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Over 250 million tons of coal movements are tracked using ION Commodities systems
With coal prices historically being lower than oil and gas prices, coal is likely to remain the most affordable fuel for generating power in many developing and industrialized countries. To control costs, coal supply management will become increasingly important, with major coal businesses needing to focus on the supply chain and inventory efficiency, while also managing quality specifications. ION’s coal mining solutions offer transparency of the trading lifecycle and equip companies to manage the coal quality from contract through to delivery.
Reducing value chain costs
Monitoring inventory is complex and typically managed outside of procurement systems. Businesses have to deal with multiple points of origin, significant volumes of coal in-transit, and inventory stocks of variable grades. As a result, businesses often have issues with controlling logistics and inventory. They either incur additional costs or err on the side of caution by holding too much inventory, which erodes margins.Solution
Improve supply chain visibility
Both procurement and supply chain logistics can be managed simultaneously with ION Commodities’ solutions. Deals that impact position or inventory can be captured while also tracking inventory balances by origin, product grade and quality, storage and shipping terminals, freight district, delivery location, or volumes in transit. Inventory costs are continually recalculated based on evolving conditions within the calculated composition blend analysis. This is used together with other information to better manage the value chain.
Tracking coal quality
The quality of coal available and on hand can add a great deal of complexity to blending operations, price adjustments, delivery acceptance, and return on investment.Solution
Streamline specification capture
ION’s commodity management solutions capture all the data required to plan and track quality, determine how to best blend available materials, or to decide whether to accept or reject coal based on contract quality. This helps create a nimble, visible environment that reduces risks and promotes supply-demand success. Terms from contracts are automatically measured against qualities from the lab analysis done on deliveries. Lab analysis inputs from multiple samples, multiple shipments from varied origins and shippers can be mapped back to the contract terms. Then price adjustments can be automatically calculated for invoicing and payables. This ensures accuracy and maximum ROI.
Mitigating the impact of supplier default
General economic conditions, the increasing price volatility of coal, and various other factors continue to create risk among suppliers. This makes it important to have plans to mitigate the possibility of supplier defaults that could adversely affect your business.Solution
Devise more effective strategies
ION’s commodity management solutions enable sophisticated tracking of the financial impact created by supplier default or related supplier force majeure events. Using our products’ configurable reports, you can quantify financial exposure by delivery period, supplier, or origin.
Companies can benefit from having a singular view of positions across both physical transactions and financial derivatives used in hedging. However, these trades and transactions are often processed in separate systems. As a result, data must be extracted from each system for off-system manual calculations to determine mark-to-market or price risk exposure.Solution
Gain a physical-to-financial view of positions and risk
ION’s commodity management solutions collect and combine information automatically for straight through processing with programmable, automated tasks that coordinate both physical transactions and financial derivatives used in hedging.