In part one of this blog post we looked at the factors which can impact decisions on eBL and digital document adoption in the commodity trading sector.
Our concluding argument was that the challenges of funding & managing transformational change; industry fragmentation; the existence of alternative solutions; and the nuanced business case have contributed to the measured adoption rates for electronic bills of lading to date.
In this, part 2, we will focus on strategies and actions which can be taken to create value and prepare for a time when the eBL could be embraced more broadly across the international commodity trade.
What different approaches and strategy could trading companies adopt in regard to eBL and document digitisation in general?
In today's ever-evolving world of commodity trading, companies are increasingly recognising the potential of the eBL (electronic Bill of Lading) and document digitisation. In this post, we'll delve into how trading firms can effectively navigate the digital transformation journey.
To embark on this transformative path, it's essential to challenge the notion that positions eBL adoption and document digitisation as the key drivers for change.
The real value lies in the steps required to be taken by trading organisations in preparation for the eventual broad adoption of digitised documents in international trade. Whether we foresee this transition happening in 5, 10, or 25 years, the value emerges and can be harnessed from the groundwork laid today.
The organisation's digital value proposition hinges on addressing the systemic challenges that are entirely within its control to resolve. Substantial value can be realised regardless of whether the eBL and document digitisation become a reality, or not.
The critical components for successfully leading this digital transformation include a robust Control Framework, Streamlined Processes, Efficient Systems, and a Skilled Personnel.
Developing a Winning Digital Strategy for Commodity Trading Companies
To retain competitiveness it is imperative for trading companies, especially small and medium-sized enterprises (SMEs), to chart a strategic course towards digital transformation. But what exactly should this strategy include?
The first step for many commodity trading enterprises is to acknowledge that the journey toward digitalisation does not revolve around eBLs or digital document adoption as its end game. While these elements play a role, they are neither the starting point nor the ultimate destination. The most significant benefits of a digital strategy come from developing solutions to the organisations critical pain points and bottlenecks, seeking seamless process integration across business functions and locations.
The essence of a successful transformation lies in focusing on actions that a company can control and implement effectively.
Elements to Consider in Developing a Winning Digital Strategy
1.Conduct a thorough assessment of current processes to identify pain points, bottlenecks and inefficiencies. Standardise organisation processes across functions and locations and understand where digitisation and digitalisation can bring the most significant improvement.
2.Consider the current policy and procedure frameworks and if a fit for the coming digital transformation. Additionally, raise employee awareness of the necessity for compliance and discipline in the execution of organisation policies, procedures and processes
3. Prioritise initiatives that align with your business goals and value drivers. Focus on areas that will have the most immediate and substantial impact on productivity, cost reduction, and customer satisfaction.
4. Address resistance to change by engaging employees early in any transformation initiative, fostering a culture of innovation, providing training and support, and encouraging cross-functional collaboration.
5. Evaluate potential risks associated with digital transformation and develop a comprehensive risk management plan to address these challenges and ensure a secure and seamless transition.
6. Ensure that a digital strategy incorporates robust compliance measures to adhere to international trade regulations and guidelines. Collaborate with experts to develop solutions that meet both legal requirements and industry standards.
7. Consider small-scale pilot projects to test the effectiveness of digitisation solutions in real-world scenarios. Use the insights gained from pilots to refine your strategy and address challenges to scaling up.
8. Establish key performance indicators (KPIs) to measure the success of a digital strategy. Regularly monitor and evaluate the outcomes against these KPIs, making data-driven decisions to drive continuous improvement.
9.Consider how a digital strategy can be leveraged to improve the customer experience throughout the trade lifecycle and differentiate customer experiences aligned to your segmentation and marketing plans.
10. As technology continues to evolve the organisation must embrace a mindset of continuous innovation and be prepared to adapt. Invest in technology, platforms and applications which are flexible and engage with service providers that have a continuous innovation mindset.
Crafting a Successful Route to Digital Transformation
In any transformative undertaking, a clear roadmap is essential for achieving its objectives. Rushing headlong toward an end goal without establishing the fundamental pillars necessary for success can result in, at worst, a complete project failure and, at best, only capture a fraction of the transformation's true potential.
Failing to complete the necessary foundational activities poses the risk of embedding existing inefficient processes, controls, and habits into any new digital tools deployed.
A comprehensive digital roadmap should encompass the following critical components:
1. Foundational Activities:
Standardise and align processes throughout the organisation: This is an opportunity to eliminate redundancy and grasp the nuances of vital process handovers between functions, locations, and external stakeholders, all of which inform, and can be configured in, any future application workflow.
Align the policy and procedure control framework: Special attention should be paid to identifying risks stemming from the segregation of duties and decision rights, all of which should be incorporated into any future application configuration.
