ILLUMITI INNOVATION BLOG

Implementing SAP Commodity Management: Three Characteristics of a Great Implementation Partner

By: Steve Thomas
CM1

For companies considering the move to SAP Commodity Management, the questions quickly become, “How quickly can we move to the new process, what will be the impacts, and how much will it cost?”

The good news is that Commodity Management isn’t a new system or add-on SAP module, and doesn’t require a full re-implementation of the company’s ERP. Instead, Commodity Management is a set of capabilities included in the company’s current SAP ERP. All that’s required is an incremental project to implement those capabilities. That means a smaller price tag and a faster timeline—both of which come as a pleasant surprise to many customers.

But when it comes to potential impacts to the organization, one of the most critical elements to consider is data structure. Despite the fact that one needs only to “flip a switch” to activate Commodity Management features, data must be structured so that the system works for both commodities trading purposes and as an ERP solution. This can be a complex process with more than a few unexpected pitfalls, and errors here can impact the business for years to come. Because of these complexities, most companies seek an implementation partner to help properly set up and customize the SAP Commodity Management features for their organization.

If you are considering SAP Commodity Management for your company, here are three things that you should look for in a potential implementation partner:

 

1.) Deep understanding of commodities trading

There are a number of potential partners that know how to implement SAP systems—but a partner that specializes in SAP Purchasing or other areas will be a fish out of water when it comes to Commodity Management. The world of commodity trading is fundamentally different that other areas, but with enough similarities that some partners approach implementation with a false sense of confidence. It’s critical for your partner to understand core commodity trading concepts, such as pricing basis, exposure reports, trade P&L statements, and more be able to properly structure and set up your system.

 

2.) Direct experience with SAP Commodity Management

Whether it’s company experience or the individual experience of consultants on the team, your implementation partner should have direct experience with SAP’s commodities features. This knowledge is critical to properly structuring the data to allow supply chain and integration of commodity markets to work efficiently.

There are a few ways that inexperienced partners could get the implementation wrong, resulting in unnecessary process inefficiencies. For example, if the company’s data was structured purely along commodity lines, it could create increased manual work down the line in a manufacturing environment due to errors such as the system being unable to properly locate materials on hand. In contrast, if the company’s data was structured largely along supply chain lines, then commodities information will not be properly integrated, resulting in more manual work for your traders. An experienced team knows how to balance these needs and create a data structure that keeps information flowing smoothly throughout the organization.

 

3.) Close ties to SAP

As any SAP customer knows, SAP is committed to continually improving their product lines through ongoing investment and innovation. Commodity Management is no different. With a close relationship with SAP, your implementation partner should not only understand the current limitations of the software but also have the inside line on what new functionalities are in the roadmap, the new feature release schedule, and what areas won’t be supported in the future. This will ensure that not only is your system set up for success in the present day, but that it will have the longevity to serve your organization for years to come.

SAP Commodity Management is a powerful set of tools that can revolutionize the way your company handles commodity trading, risk and exposure management, and associated logistics. For more on whether SAP Commodity Management is a good fit for your business, contact your Illumiti representative.