The specters of inflation and an economic downturn nevertheless loom large in the C-suite. Businesses across the world are taking a long, hard look at how to manage in an ever-changing environment.
Perhaps it’s not surprising, then, that one of the headlines out of Davos this year centered on CEOs searching for ways to make operations more efficient and profitable. For these reasons, we expect to see even greater investment in digitization, automation, and other technologies that empower businesses to reduce costs and streamline their operations.
Such tools will also play a key role in making organizations more resilient. No matter what 2023 may bring, we can confidently say businesses face a dynamic risk environment. They will need technologies that enable them to withstand whatever blows they may face and come out on the other side thriving.
With these considerations in mind, here are three key trends you can expect to see develop this year.
For years, the conventional wisdom has told us that the world of ‘paper’ documents will soon be behind us. With so much business in many industries being done strictly digitally, the commodities industry’s reliance on labor-intensive documentation stands out as a glaring anachronism. From one-off spreadsheets and imaged invoices to the ever-present (and handwritten!) delivery receipt, this is one industry that remains sluggishly behind the curve when it comes to automation.
Is all this inconvenient? Absolutely, but the impact goes far deeper than that. To illustrate the point, consider this article published by McKinsey and Company late last year that revealed the commodities industry is spending more than $6.5 billion in unnecessary direct costs due to its reliance on paper-intensive documentation. That money could be saved simply by switching to an electronic bill of lading, while enabling an additional $40 billion in global trade.
There are other costs to paper-based processes, too. The manual rekeying of documents ties up people and resources while introducing opportunities for error. Every time a piece of data is transferred by hand from one form to another, there’s a chance to introduce a mistake. Multiply this enough times throughout the rekeying process, and it virtually guarantees costly mistakes.
If business leaders are serious about improving efficiency and profitability, you’re going to see a push in 2023 to move toward digitization, the first step in automating the reconciliation process. Once complete, however, this transition will enable straight-through processing for tasks like trading confirmations and inventory reconciliations. Taking this step will help to reduce errors while also freeing up teams to spend more time on their strategic business priorities.
Data is one of a business’s most valuable resources, but many are still struggling with taking raw information and turning it into actionable insights. One of the key challenges facing businesses is that their data is locked in documents that may be scattered across their organizations. When that happens, data becomes difficult to access and thorough analysis becomes nearly impossible — you can never be sure you’re working with complete information.
Even worse, whoever has the document will only re-key what’s necessary for them to complete their own task. Consider what this might mean for an invoice: While vendor details and the total amount might get re-keyed, all the other details contained in that document — project details, demurrage charges, etc. — would remain inaccessible to other teams. And this is just one example of a problem that might be replicated over and over again within your organization.
This can play out in some troubling ways. In research published by Gartner, it was revealed that 44% of employees made incorrect decisions because they could not find the data they needed. Now imagine if that data weren’t in applications at all, but rather were locked away in documentation. How much worse does that problem become?
For organizations to unlock the full power of the data they possess, they need to digitize their documentation in a way that’s readily accessible. Digitization makes it possible for teams to share and collaborate with complete information. That information can also be easily shared with the counterparties and vendors who need it.
Hence the second trend: In 2023, you’re going to see a bigger push for digitization than ever before. Businesses are recognizing the true treasure trove of information they have stored away. The ones who unlock it first will enjoy a strong competitive advantage.
In the past, we’ve seen automation and digitization tools applied broadly — vastly different organizations attempting to use the same sets of tools to achieve very different outcomes. But as the technology has advanced, and organizations have matured in their understanding of the best way to use it, the solutions have also matured.
Consider artificial intelligence and machine learning, for example. These technologies have come a long way through the years, and they can now be applied as part of a hybrid approach to intelligent document processing to extract valuable data from documentation. These “smarter” approaches can be further tailored to the needs of specific industries.
As an example, let’s consider commodities again. The relationships and processes that drive the commodities sector are not comparable to industries like insurance, healthcare, or banking. By its very nature, the commodities industry is driven by a unique web of requirements and relationships that shape trading, procurement, supply chain management, accounting, and other processes.
While these processes can benefit from automation and digitization tools, those tools must be customized to meet the particular needs of the commodities industry. Further complication arises when you consider that the commodities themselves come along with their own nuances. For instance, although sugar, biofuels, and metals might all be considered “commodities,” the processes that dictate their lifecycles are very different in practice, and vary depending on which region you’re in.
As a result of differences like these, we expect to see automation and digitization tools become more and more specialized throughout 2023. While industry leaders have recognized the power of these technologies, they will increasingly demand solutions customized to the needs of their businesses.
Automation and digitization will empower businesses to be more responsive, efficient, and productive, and while expending less effort. But while these tools continue to evolve, some industries are still dragging their feet.
In 2023, that’s no longer an option. Given the economic headwinds we face, all commodity sectors will soon see a push to adopt these tools on a wide scale. And the companies that get there first, and effectively employ these technologies, will get to enjoy the benefits of that competitive edge. Whether improving margins, capturing news sources of materials through to responding more rapidly to the next black swan event.