Artificial Intelligence (AI) has emerged as a powerful tool for commodities businesses, promising to transform operations.
But not every AI opportunity is the same. The commodities industry has..
Navigating AI in commodity trading requires more than just harnessing technology—it demands strategic implementation to overcome some inherent challenges.
In our recent webinar, Embedding Artificial Intelligence into Trading and Operations, we discussed the challenges of AI in commodities trading, and showcased three companies that overcame these challenges to improve their operations.
Overcoming Challenges in AI for Commodity Trading
Digitization and automation are important ingredients for efficiency in your commodities business. Not only do they give you the accurate data you need to plan your next move, but they also let you respond quickly to changing market dynamics.
But to use them effectively, you’ve got to overcome some challenges.
You might face resistance from your own team members, who may be concerned about job security, the time it takes to implement and learn new tools, and the disruption the new tools will cause to the business. You also have to worry about the large up-front investment and technical debt that may accompany a new AI tool.
"The problem is that process and people are always pushing back against that technology. Things like priorities: How do you get this project to the top of your list? What disruption will this cause to your business? And how do you prove the value and get the end result that was expected?"
– Rick Nelson, CEO, ClearDox
To improve the chances of adoption, whatever new technology you select has to be implemented fast, be easy to use, and bring your team immediate value.
So, deploying AI strategically is key. You’ll need quick, tangible benefits to justify the costs and the disruption and assure team members that AI will help them perform their jobs more efficiently, not replace their jobs.
Leveraging AI for Intelligent Applications: Real-world Stories
So how do you address the pushbacks on bringing AI into your business? First, it’s important not to view AI as a standalone tool like ERP or CTRM, ClearDox CEO Rick Nelson said.
Instead, look at it as an integrated component of your operations. When implemented effectively, AI through intelligent applications is designed to enhance and support your existing work practices. ClearDox uses highly specialized applications concentrating on specific business tasks and outcomes tailored to the commodities trade lifecycle, including:
- Trade confirmations
- Inventory movements
- Trade finance covering letters of credit
- Compliance, including carbon accounting
ClearDox integrates these intelligent applications directly into an organization's existing operations and systems, making them a seamless part of the business process, without requiring an overhaul of your system.
Here are some ways our clients have used our solutions to quickly improve their business.
Case Study: Metroplex Energy's Efficiency Leap with ClearDox
Metroplex Energy, the wholesale fuel supply trading and logistics arm of RaceTrac, moves a staggering 6.5 billion gallons of fuel annually. Virginia Stephens, the Executive Director of Metroplex Accounting was looking for ways to scale their operations without hiring.
The Challenge: Driving Efficiency Without Adding Staff
Metroplex Energy's primary goal has always been to secure fuel at the best possible prices for RaceTrac and its other third-party clients. This objective was amplified after their recent acquisition of Gulf Oil. These expansions challenged Stephens to scale operations without simply adding more staff.
"I got introduced to ClearDox through the acquisition. And I have been smiling ever since. This is one of the products that I have been looking for. We move a lot of invoices, and a lot of fuel through our system. It has allowed us to take that on with minimal dev work and minimal addition of human bodies. So, allowing the headcount that we have to be able to think and to analyze the data versus just input the data."
– Virginia Stephens, Executive Director of Accounting, Metroplex Energy
The Solution: A Seamless, Scalable, Solution
Prior to implementing ClearDox, the settlements were handled via traditional bots, which did not offer the scalability and ease of integration that ClearDox could.
With ClearDox, Metroplex can handle an increased volume of invoices and fuel movements efficiently, with its existing staff. It also allows staff to focus more on data analysis and less on data entry. Stephens emphasized that successful automation requires more than just new technology; it requires change management and buy-in from all stakeholders involved.
"You’ve got to bring people along with the journey and your vision. I cannot stress how important change management is and getting buy-in from those that will either be directly affected by the process change or those in other functions that you don't think will be affected, but they ultimately are. It's a wonderful transformation once it happens, but just make sure everybody's along for the ride."
