity management touching the different aspects, whatever is important. And if there's anything missing, you guys can also let us know if there's any specific topic that we might have missed in the list. And if you are interested, if you want to go through something and we will try to squeeze that topic in any one of these days, we'll try that as well. Due to the lack of time, this will not be a hands-on training. We'll not be able to provide a system to everybody and do some exercises. But wherever we feel is necessary, we can definitely show you in the system what it looks like if required. Otherwise, more likely to be through the presentations and the documents. So starting with the introduction of myself, I'm Souris Pradab Singh and from SEP in North America. I am from the ENR team, Energy and Natural Resources team. And my skill set is more around the SEP commodity and risk management, more towards the pricing side, which is the CPE, with fairly good understanding. on the risk side as well. Before this I was working on SCP ACM agriculture and contract management with Cargill for quite long time. So ACM around six years and then five years or six years around with commodity management. I will hand over to Nick Hill to start agent from his side. Thanks so rich. Hey, good morning, everyone. My name is Nikhil. I'm again, same team from As Surages, E&R team, energy and natural resources. We are focusing on basically my expertise also in the area of commodity management and commodity risk management. With me being more focused on the risk management side of it, so I have a background in trading and not from a functional point, point of view but from a city item solution point of view which is offered from SAB and have been working on many clients specific to this area let's start so although this slide says for oil and gas and metals and mining but like I said this will be common for every industry okay so the agenda of this slide this This presentation will be why do we need SAP commodity management and how are we going to use it to meet the business requirements, the industry's requirements. Then we'll also see what are the different elements of these solutions and throughout the course of the training for the next six days, what are the different topics that will be covering. So I think this is a very common slide, which all of you must be quite aware of. Why do we need the commodity management? So the first topic is the global trend. How globally we see the requirement to use a solution which can cater to the need of volatility, like the demands or the supply can vary or fluctuate depending on different regions, maybe geopolitical regions or geographical regions maybe due to some natural disasters blah blah different regions they can be volatility coming up right and the management the top level management would like to see the risk that the industry the that the company is exposed to throughout right from the beginning from end to end right so due to all this um um um uh volatility, the risk also increases the risk. There is a risk in the company, high level management level where they want to see what their current positions are, what they are currently exposed to. And also they also like to see what is the profit they are going to make in the next one month, next one year, and next certain delivery periods, right? Due to all these things, there are, there's demand that we come up with such a solution to cater the need and also there are different regulations like they are accounting regulations there are taxes environmental and safety demands due to all these various strains we see the need of a solution and as it comes up with this as a commodity management solution and like I said due to all this volatility, the material cost gets affected, the pricing gets affected. Like more often we have seen due to the OPEC decisions due to the changes in the Middle East or any of such geopolitical regions, the prices in oil gets fluctuated a lot. We have also seen a very near example during the pandemic, the crude oil of the, I mean, at least in North America, it went negative. So due to all this volatility, the prices are really, really impacted. They get affected a lot. Due to all these things, the operating margins of the company also gets impacted, right? And these are the challenges which impact the total revenue and liquidity of the, company so like I said these are very common slides which you must have already seen okay so in SAP what we have done is we have used the core core solutions of SAP like SAP SD SEP M M SEP Gt M SEP FI we have used the core strengths and we have embedded our SAPCP and SAP risk management solution on top of it so that it can work in conjunction to each other and provide the best possible solution that we can. And for this, SAP had made some strategic investments with dedicated teams which are working on these solutions throughout different regions. We have team based out of India, based out of Germany, based out of Brazil, for the entire CTRM solutions. And all the different aspects of the solutions are based on the collaboration with different industry leaders from different kind of industries like agri industries or oil and gas industries. And based on their feedback, SAP is trying to come up with enhanced solution of SAP commodity management. So whenever we get some feedbacks from leading our customer, we do plan to add it to a product roadmap so that it becomes a part of the solution. So this is an example of end-to-end business solution of oil and gas industry, where we have the suppliers, we supply, and then it goes to refining then it gets applied to marketing and sales side then logistics and then to the end customers so this is end to end uh value stream which is being displayed here so uh it's just trying to show that SAP is trying to cater to each each different node of this value chain It tries to provide solution to every requirement for each of these nodes. So I won't take much time here because we'll quickly go through our CP and risk management details. Similarly, this is the Mills and Mining, similar solution. We are trying to show the end-to-end solution the value chain and how SAP commodity management tries to place part in each of the requirement of the process. Yep, so the different industries that can be used, I mean, that can be the target industries for ACP commodity management, can be oil and gas, which is energy, and can be metals mining, can be, Our agri industries can be the dairy products, can be the soft commodities