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.
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.
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.
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:
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.