Develop a culture of discipline and compliance to internal policies, procedures and processes: Process and Procedure compliance is critical to the success of any digital transformation. Tasks must be completed consistently, accurately and timely to ensure the quality of data inputs & outputs upon which the success, or failure, of a digital transformation strategy ultimately depend.
2. Technology Enablement:
A next step would be to seek out and implement solutions which enable process automation. The objective is to automate processes wherever feasible, maximising internal opportunities to enhance productivity, performance, and cost-effectiveness.
The business should scope the problem to be solved and identify its requirements. Whether enabling functionality should be built into an existing CTRM or purchased as a standalone capability is a business decision. Both have plus and negative points.
The CTRM route could be costly and time consuming, potentially delivering an over complex solution to what could be relatively simple process challenges. The standalone route could add complexity into the organisations IT landscape if multiple solutions are implemented for discreet process areas.
Where speed, cost and flexibility are desired, a best-in-class standalone application, as a tactical solution to resolve critical pain point(s), could be considered as a preferred solution.
3. Integration with External Partners:
After enabling technology has been identified and implemented successfully, driving the organisations digital transformation, it's time to focus on opportunities to interface and integrate with third parties, further enhancing productivity and performance.
The foundational work is vital to these efforts as it dictates the process handovers, and data to be transferred, to collaborate seamlessly with 3rd parties across the supply chain. Interfaces can be as straightforward as receiving 3rd party data in Excel or XML files for direct upload into the selected application, or they can involve deeper integrations with service providers, suppliers and customers.
While the above steps are not mutually exclusive, focusing solely on technology enablement and integration without the necessary foundational work will lead to suboptimal outcomes and increase the risk of project failure.
These phases can be completed relatively swiftly and, in some cases, concurrently, depending on the project scope and complexity. There are many opportunities for 'quick wins' depending on the organisations preferred approach.
Opportunities to address the organisational model:
A digital strategy also provides an opportunity for the business to seek out and implement alternative organisational models such as offshoring and outsourcing.
There can be significant value in seeking collaboration with an expert outsourcing partner with the requisite experience and expertise in commodity trade execution and shipping operations.
The right outsourcing partner can also turbo-charge the digital strategy by leveraging its existing infrastructure to provide access to technology at lower cost (vs. going alone) and enabling the business to transform and scale with speed.
Outsourcing and offshoring has been part of most large trading organisations playbook across all functional areas, leveraging their operational scale and geographic scope. Through digitisation and digitalisation SME’s can now access these same benefits of scale in their trading back-office functions through partnering and collaborating with expert providers such as Crest Trade Services.
Unlocking Success Through Digital Transformation: Overcoming Challenges
Digital Transformation does not come without its challenges.
As stated in part 1 of this blog post a critical dimension of a digital strategy is the change management, and in particular the impact and disruption it could have on employees and the broader organisation if change is not managed effectively.
Through digital transformation the role of the trading operations/trade execution employee transitions ever further into one of data management and exception management expert. While many will welcome becoming free from the drudgery of spending 20-30% of their time on manual data input across multiple applications and excel sheets, reviewing and reconciling documents, and the always overflowing inbox, many can find the transition difficult.
Senior leadership sponsorship and unwavering support is necessary to achieve successful transformation, playing a critical role in keeping the organisation focussed on the prize and providing the necessary resources to project teams and change managers to lead employees through the transition.
Digital Transformation: Levelling the Playing Field
Regardless of the challenges, for many enterprises a digital strategy is a necessity for long term success. For SMEs, it's a key to levelling the playing field with larger competitors and in the short to medium term it can provide a distinct competitive advantage, enabling the business to respond to change with speed & agility and increasing its resilience in the face of supply chain disruptions.
Focusing on the aspects of strategy that are within the direct control of the business is paramount. This approach not only enhances the ability to secure project funding (vs competing organisation projects) but also enables organisational learning in preparation for more complex technology implementation opportunities in future.
The good news is that the costs to resolve typical key process pain points around operations and trade execution are not generally prohibitive and can have a relatively short implementation cycle and payback period of 6 to 18 months.
Conclusion
In conclusion, the adoption of electronic Bills of Lading (eBLs) in the international trade of commodities presents a complex picture and the journey to widespread adoption is not without its share of challenges.
Companies, particularly SMEs, need to balance the promise of eBL and digital trade documents with the practicality of implementation. With the realisation that the success and value of a digital trade strategy is not dependent on document digitisation, and is within their sole control, they have the freedom to proceed at their own pace. For SMEs, this transition becomes a bridge to competitiveness, fostering agility and resilience in turbulent times.
By addressing challenges head-on, learning from experiences, and staying attuned to the evolving requirements, trading companies can position themselves for a future that maximises the potential of eBL & electronic documentation as, or when, they are more broadly embraced, contributing to a more efficient and resilient international trade landscape.
Contact Crest Trade Services to start a conversation on your trade operations digitisation opportunities: info@crestts.com