The waste management industry produces energy from waste. They often sell the steam to industrial companies in the direct neighborhood, or sell the electricity on the power market. You certainly need a system that can capture any steam and/or electricity contract, even the most complex steam pricing formulas. KYOS offer a cost-effective solution that enables waste companies to calculate the best sales contract given a variety of potential price indexations. Waste risk management is key to survive in this competitive market with over capacity.
Multiple categories (waste, energy) will profit from automated commodity market price analytical functions. Some of our clients use the KYOS portfolio & risk management system to manage a portfolio of steam and power contracts. In this system, each user is able to define a category specific portfolio of commodities. Even better: no more use of spreadsheets as all category buyers use the same integrated portfolio & risk management system. Furthermore, the CFO has an up-to-date helicopter overview across all categories, securing compliance and consistency. Users also save valuable time by sharing analysis across the organisation.
The rising costs of commodities affect heavily your bottom line. Suppliers of steam often link steam prices to power or to natural gas. In the KYOS portfolio & risk management system users are able to compare several commodity price formulas in a split second. Calculating the best applicable formula takes less time than Excel based analysis. Also, it results in significant lower costs with less time spent!
Managing commodity risks is inevitable for waste companies, accurate and up-to-date information is crucial to stay ahead of competitors. Managing this crucial information in Excel has proven to be a pitfall for many companies in terms of costs, mistakes, hidden risks and potential fraud. Likewise ERP systems such as SAP look backwards instead of to the future and cannot perform the required risk management calculations. The KYOS portfolio & risk management system captures years of experience in managing risks of steam contracts and market price volatility leading to effective hedging strategies.
In the portfolio & risk management system you can store commodity budgets, steam production and contracts. The automated market price analytics are combined with your physical positions. In addition, it will provide you with clear insight in the current cash-flow and potential cash-flow variance versus budget expectations.
In other words, you will have a better insight in contracted and/or open positions, cash-flows and the associated risks. This is a clear advantage for your company, not only for procurement, but also sales, finance and treasury. KYOS has a proven track record with waste companies specifically on waste risk management.
As the waste management market is highly competitive, managing the risks is a key task. Steam and electricity contracts are often sold against floating prices and hedging with financial swaps are common. Companies therefore need to find a balance between security of income and the risks of rapidly changing market prices The KYOS portfolio & risk management system will help you to find your “risk and reward” optimum by simulating multiple cash-flow variances. Moreover, it will provide you with clear insight in the potential cash-flows given any variance between fixed and floating prices.
In short: start managing your cash-flow variances and subsequently lower your required working capital!