CommOS – powering metals supply chain management

Proactive supply chain management in metals is more important than ever for several reasons. These include;

• Continuing sanctions on Russia have curtailed supply,
• Disruption in the Suez Canal which is expected to last well into this year. Re-routing around South Africa is adding approximately 10 days onto journeys, reducing shipping availability and increasing costs with Maersk’s current transit disruption surcharges adding between $8/mt and $14/mt to metals transportation costs,
• Robust supply chains remain an important consideration in the energy transition. Demand is rising for metals to support green technologies, and there is increasing focus on products’ supply chain emissions, including in manufacturing and shipping,
• Traceability is another major consideration in metals supply chains, not only for ethical reasons, but also to mitigate the risk of fraud.

Ensuring effective supply chain management practices benefit metals traders by providing a more reliable flow of goods and a better service to clients. Every team can benefit from robust supply chain management and the benefits are not limited to the logistics team. Good supply chain management means less disruption for operators to respond to so that they have more time to focus on value-adding tasks. Traders can make better decisions based on having more reliable data about their counterparties and can provide a more reliable service to clients. And risk managers maintain better control, with KYC, credit and operational risk controls all contributing to more reliable supply chains.

About CommOS

CommOS is a Commodity Management System with features designed in collaboration with major metals traders to provide metals commodity management straight out of the box. CommOS provides all the risk management functionality you expect from a modern, cloud CTRM, but also includes everything logistics professionals need to manage their day-to-day operations so that your entire business runs smoothly on one joined-up system.

CommOS is used to actually manage the ins and outs of metals trading, not just to report on activities after the fact. It includes automated workflows that are customised to your business processes to improve processing and risk management. It also includes automated pricing calculations and document creation, including for contracts and shipping documents, as well as checks and balances for all teams, from credit line alerts for traders to allocation checks for operators. And because your team all manage their entire workflow in CommOS, risk and management reports are all fully automated, with no need for your busy team to repeat or re-enter any information.

How CommOS improves metals supply chain management

In operations

CommOS is built around powerful inventory management that uses virtual lots to both show and manage your real-world positions. These virtual lots are a digital representation of the actual goods, and include all their quality data, location, and full history, meaning that operators can manage and allocate stock with ease.

The ability to sort inventory by location, assays, time in warehouse, and many other important criteria, leads to fewer errors and more reliable supply chains. And CommOS includes alerts if allocations don’t match the contract specifications, further improving reliability.

It also includes automated workflows to manage tasks that can be repetitive and error-prone, such as automatically calculating pricing and creating documents, and progressing tasks or documents to the appropriate next stage, whether internal or external. CommOS also includes alerts and calendar notifications that can be built into these workflows to ensure handover processes are clear and nothing is missed or buried in an email inbox. And because every metals trader is different, these workflows can all be customised to your own processes.

These workflows also make supply chain management more straightforward as the live situation changes. From scheduling inspections and updating quality and assay information afterwards with ease, to adding workflows to reject inbound shipments that don’t meet your quality specifications, your workflows can be as flexible and agile as your business processes, whilst still automating manual tasks and accelerating operations.

You can also integrate external systems into your Commodity Management System, for example, incorporating vessel tracking updates your Commodity Management data as soon as there are any delays or changes to ETAs. This means that your entire team are instantly aware of, and can proactively respond to, supply chain disruptions as soon as they arise.

For operational risk management

Because CommOS includes CRM and counterparty management alongside your contract and logistics management systems, it is easier to highlight the counterparties that are less reliable and therefore contributing to supply chain issues. For example, you can uncover the counterparties that have more delays, more rejected shipments, or are later making payments.

CommOS can also help your organisation reduce the risk of fraud by bringing every aspect of your supply chain management together, through powerful KYC, location monitoring and inspection support, as well as enhanced traceability controls. The Know Your Counterparty functionality includes checks on counterparties’ financial stability, credit lines, certificates, and includes alerts for scheduled future audits.

The powerful pricing engine calculates valuations instantly, and updates them with a click if any assays, positions or other variables change. This means that MtM and P&L reports can be updated live throughout the day, with no need to wait for traders to update your records, or for month-end reports.

“Pre-CommOS, we were using numerous IT systems more than 15 years old and I would lose nights and weekends every month end trying to export, import, reconcile and correct data, and risk management was very time consuming .

CommOS has amalgamated three systems into one and has seamless data flow with our accounting systems. It has made data integrity and risk controls multiple times stronger, and has made month ends much more streamlined – yes it has given me my nights and weekends back!”

Chris Russell-Jones, Euro Alloys

CommOS also includes live integrations with accounting systems so that credit lines update automatically as soon as invoices are paid. You can also add pre-approvals, including for credit limits, so that traders don’t need to run each individual contract by the risk team, and pre-approved document templates that mean standard wording can be pre-approved by legal teams, avoiding the need for every document to be thoroughly reviewed.

For trading teams

The credit management features mean that traders can make better use of counterparty credit lines, meaning a better asset turnover. Traders also have complete position visibility and can use this knowledge of your live inventories to inform their trading decisions, so better supply chain management also translates to more efficient trading. Trading decisions are also made based on live information coming in throughout the day as the whole business is managed live within the one connected system.

And because traders can identify their most reliable counterparties, they can focus on those who provide the most stable supply chains, making it easier to fulfil their obligations and become a supplier of choice to clients.

Once again, the pricing engine improves processes and reduces operational risk as traders are able to easily build complex pricing into their contracts and CommOS will instantly perform the calculations based on the contract figures and your pricing formulae. And as any values change throughout your supply chain operations, such as after an inspection, the new values can be instantly recalculated with a click, ensuring all positions and reports are fully accurate and your valuations are correct.

Traders also gain complete traceability in CommOS. They can therefore easily verify quality and sustainability data for clients, have straightforward certificate management built in, and can use the automated pricing engine to calculate the value of all assays instantly. Integrations to other systems such as vessel tracking or carbon calculators mean that carbon pricing can also be added to your contracts if this becomes relevant to your business, and you can command any associated sustainability price premiums.

Conclusion

Effective supply chain management plays a key role in ensuring the profitability and resilience of metals trading companies. Whilst this has always been important for traders, many are only now beginning to appreciate the true value of integrating all your teams and processes in one connected Commodity Management System to provide this supply chain management.

CommOS powers effective supply chain management and ensures its benefits reach all your internal teams, but also, that they are passed on to your clients so that you provide effective, reliable supply chains to these clients and reap the benefits of doing so.

If you’d like to find out more about CommOS, explore how it has been developed for metals and concentrates traders.