Work Better, Together. Collaborating to improve asset turnover

Collaborative commodity management technology

Whilst collaboration (and therefore asset turnover) can be improved to an extent without implementing new technology, commodity management apps provide the double benefit of automating collaboration so that it reduces individuals’ workloads and of supporting a more compliant atmosphere, even whilst allowing middle-office teams to spend less time on routine activities.

In contrast, if a collaborative initiative is implemented without the supporting technology, it will require individuals to spend more time logging information, updating records and emailing or uploading copies of documents. This increased workload undermines the primary aim of a collaborative initiative – allowing people to do their jobs faster. And sharing information without a clear single source of truth, or using static documents that multiple people may be working from simultaneously, introduces new risks into the business.

Collaboration supported by technology provides many advantages to the different teams within the business, combining to improve asset turnover and provide more opportunities for profitability.

Front-office advantages

For traders, completing a high volume of trades is already a crucial part of their role, and often part of their incentive structure. Trading teams can benefit from technology-enabled collaboration by gaining:

• Clear, unambiguous pre-approvals from Finance, Legal and CSR teams, with contract templates, system-managed credit limits, certification management and automated processing through approval workflows.
• Complete position visibility, what-if analysis, MTM, KYC data and more, so that they have the information they need about counterparty credit limits and deal profitability before initiating a trade.
• Automated data-sharing and document creation that reduces time spent on manual tasks and on correcting errors such as mis-typed contract terms or invoices.
• Faster processing and fewer errors across operations and invoicing, leading to a better customer experience, better utilisation of credit limits and less need for colleagues to return with requests for additional information.
• Reporting that takes care of itself and gives individuals more time to focus on the activities that add value to their role.

Back-office advantages

In many ways, collaboration and the commodity management technology that support it provide the greatest direct benefit to operations teams, but as shown above, these benefits translate into improvements in other teams’ functions, as well as greater profitability through improved asset turnover. Operations teams can benefit from:

• Direct access to all information about a trade as soon as it is entered.
• Automated notifications and reminders of tasks/deadlines for both individuals and teams so that actions aren’t omitted, even if staff are absent.
• Reduced administration and risk of errors through automated data-sharing, pre-populated system fields and automated conversion between packaging types and transportation modes.
• Improved logistics including automatic creation of documents such as requests for release, shipping instructions and transport requests.
• Notifications that update as the real situation changes, for example if the estimated time of arrival in port changes, the deadline for the shipment’s Ocean Bill of Lading and any other tasks will update automatically.
• A complete audit trail of every action carried out against each contract.

Middle-office advantages

For Risk Managers, Finance and other oversight teams to be fully effective, collaboration is essential. These middle-office roles rely on other teams providing accurate, timely information and on others acting in accordance with the policies and directions they provide. Middle-office functions have sometimes been seen as essentially cost-centres when it comes to asset turnover; reporting and compliance take time that busy traders and operators could be using to fulfil their core objectives. But improved collaboration means there no longer has to be a trade-off between risk management and operational efficiency. People in these roles can benefit from:

• The creation of a single source of truth that allows for pre-approved contract templates and clauses.
• The ability to set risk limits such as counterparty credit limits that provide automatic approvals or direct contracts to the relevant manager for faster approvals.
• Real-time checks and controls that prevent risky actions before they occur, such as alerting a trader if their action would breach a financial control.
• Customisable automated workflows that mean the middle office only intervene when needed but ensure contracts follow your approval processes and alert individuals when action is required.
• A complete audit trail and real-time reports that are based on actions that have been completed, without the risk of errors from self-reported data, and no need to wait for end-of-day or -week reports.
• Risk management professionals are able to take a proactive stance and empower other teams with the information they need to do their jobs faster, creating a stable, robust environment where the middle office contributes to overall profitability.

Collaborative commodity management provides a wide range of benefits to all business functions. When this technology is used to its full potential across teams, the effects impact on the entire business, creating an environment with less risk where every contract is progressed quickly and with the data to provide the best value, ultimately providing the opportunity to increase asset turnover and improve profitability.

 

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