The Commodity Trading Week (CTW) events in London (EU) and Americas were a resounding success. Gathering industry professionals from across the globe, these events sparked insightful discussions and..
Are manual processes holding you back?
How commodities companies can gain a competitive advantage with automation
The past few years have been very challenging for commodities companies. While disruption from the COVID-19 pandemic started to wane in early 2022, the war in Europe has since shocked global markets, exacerbating supply chain disruptions and driving prices sky high.
To operate at peak efficiency amidst this persistent uncertainty and volatility, commodities companies require accurate data. Using inaccurate information to make hedging, trading, purchasing and other important decisions can result in financial damage, supply chain issues and other negative consequences that make it difficult — if not impossible — to outrun the competition.
Despite these significant drawbacks, many commodities companies continue to use manual processes for many back-office functions. These slow, error-prone processes prevent companies from having the accurate data they need to made decisions with confidence and quickly take advantage of new opportunities.
Three manual processes in particular cause significant operational and financial challenges. Here’s why, and how automation can help.
Manually reconciling trade confirmations, approving invoices and managing inventory is a very common practice — and a very risky one. Here are some of the issues associated with each of these manual processes.
- Trade confirmation statement reconciliation
Manually reconciling trade confirmation statement information against commodity trading and risk management (CTRM) system data is a slow and highly inefficient process. Costly discrepancies, which often go unnoticed for long periods of time, throw off both balance sheets and business decisions. Some companies use a “semi-automated” process involving spreadsheets, but that’s not much better since nearly 90% of spreadsheets include mistakes.
- Invoice approvals
Manually comparing data on paper or digital invoices to data in AP systems is also time-consuming and error-prone, especially for fuel retailers, who often receive stacks of invoices daily and race to meet 10-day payment terms. Manually approving invoices is also exorbitantly expensive — one report puts the annual cost of labor and other expenses related to this process at $2.7 trillion.
- Inventory management
Despite the fact it’s often handled by teams of people, manually entering inventory data and reconciling inventory balances is still a very time-intensive process that subjects companies to significant risk. The inherent shortcomings of manual processes means inventory data within internal systems is rarely — if ever — accurate. This makes it extremely difficult to hedge positions with any degree of confidence, and can lead to companies selling product they don’t have, or purchasing product they don’t need.
Advantages of automation
Continuing to rely on inefficient, error-prone manual processes to manage back-office functions incurs extremely high levels of risk commodities companies cannot afford. Automating back-office processes with intelligent documentation automation solutions provides the agility to maximize efficiency and profitability no matter how volatile or uncertain markets becomes.
Intelligent automation solutions such as ClearDox, which are designed specifically for commodity-intensive businesses, can automate processes from start to finish using technologies like artificial intelligence (AI), machine learning (ML), natural language processing (NLP) and optical character recognition (OCR). Data from any document type — digital or handwritten — is quickly extracted from paper or digital documents, then easily integrated it into CTRM, accounting or other internal systems. Benefits include:
- Increased speed and accuracy: Intelligent documentation automation solutions process documents rapidly and without errors — even when extremely high document volumes are involved — which ensures internal systems always contain current, accurate data.
- Reduced risk and costs: Automating data entry and reconciliation significantly mitigates operational and financial risk by eliminating fat-finger errors and ensuring discrepancies are never missed. It also cuts costs: Deloitte research shows automation saves companies 25% to 40% on average by streamlining processes and improving productivity.
- Higher productivity and efficiency: The labor shortage has made entry-level positions hard to fill and keep filled. Because intelligent automation solutions easily scale to handle increasing volumes, companies can do more with less. Staff once consumed with manual tasks can be refocused on higher-value projects that support business growth.
Why automate now
While companies can’t control external challenges like pandemics, world events and climate change, they can use automation to alleviate the impact these challenges have on their business. Automating back-office processes provides commodity-intensive businesses with the efficiency and agility required to make it through volatile times unscathed and gain a competitive advantage.
Read our white paper to learn more about why automation must be a top priority for all commodities companies, and the benefits it provides.