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ION’s Strategic Planning and Procurement (SPP) Solution Aids Producers with Margin Risk

I recently read a blog article by ION regarding its Strategic Planning and Procurement (SPP) solution, a commodity management solution (CMS) for raw material procurement, promoting its use alongside an ERP for safeguarding and maximizing the bottom line. As a follow up, I spoke with Felix Thoma of ION about what exactly ION’s SPP solution is and how it works.

ION’s Strategic Planning & Procurement is a pre-configured version of ION’s TriplePoint solution for producers that acquire raw materials to make products that are manufactured and sold. These producers face the challenge of volatile commodity price exposure within raw materials (e.g., Aluminum beer cans) on one side and the need for a stable consumer product price on the other. Plainly, they are exposed to margin risk and need to develop strategies like hedging to manage that exposure.

ION has invested continuously in the Triple Point platform he told me and SPP is one of several configured solutions that were set up to target specific use cases and markets to reduce implementation complexity. ION SPP is a targeted module fit for purpose for procurement organizations, I was told.

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Most producers will utilize an ERP solution, however, most usually that ERP has no real capacity to help report and manage this sort of margin risk. So, from Felix’s perspective, the first need is that any CMS must be readily integrated with the ERP without significant effort or cost. “Connecting ION’s SPP to an ERP in this area of a business is quite light and not very complex,” he told me. “Essentially, all we need is the forecast MRP run from the ERP with raw material amounts, as well as some accounting integration. These two areas are far less complex to do than the area of logistics, for example.” In essence, he says that the touch points between the CMS and ERP are actually very light and quick to achieve.

So, what exactly does ION SPP do?

It captures the raw material trades, as well as the financial trades used to hedge, provides tools to manage the risks and model scenarios to help with planning – including plant planning using advanced forecasting tools, monitors material costs in real-time, speeds up the reconciliation process and more. It also helps in areas like cost analysis, hedge effectiveness testing and complete integration with the ERP. In short, it helps the user manage their margin risk exposure, Felix said. It also comes with complete reporting. ION has enjoyed success with this solution and sees a strong market for it in areas like automotive and food & beverage and expects to continue to do so.