According to Gartner, Inc., “Digitalization is the use of digital technologies to change a business model and provide new revenue and value-producing opportunities; it is the process of moving to a digital business.” Arc Advisory Group suggests that digitalization “changes everything” – from processes and strategies to enabling companies to make better, more informed decisions. Digitalization is transforming global businesses, making commodity trading easier for those who embrace new technology.

For commodity trading companies, digitalization is about leveraging new technology to improve business processes and increase value. Advances in computer power, connectivity, and mobile devices enable a more connected value chain, powering significant improvements in communication, collaboration, and decision making.

Even a decade ago, no one could have predicted the level of connectedness we experience in 2019. Commodity trading companies have access to real-time market feeds, weather reports, product movements, news, manufacturing and shipping schedules, inventory levels, and more. IoT sensors are embedded in everything from shipping containers to soil sensors, providing a real-time view of agriculture products from farm to fork, metals from mine to manufacturer, and oil from discovery to consumption.

The challenge is ensuring you are using all the information that can help you grow your business. Can your commodity trading and risk management (CTRM) software aggregate and analyze all this data to help you make better trading decisions? Information alone is not enough, you also need the analytics to make sense of it.

Artificial Intelligence has been around for decades, but only recently have computers been powerful enough to rapidly analyze the quantity of data generated in commodity management each day. Now, computers can aggregate real-time information, analyze it, and create valuable intelligence in the period of just a few minutes.

Take, for example, a farmer analyzing the health of his crop. He can upload a photo of a plant and an app on his phone can immediately tell him if the plant is diseased or not. This is a process typically takes days, or even weeks, requiring contracting a specialist, scheduling an appointment, and waiting for the specialist to evaluate the crop. If the crop was diseased, that disease could spread while the farmer waits for the specialist – ruining more of the crop.

Today’s mobile phones connect people, systems and data together in real time. If there is an emergency on a Saturday night, someone can call you, email you, text you, and message you and all four of those messages will arrive to your phone immediately. If a market disruption occurs, you can log into your CTRM from your phone and immediately evaluate your options.

For example, if you have Eka’s Position app and you see a news story that concerns you, you can quickly log into the app on your phone, view your position in real time, run a few simulations based on the news story, and create some reports to share with your team. You can do all of this in minutes, without leaving your house, enabling you to take quick action when required.

Moving from on-premise systems to a cloud-native platform lets you access your data at any time, ensuring mobile access to both data and systems. Beyond that, perhaps the biggest advantage of cloud-native software is the ability to implement it quickly – both the initial implementation and scaling and extending the solution.

Imagine you are a small trading house just starting out. You need a starter CTRM with basic, out-of-the-box apps. With Eka, our simplest implementations can be completed in under two weeks, so you are up and running fast. Six months later your business has exploded, and you need more capacity. That’s not a problem with a cloud-based commodity management platform, you simply use more server space. There is no need to purchase additional hardware.

Now a year passes, and you need some additional reporting and risk management apps. Since the platform is cloud based, you can quickly and easily implement additional apps without purchasing new hardware or disrupting your existing CTRM processes. The cloud-based platform grows with you.

Blockchain has the power to improve commodity trading efficiency exponentially. By connecting all trading partners via blockchain, you can eliminate cumbersome and repetitive paperwork, reduce email and phone correspondence, and eliminate middlemen in transactions. Creating a blockchain where every member of the value chain has instant, accurate visibility into the entire value chain ensures all parties can negotiate quickly and effectively, track commodities in transit, and settle invoices in a timely manner.

One example of the power of blockchain is the first coffee blockchain marketplace that Eka implemented to enable coffee traders in India to negotiate directly with trading partners, provide complete traceability of crops, and improve billing and paperwork.

Commodity trading companies must embrace new technology to succeed in rapidly evolving commodity markets. Real-time data and the ability to analyze it provide the chance to stay ahead as markets shift, and that ability provides a competitive advantage to companies savvy enough to use it. Don’t be the one left behind.

Learn more about the power of digital transformation.