Perspectives on Disruptive Technologies in Commodities – Part 2

We continue today with the input from the CTRMCenter Thought leader panel’s view on disruptive technologies in CTRM and CM software. ComTech is looking at the role of technology in driving change in commodities and we would appreciate your input into a small number of questions to help us understand where and how technology is being deployed. Please visit the Disruptive Technology Questionnaire.

We asked the following question – What do you believe is or will become the biggest technology disruptor of commodity markets or commodity business processes through the supply chain or in trading and risk management in the next 12-24 months and why do you think that?

 

Simon Piercy – We see the decentralization of technology as a key theme over the coming years, delivered through several separate but related mechanisms. Decentralization is a progression of factors we have seen in recent years: the adoption of AI and algorithmic trading, blockchain and related technologies such as smart contracts; and a move from monolithic to ecosystem platforms. Decentralization becomes attractive to the commodity industry, primarily as a technology enabler, and in turn as a cost and risk reducer.

From a technology perspective, we see a greater push towards more open standards and interfaces (APIs), likely standardizing on REST APIs, with GraphQL waiting in the wings. As transactional volumes increase, the need to have low overhead, low latency APIs becomes paramount.

Vendors not already providing cloud-native solutions will need to get on board with distributed technologies such as containerization of deployed apps through technologies like Docker, built on orchestration platforms such as Kubernetes. Containerisation allows for rapid “right-scaling” of resources to support peaks and troughs of data throughput and processing, rather than the very costly approach of provisioning the biggest servers available, all running 24/7.

Containerisation also supports the microservices concept: small, lightweight, rapid, concise services providing a well-defined capability, built around reliability, low-latency, and low-cost. A logical development from microservices is serverless: massively scalable and reliable components that are the ultimate in services computing efficiency.

Another decentralization push will be to promote more open-source use. Open-source hasn’t taken off within the commodities sector; vendors are maybe reluctant to commit effort to a riskier commercial model, and traders perhaps want to keep their models proprietary. There are, however, opportunities to build out standardized “plumbing” that could provide a bedrock on which components, containers, services, and microservices combine to provide a “sum of parts” solution better, faster, and cheaper than monolithic systems.

In conclusion, ecosystems of specialist vendors working together, using these newer decentralized models will offer faster, cheaper, more efficient, and more connected technology solutions to the sector.

 

Richard Williamson – I double-checked the definition and the 3 biggest tech disruptors for the next 12-24 months are COVID, the current trade finance climate, and one that’s been around for quite a while, standardization (lack of).

It will be more a case of cleaning house for most companies in the sector, replacing old systems plus spreadsheets for something more suited to the COVID-imposed working patterns and the stricter demands for transparency and controls from financial lenders. It’s always easy to talk about the next big thing but the focus is on the now, the adoption of existing modern technology to run your internal processes, tackle your operational risk, standardize things, give employees the right tools to work better together, provide comfort to your banks and insurance company.

If there is any spare capacity after this is in these 12-24 months, it would be really good if the focus was directed at standardization of data, process, terminology, etc. This would be the biggest tech disruptor for positive change for commodity supply chains. It’s the main factor that stands in the way of success for any of the potential industry disruptors, these supply chain hubs or trade finance network platforms, anti-fraud collaborations, provenance, traceability, CARBON. All these hold huge potential in terms of value and risk management but without trade associations, institutions, task forces, members addressing the standardization issue, it will not happen, whatever timeline you put on it. And it’s not the kind of standardization that would require compromise in the art of the deal. Many lawyers and arbitrators would agree that standardization of contracts is a valuable risk management exercise and one that doesn’t or shouldn’t adversely affect or take away one’s competitive edge.

Then in 3-5 years, companies will be much better positioned to reap the benefits of collaborative advantage promised bythese new (blockchain or otherwise) industry platform solutions, incorporate AI and make better use of their data alongside “Big Data”and move on to the new opportunities to innovate and compete that these disruptors will facilitate.