– Virginia Stephens, Executive Director of Accounting, Metroplex Energy
Case Study: Zen-Noh Grain's Exploration of AI's Potential with ClearDox
Based in Convent, Louisiana, Zen-Noh Grain Corporation handles the logistics and export of about 2.2 million bushels of grain daily through subsidiaries in Calgary and Brazil, and brokerage operations globally. The company's complex operations are characterized by a just-in-time delivery system with minimal storage capacity, which makes the logistics of grain export critically important.
The Challenge: Improving Document Processing Efficiency and Accuracy
Zen-Noh wanted to streamline their processing of documents like grain certificates, weight certificates, and grade certificates and reduce their reliance on manual data entry while improving data accuracy.
At first, Zen-Noh Grain wanted ClearDox’s solution for processing certificates, but they quicky realized ClearDox could help them automate other manual processes, which increased operational efficiency and enhanced the accuracy of critical business data. This shift also let them transition some employees toward more critical and strategic business functions instead of data entry tasks.
"We really wanted to remove people from the data transcription process. It just doesn't make sense to have people transcribing data that we can intelligently capture otherwise. We're catching things that we never would've caught with manual processes. So, our accuracy has gone up significantly. But we've automated what were previously manual processes in ways that are giving us significant improvements in our efficiency as an organization."
– Rick Honsberger, Director of IT at Zen-Noh Grain Corporation
The Solution: A Solid, Knowledgeable, Partner
Reallocating people to more strategic functions in the company required careful management and communication, Honsberger said. So having a solid partner who is not only on top of the latest technological developments but also deeply understands the specific challenges faced by the commodities industry was critical.
"We even considered managing a lot of this ourselves. But it doesn't help me to be an expert in the technology that ClearDox can otherwise provide for me, or to try to manage those processes myself. So I think it's critical to find a partner that you're comfortable with and that can handle and keep on top of the technology, and we're happy that we found that with ClearDox."
– Rick Honsberger, Director of IT at Zen-Noh Grain Corporation
Case Study: PBF Energy's Automation Journey and Insights
PBF is one of the largest independent refiners in the United States, with six refineries across various regions capable of processing about a million barrels of crude oil per day. The company's operations also reach international waters, so they need a sophisticated logistical and operational setup to manage complex physical energy transactions involving multiple types of crude oil and refined products.
The Challenge: Complex Data Entry
Steve Strohmenger, the Senior Director of Risk Control and Compliance at PBF Energy, said PBF Energy initially wanted automation for their contracts team, which dealt with the most manual and time-consuming transactions, including plenty of variable terms like product names, pricing, and delivery details. PBF needed to ensure that every transaction was processed accurately to prevent costly errors downstream.
"Prior to onboarding ClearDox, the process to reconcile all those terms between the incoming documents and our system for every transaction was very manual. It was time-consuming and prone to error. And reconciling all these documents is extremely important, it's not the only process that these guys do. It's one of many."
– Steve Strohmenger, Senior Director of Risk Control and Compliance, PBF Energy
The Solution: Enhanced Process Automation
PBF Energy initially turned to ClearDox to automate the reconciliation of terms between incoming documents and PBF's internal systems, starting with broker recaps. But during implementation, they quickly saw the potential to efficiently read and extract relevant terms from documents, match them against internal records, and identify discrepancies.
This not only streamlined the reconciliation process but also significantly reduced errors — in a sector where accuracy is everything.
They also used ClearDox’s solutions for documentation related to transactions, allowing them to automate additional manual processes, enhancing overall operational efficiency. The solution has enabled PBF Energy to develop metrics that drive organizational change, target training to reduce recurring errors, and keep senior management informed about operational issues in real time.
Looking ahead, PBF Energy plans to continue exploring new areas where ClearDox’s solutions can be applied, further embedding AI and automation into their core business processes to stay competitive and efficient in a fast-evolving industry.
"And ClearDox and the platform was a really a logical fit for us. They understood the needs and the challenges that we face, plus they have the experience and the business knowledge to accommodate all that."
– Steve Strohmenger, Senior Director of Risk Control and Compliance, PBF Energy
Making AI Work for Your Commodities Business
Integrating AI within commodity trading involves careful consideration of both technological and human factors. By partnering with seasoned experts like ClearDox and focusing on specific, measurable outcomes, businesses can not only optimize their operations but also pave the way for future advancements.
If you missed our webinar, you can still access the recording to watch the panel discussion and Q and A sections of the webinar.
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