like coffee, cocoa, sugar. These are all three bottom ones, the dairy, grain, and soft commodities. They are most commonly used in Cargill and ADM and CHS. We do also have some of the customers in Asia and Europe as well. But in an actual, the commodity management solution can be used in oil and gas, energy, metals mining and agri industries as well. So the digital code, so this part is important, the digital code. When we say digital code, it's the data, the digital data, which gets accumulated in by ASAP to process all the different kind of reporting, all the different kind of reporting, of processes and this digital core gathers information from all the different areas from right from deal capture to risk management to logistics and inventory settlement and gil feed deal capture is a part of ctrim as well where we try to capture the deals which are the preceding documents for the back-end contracts where a trader negotiates a deal with a counterparty and comes up with the paper dog legal paper document that's a deal and deal capture the solution from SAP to capture that is the front end from for the traders it kept it it I mean it has the important data like who is the counterpart party, what are the pricing elements, what are the fees, and what is the delivery period, how long the contract is valid for, et cetera. And you can see all this different data, which are available in different lifetime of the value chain, like settlement has, then was saying, logistics and inventory storage, has what volume is used, what UOM was used. used, et cetera, and all this played together in the digital code to show what the current risk of the company is. And the risk manager can take appropriate steps based on all this data. Here, we are trying to show the architecture of commercial management, how it's built. Like I said earlier, as a separate, SAP is using, is leveraging the co-products like SAPS and the SAP ST solution, MM solutions, and the CP is inbuilt on top of these solutions. The commodity pricing engine is embedded within the solution and it works along with the sales and distribution or the material management part. It's and also the SEPTRM and SEP risk management specifics, these are layered like you can see. So, Nicol, do you want to talk about the TRM piece here? Sure. How the TIRM and risk management are managed in the architecture. Right. So in terms of, you know, the whole architecture of the, this solution, we also integrate with SAP Treasury and Risk Management solution and then financials and accounting to do all the monthly evaluations, postings, and stuff like that, which I'll be covering in some later days in detail. But SAP Treasury and risk management supports the functionality around your financial derivatives, risk management, in terms of penal calculation, exposure analysis, and so on and so forth. So these, this is a core functionality for risk management, and it integrates right into the commodity, the whole commodity management solution SAP offers. And again, to end the complete end-to-end scenario, as I said, the accounting in terms of your monthly evaluations, your margin management for financial trades, you're realized gains and posting. So all these are then handled from tragedy and risk management and integrates directly into financial accounting. Right. Thanks, Nigel. And like you can see, they are all stacked on top of each other. And the database, SAP HANA is right there. And you can have analytic application on top of all these solutions where you can do your analytic runs like the MTM, P&L reporting, and any other kind of analytics on top of it. And you can also see the other modules like quality, warehouse, transportation, manufacturing, and all other SAP modules, which works along with the SAP commodity management solution. So, for example, in case of quality, you can have your other quality factors like in oil and gas you have water contents or sulfur contents, which play a major role in determining the prices. In ACM, you have as well, other quality contents like water and etc. But you have a different way, like the DPQS module, how you calculate the quality changes in the quality to calculate the change in pricing. But in ASEL, as a PCM works on. on top of along with the other core modules of SAP. And if you look at it, you can break it down into two major topics. One is the commodity procurement and commodity sales, which you have seen here, like the CPE with the sales and purchase. Here you manage the complex pricing and the complex Pre-end determination rules, every other complex rules from pricing perspective, how the quality is driven and how you can calculate the quality using CPE or CPF. I'm sure you must be aware of CPS, but it was it's common. It was originally used in the SAPSD and SEPMMM, but it is also used in SME commodity management for the same purpose. And you also use, you can also streamline the process for different invoicing. Like you can have the provisional pricing to final pricing. We'll be covering that topic as well later. And just to give a high level, provisional pricing is nothing but whenever your future price is not final, and you do not want to wait for a longer period for your invoicing, for your cash flow, you can go ahead with the provision pricing and then the final invoicing gets the delta amount between now and then and that's called the differential final invoicing then comes in the commodity risk management where we have the real-time exposures and yes these are all real times whenever you have any transaction happening in the system we have a common table for physical set we have 7 B Lockby and similarly we have table for finances as well which Nick will be covering and these tables are updated real time and whenever you run the report all these exposures all these risks will be real time and you can see the real-time exposures for physical transactions and also for the financial transactions okay so the Different topics in this training are like this. We'll be going through the commodity master data, the commodity curves, the different aspects of CPE, like DCS, May, price type, quotation rules, the period determination rules, and the different kind of CPE routines that we may have. We'll also go through the financial transactions, the reporting side, the free characteristics, book structure, the C.E. And the CPF, yep, that's more what we'll be going through now. So this was an overview, a high level session of what commodity management will pay for. And now we'll try to go through the topics in details.