Welcome to the second in a series of newsletters from Crest Trade Services providing insights and updates on commodity trade execution.
Contact us at info@crestts.com with your feedback & questions
Execution Insight
Optimizing Trade Execution in Growing Trading Organizations
In SME or boutique trade houses, the organizational structure is typically straightforward, with clear reporting lines from individuals to the C-suite/Leadership team. However, as the business grows and organizational complexity increases, decisions on the functional structure, roles, and reporting lines become more intricate and critical.
Execution Fit in the Organizational Model
The purpose of a business function is to enable the business strategy. Trade Execution (TE), as a key function in commodity trading enterprises, is no different. Growing margin through customer-added value could be best achieved by alignment with the commercial organization, fostering collaboration to identify value opportunities for customer-tailored services, and driving performance through customer-focused KPIs. Conversely, alignment with the finance organization to drive down costs through productivity-focused KPIs could be more appropriate for growing market share through pricing. While these examples represent opposite ends of the spectrum, most decisions are much more nuanced. Generally, for most trading organizations, Trade Execution will be placed under either the commercial or finance structure, with appropriate reporting lines. However, some organizations have Trade Execution as a unique function with its own seat on the leadership team.
The Peril of Abdication
It is up to business leadership to define how Trade Execution can best enable strategy and organize accordingly. Of critical importance in any decision about functional reporting lines is that they must be assigned to a senior leader in the business who understands the activities of the TE function.
They must be engaged in seeking out opportunities to optimize its value to the broader organization. If this critical factor is not addressed, then the organization may face the 'peril of abdication,' with the leadership leaving a vacuum that can result in confusion, inefficiency, and TE being misaligned with the broader organizational objectives.
TECHNOLOGY CORNER
Digital Transformation In Trade Execution
Embarking on a digital transformation in trade execution can bring substantial rewards.
But what are the key drivers and benefits of such a potentially disruptive change? For leadership teams, the critical question is: 'Is our organization ready for major changes?'
Leadership must craft a compelling vision for change that everyone can rally behind. Without a clear vision, overcoming resistance becomes significantly harder.
Key opportunities in digital transformation
Process Automation: Automate manual or paper-based processes to boosting efficiency and productivity.
Workflow Integration: Break down silos with standardized processes that run seamlessly across the organization.
Network Leverage: Enhance connectivity and reduce data‘friction’ between stakeholders.
Organizational Flexibility: Reallocate resources swiftly to meet changing market and seasonal demands.
Increased Competitiveness: Lower execution costs,increase margins & agility to capture new opportunities.
Each organization’s journey to digital transformation in trade execution will be unique. Leadership teams need to consider their specific culture and strategy, and clearly understand why change is needed and what future it will lead to.
In Crest’s experience, a digital strategy in trade execution can significantly improve employee productivity by over 30%, reduce the cost of execution, and increase margins.
Crest Trade Services - your partner in trade execution transformation.
Tel: +41 22 710 21 69
Email: info@crestts.com
Web: crestts.com
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