Digitalisation can be an overused and misapplied term. It means more than simply converting offline information into a digital format (technically known as digitisation): the goal of digitalisation is to use technology to improve the workflows that create and use the digital information.
Digitalisation in commodities
Digitalisation is all about improving data, processes and workflows; all areas of particular importance in commodities where data access can inform more profitable trading and processes often involve multiple people working on a sequence of time-sensitive tasks. Above all, digitalisation helps people make better decisions by giving them the information they need when they need it. And for commodity traders and supply chains this improved decision-making can translate into improved margins.
There is variation in the extent to which commodity traders and procurement teams already make use of technology to improve their processes and decision-making. Many larger organisations use CTRM, ERP and other systems to manage their information, but their success can vary. Some older CTRM systems are used to simply store information, meaning that they do not make processes any more efficient, and that the data in these systems is not up to date or accurate enough to inform trading or operational decisions.
A CTRM or other commodity management system that digitises information without digitalising the processes around it leaves the business with no choice but to use offline processes that introduce operational risk. These processes can range from a post-it note to remind an operator of a deadline or a trader of their planned strategy, to complex spreadsheets that carry out in-depth calculations and manage business processes – until a mistake is made and information is accidentally deleted or changed.
A people-centric view of digitalisation
In spite of these challenges, commodities businesses are used to looking for an edge, and to finding or creating tools that help them operate more effectively. Perhaps this is why those in commodity supply chains have a more positive view of digitalisation than some of their counterparts in other industries. Comparing discussions around digitalisation at the recent commodity-focussed Commodity Trading Week and Energy Trading Week with wider technology events, those in commodities are much more positive about digitalisation. Commodity traders generally focus on how digitalising the business will help their people work better and add more value to the company, compared to some industries where digitalisation can be seen as a threat to jobs, despite how frequently this has been proven untrue.
This people-centric view of digitalisation, where we focus on giving people the tools they need, is particularly relevant given the recent disruption Covid-19 has caused to the industry. Leaving aside the immediate risk to health, and the focus on technology to support remote working, counterparty risk is one of the most important factors to consider as we look towards a resumption of more normal conditions. People are playing a vital role in mitigating this risk, using the relationships that have been built between partners and suppliers to maintain buyer confidence in the business, assess risks and offer new solutions to protect positions and credit lines. These interpersonal relationships have always played a crucial role in commodity traders’ success, but could become even more important in periods of increased credit risk as counterparties look for reassurance from trusted trading partners.
People play a vital role in commodity businesses, and digitalisation helps them perform even better. Gen10 appreciate the role that individuals play in your organisation and know that every business conducts its processes differently. This is why we put flexibility at the core of our solutions. The automated workflow engine can be customised to your unique business processes without the need for extra development; reducing administration, speeding up processing and reducing the risk of errors. And because these workflows are customised for your business, all tasks can be completed within the system, and the processes reflect the way your people want to work. This means that not only do your people have the information they need to make the best decisions, the significant time savings of digitalising and automating processes gives them the time to really focus on adding more value with every decision.
Want to read more?
Subscribe now for monthly updates