M&A in the commodity trade call for integrated ERP/CTRM software

While the number and value of mergers and acquisitions (M&A) in the Netherlands are declining, interesting developments continue to occur in international commodity trading. For example, Danone, the world’s largest yogurt producer, recently acquired the U.S. food company WhiteWave Foods. Amtrada, a Dutch trading company in coffee, cocoa, and nuts, sold its coffee business to Sucden.

Other sectors also saw notable acquisitions, such as the acquisition of grain trader Nidera by China’s Cofco and the merger of Chinese steel producers Baosteel and Wuhan. In the oil industry, Varo Energy acquired Inter Oil, and MFA Oil acquired Ozark County LP Gas.

Supply chain integration

In the commodity world, mergers often involve horizontal integration, where trading houses merge by acquiring similar companies. This allows them to realize economies of scale and enter new markets. On the other hand, there is vertical integration of storage and transshipment facilities, securing production capacity and improving responsiveness to sudden shortages.

Complexity calls for control and insight

The success of a merger or acquisition depends on how much cost savings are achieved and how much additional revenue is generated, for example, by consolidating offices or roles. Mergers and acquisitions often increase organizational complexity, heightening the need for control and oversight. Companies that frequently engage in acquisitions need an IT system that facilitates the integration of new companies.

Integrated of trading, logistics and finance

The need for greater control, insight, and easy integration of new companies is often inadequately met by IT. The fragmented software landscape simply cannot deliver this insight. A solution to this is implementing an integrated ERP and Commodity Trading & Risk Management (CTRM) system. In addition to supporting all business processes across departments, it also provides functionality specific to commodity trading. An integrated ERP and CTRM system offers real-time insight into market positions, contracts, currency positions, prices, and logistical arrangements, with all departments (Trading, Logistics, and Finance) working within the same system. An advanced integrated ERP and CTRM system can easily handle multiple entities (companies) and currencies.

Cadran developed a complete CTRM module within Oracle JD Edwards ERP, which offers all the necessary functionalities.

Do you want to know all reasons in favor of an integrated ERP & CTRM system? Read our brochure.