• produced at high volumes,
• unspecialized and generic,
• homogeneous, and
• in standardized units of measure.
a. Different lots of the same product might have multiple quality characteristics, such as content of foreign matters, chemical composition, hardness, etc. Theoretically, the same commodity may be a variety of very similar but still separate products.
b. The coexistence of multiple units of measurements and multiple variations in defining the same unit of measure (depending on the region or on the product) creates numerous problems for businesses. For instance, there are multiple definitions of a bushel: the weight of a bushel of corn would not be equal to a bushel of barley, or soybean because of their differing densities. Furthermore, a bushel of wheat may not match a bushel of wheat from another territory because different areas have different definitions of the term “bushel”.
c. There is a considerable involvement of highly detailed logistics, transportation, and goods delivery activities. This is usually not a big issue when trading other types of products or commodities, for instance, metals or securities. However, in the agricultural commodities business managing this matter is really essential for a successful operation, and as a consequence, it diverts significant human and organizational efforts. These tasks may include all types of ground transportation planning, coordination, and tracking (trucks, railways), as well as a whole assortment of specific issues related to water transportation—from barge management and vessels forming (upcoming vessel loading planning, loading and other vessels transfers coordination, and related documentation issuing) to voyage and time charter control activities. The nature of agricultural commodities also complicates transportation tasks as products are often transported in bulk, and each loading or unloading shrinks the total volume.
d. Commodities may be transformed from one product into another product during the transportation process. For example, the impact of undesired (and unpredictable) weather conditions during the shipment of wheat or rice can eventually result in the product being downgraded to a lower quality level or even to animal feed.
• communications and data integration;
• transaction and deal capturing (front office);
• risk management, reporting, and position exposure (middle office); and
• settlement management (back office).
• CTRM software, being a stand-alone and self-contained system, can be used by a trading division to its maximum capacity, where all modules are implemented and running. In this case, CTRM is independent, and the company manages financials, HR, inventory, and workflow management on its own. Resulting data and reports can be exported on a regular basis to the holding company for consolidation and reporting. In this model, it is very possible to have functional duplication on two levels: multiple data entry, and duplicated data maintenance efforts. In some situations, though, it is an acceptable way to manage a business, despite its obvious weaknesses.
• It obviously makes sense to share functions of financials, HR, workflow, inventory management, etc. and some others with the ERP package. This approach allows companies to reduce or eliminate data entry duplications and streamline transaction flows. Financials, HR, inventory, workflow, logistics, and transportation management functions would be performed by an ERP system while a CTRM package will focus on core trading activities, such as deal-making, risk management, position reporting, and so on. A crucial feasibility condition for this approach is the integration of ERP and CTRM.