Costs and risks associated with front-to-back office reconciliation

Because many firms use different systems across trading, risk and trade processing that are not well integrated, people performing different functions aren’t using a single, consistent set of information. Errors that arise in transferring data between systems need to be corrected introducing delays for users;  for a trader or risk manager who wants to see trading positions in real-time this can be critical.

Logistical challenges in supply management

Refiners, marketers, and supply traders need to deliver the right product at the right time to the right location. Purchases may need to be made by traders many months in advance, and then schedulers need to manage logistics and transportation by either truck, rail, voyage or pipeline. But the schedulers and traders often share information in an ad-hoc fashion. In addition, schedulers need to closely monitor the supply chain to ensure product is on schedule for target delivery dates.

Timely and accurate view of inventory impeded by complexity

Companies need an accurate view of current and projected inventories to meet their commitments. However they are faced with an avalanche of exchange agreements each with different product re-grades, location differentials and other details. In addition, product is spread out along the supply chain across storage, cargoes and in-transit. Keeping track of inventory is complex and is typically managed in spreadsheets.

Errors and delays in settlement

Crude oil, refined products and natural gas liquids are subject to a wide range of costs before they can be sold including transportation and product re-grades. In order to settle with upstream owners and producers, companies need to track and calculate these costs. However they often do these calculations in spreadsheets right now.