 

Manav Garv – The pandemic revealed limited progress made by organizations in their digitalization efforts. The inability to address the breakdown in value chains while accommodating a remote workforce simultaneously, compelled organizations to re-prioritize their business goals. Dealing with the breadth and complexity of commodities and direct materials with legacy processes and technologies further compounded the challenge, making it more important than ever to shift to cloud-driven solutions to quicken the pace of digital transformation efforts.

To that end, we believe there are four fundamental areas businesses must focus on to gain tangible value from their digital transformation moving forward –

1. Supporting new ways of working: According to a Gartner survey, two out of three employees report having to exert too much effort to use the technology provided by employers. An average employee spends more than five hours a week wrestling with tech issues. Gone are the days when an employee could walk to the IT department to troubleshoot. New ways of working are shaping up that call for a significant focus on the need to enable self-service for workers to support remote ways of working at scale. It’s important to note that not everyone in the workforce comes with the same level of technical proficiency. By providing detailed and comprehensive in-solution, self-help features based on best practices that users can access on their own, will enable broader adoption and reduce the need for manual support allowing users to accomplish tasks more independently.
2. Automation as the foundation for better visibility and faster decisions: With business continuity and growth at stake, enterprises operating in complex markets such as ours no longer have the luxury of spending days to understand their risk exposure. A survey of over 3000 C-Suite executives detailed that there will be a greater acceleration of automation efforts to ensure business continuity and resiliency. To focus on transformational efforts while improving speed and agility, automation needs to take center stage so that enterprises can free up their resources and concentrate on more strategic efforts.
3. Enabling and engaging network by digitizing critical processes across the organization: Upwards of 73 percent of organizations in a recent McKinsey survey encountered problems in their supplier base, and 75 percent faced problems with production and distribution due to Covid-19. These numbers jump to 91% and 100% respectively when you just focus on the food and consumer goods industries. Participation across the ecosystem will be crucial in the next two years. It isn’t about more digital technologies in the supply chain but the right kind that is developed for commodity and raw material intensive businesses. Companies, suppliers, and customers are only connected through data. These digital links do not extend across the entire supply chain back to the raw commodities where collaboration must happen. Perhaps the greatest lesson from COVID-19 is that companies need to be prepared to pivot quickly when unexpected market shocks occur. Embracing a digital supplier network provides that flexibility and most importantly transparency, that doesn’t just benefit during pandemics and market shocks.
4. Agile platform built on a cloud platform: To deliver against the three previous initiatives, organizations need to ensure that their technology infrastructure is capable, resilient, and most importantly adaptable to enable long-term success.

Delivering the capabilities required by the supply chains of the future requires a more agile infrastructure—one that will accelerate digital transformation by extending existing services and providing the right foundation to quickly add new services as needs arise.

Most executives agree that agility will allow them to remain competitive in a post-pandemic world where customer needs are changing rapidly. Cloud-based solutions supporting open APIs for easier integration and delivered with regulation-driven enterprise security are enabling enterprises to shift resources from maintenance-heavy IT infrastructures while speeding digital transformation and driving business innovation.

Ultimately, it is primarily through the cloud that organizations will be able to gain the agility to deliver remotely, globally, and in the continuous fashion that is shaping up to be the new normal.

 

Ganesh Natarajan – From my personal perspective, I would like to share the following viewpoints as disruptors

Commodity markets will be really looking at the value of digitization (Redesigning the whole process/value chain and replace with end-to-end digital solution (e.g Blockchain P2P model) versus digitalization (Taking existing processes and instruments and finding a digital/electronic alternative (eg e-Docs)

1. Access to the Physical data
2. Data analytics – AI, specialized hardware with deep learning Logos
3. Investment in data infrastructure has to rise (digital cargoes and digital e-docs)
4. Skill sets of commodities staff must have to evolve

 

ComTech thanks the CTRM Thought Leaders for their participation. Please do complete the new Disruptive Technology survey.

Keep in touch and sign up to our Newsletter