Essentia Deploys Allegro for World’s Largest Supplier of Dairy Products

The Project

Substantial challenges assail the global dairy industry. These include global supply chain disruptions, record-level energy costs and inflation, labor shortages, and changing consumer preferences. Understanding and predicting the potential impacts to business costs, to profit and loss is a critical path to making the best decisions, to navigating market volatility and optimizing profitability.

Operating in 130 countries, Essentia’s client is recognized as one of the world’s largest suppliers of dairy products.  With millions of dollars in annual physical commodity inventories, an effective financial hedging strategy is important to mitigating commodity price risk. Achieving this necessitates a unified, “single view” of commodity inventories.  A Commodity Trading and Risk Management (CTRM) system was required.

Essentia Provided

Essentia was enlisted to assist in capturing the requirements necessary to evaluate solution alternatives. Capabilities were needed to capture and manage prices (curves), financial hedging transactions (deal capture), to value the portfolio and generate the position and exposure reports necessary to manage risk. Additionally, option valuation and analysis of the various factors that may impact the value of an option position were likewise needed.

With requirements defined, Essentia advised and assisted in the software evaluation process. For its flexibility, adaptability, intuitive user interface, and relevant past performance, the client ultimately chose the Allegro CTRM platform.

In parallel to software license negotiations, Essentia planned the implementation and configuration of Allegro. Once software license purchases were concluded, the software was configured and with some amount of customizations, as necessary, to meet client-specific requirements were developed.

End user acceptance testing was combined with training and enablement, to both ensure system fitness to purpose and to maximize adoption by the end users.

Once deployed, Essentia was engaged to provide ongoing daily run-and-maintain support and cloud managed services.

Client Benefits

While some of the challenges faced by dairy companies are outside of the control of industry stakeholders, being optimally equipped to make the best decisions to mitigate commodity price risk is squarely in the realm of a commodity trading and risk system. Through deployment of the essential capabilities required to mitigate risks and enhance profitability, Essentia’s client has strengthened its ability to compete more effectively in the market and enhanced its ability to capture additional opportunities in agricultural trading. 

Industry
Agriculture

Commodities
Milk and related dairy products

Technologies
ION Allegro
Microsoft SQL Server
Amazon Web Services
Prices from USDA, CME, NZX

Essentia Solution Offerings
Strategic Advisory & Planning
CTRM Implementation
Cloud Managed Services

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