In commodity markets in general and biomass in particular, change is the only constant. With pressures on margins, tighter and more comprehensive legislation and faster trading, to name a few challenges, companies, their business processes and systems, need to be agile and that agility needs to be embedded across the organisation as well as the wider supply chain.
What is business agility?
There is no one accepted definition of business agility; its role and purpose can be defined differently depending on who is asked, and whether they are referring to IT, business, supply chain or other forms of agility. The common goal of any business agility initiative is the ability to respond better and adapt faster to change – a concept that trading organisations are all too familiar with. Traders are already expert at analysing data, making quick decisions and reacting quickly to make the most out of opportunities as they arrive, but a quick trade desk alone does not confer organisational agility. A trader could discover an opportunity for a profitable deal but if the counterparty’s sustainability certificates have not been updated internally, or the market has already moved by the time the contract is approved, the opportunity may be lost due to a lack of business agility in this area. Information therefore needs to be communicated with the rest of the organisation and partners in the value chain with speed and accuracy to power business agility. True business agility means the entire organisation is able to come together to move in the same direction, and to respond large, systemic changes not only day-to-day variations such as market moves.
Information only supports agility if it is shared amongst all who need it
Business agility is as much about the organisation-wide systems and processes that support an agile mindset as it about the tactics and individual actions, so we cannot simply assume that trade desks are agile but held back by the rest of the organisation – particularly if their current working practices include points of friction with middle- and back-office functions.How to become more agile
To become agile, businesses need to develop capabilities in several core areas:- Data visibility
- Interfunctional coordination
- Swift, decisive action
- Empower employees to be more creative and collaborative, with skill sets outside of the traditional organisational silos. An example of this is the current hiring trend for traders who can code.
- Encourage collaboration, from improving the ability of multiple teams to add value to a trade using technology to large-scale collaborative initiatives with supply chain partners.
- Maintain a focus on customer success and develop ways to respond rapidly and flexibly, such as by improving your counterparty onboarding or contract creation times.
- Balance agility and stability. The highly regulated biomass trading environment means that there are many processes that must be followed for every contract, but implementing systems that improve governance and compliance can make it easier for individuals to behave with greater flexibility as they have better awareness of whether their actions are in line with your risk management policies.
- Use technology to support agility. Technology underpins and enables the changes in structure, values and processes that are needed to support more agile ways of working; from providing a secure framework that empowers employees to improving collaboration between offices and along the value chain.