How a Grain Trader Can Automate Processes and Increase Company Turnover
The original article was published on Landlord.
To efficiently manage grain export flows, participants in the grain trading market have to deal daily with a large number of figures and metrics for each purchase or sale. A company’s success depends on how quickly information is received, processed, and forecasted. To manage documents and payments, grain traders use various methods, from Excel spreadsheets and 1C software to different CRM systems. However, any business truly evolves when it implements its own specialized systems. Grain trading requires a tool that takes into account the complex logic of the grain business, can quickly process vast amounts of diverse data, consolidate it into reports and forecasts, present it in a user-friendly interface, and ensure rapid information exchange among participants. There’s a well-known global case where a trader lost about $2 million on a deal because an employee accidentally deleted a value in an Excel spreadsheet cell. The larger the grain trader, the higher the cost of such mistakes. That’s why responsible and forward-thinking grain trading companies are transitioning to specialized software, with one effective example being the GrainTrack program.
A New Level
Cardiff Trading began its grain trading operations in 2014, purchasing grain from Ukrainian producers and exporting it to Poland, Belarus, and Hungary, with annual sales volumes of 50,000 tons. In 2016, the trader decided to expand its trading directions, increased its staff, and adopted a more aggressive market strategy. While previously the company shipped goods by land under DAP terms, now 94% of Cardiff Trading’s grain is shipped through seaports under CPT and FOB terms. “The DAP market is limited in its demand, primarily dealing with rapeseed and soy. But with CPT and FOB, you can handle significantly larger trade volumes,” explains Ivan Cherevko, Director of Cardiff Trading. “Additionally, CPT and FOB terms allow for much more profitable and liquid trading of nearly all the major crops grown in Ukraine.”
Focusing on corn, wheat, and barley, the company made a breakthrough, achieving a trading turnover of 970,000 tons in 2017. In 2018, they already shipped two consignments of 25,000 and 30,000 tons. Previously, the company avoided such large contract volumes, forming CPT batches of 300–500 tons, mostly working with mid-sized agricultural producers. But having established itself as a reliable partner, the company has now increased contract volumes, vessel shipments, and purchases. Its key partners are now top agricultural producers like Mriya, AgroGeneration, Agricom Group, Podillia, MHP, Astarta, UkrAgroCom, Lebedyn Seed Plant, Rostok, Agrodim, and others. Overall, for the 2017–2018 marketing year, the company plans to reach a trading turnover of 1.5 million tons and continue growing.
Technical Support
Larger-scale operations require more effective control and accounting tools. A year ago, Cardiff Trading used Excel, but now its functionality no longer satisfies the trader’s needs. The company realized that Excel could not provide the rapid and efficient data consolidation required. “We used it until we encountered problems with growth and hiring new employees. The tables were difficult to maintain, there was a lot of manual work, reports took too long to produce, and there were many errors,” says Cherevko. Other problems also arose: large Excel files were not picked up by email servers, computers froze during data processing, and data was lost. “Timely data entry and structuring are crucial in trading, especially when using different trading instruments to profit from spreads between crops or price differences between ports or months,” explains Cherevko. “For this, you need forecasts and control over position changes. Based on this data, a trader decides whether to take an aggressive or cautious approach. That’s why we needed a program capable of processing all this massive and diverse flow of information and guiding the trader’s behavior.”
Case for the Solution
There are various universal solutions for automating relationships with counterparties, such as CRM and ERP systems, but they are designed for industrial markets and not suited for the grain market. Therefore, Cardiff Trading’s search for the best information processing system took several months. They considered options like 1C software add-ons, but the program is now on the sanctions list. Programs used by grain traders in the US, Europe, and Asia were found to be quite expensive and, in Cherevko’s opinion, not adapted to the specifics of local grain trading.
In June 2017, the company chose the GrainTrack solution, which simplifies the complex grain trader management accounting system into a very user-friendly format. The program helps connect information about all contracts, logistics, trading, and finances on one platform. GrainTrack, equipped with predictive analytics, can calculate profit and loss and quickly identify problematic contracts. This functionality allows the trader to make informed decisions, focus on effective business development measures, use various tools for operations and strategic planning, and monitor the company’s efficiency.
Among the program’s advantages is the ability to see reports on all operations and assess the results of deals even before they are completed. Additionally, the system contains a database of company counterparties, information on relationships with suppliers and buyers, a complete list of all deals, shipment registers, and issued invoices. The program also allows delegation and monitoring of task completion, sending emails, and creating contracts. For example, in the “Contracts” tab, a manager can plan and coordinate deals, track the logistics chain, and create a register of vehicles and wagons. The program saves up to 40% of the time spent on accounting and communication. Moreover, GrainTrack operates in the cloud, ensuring employees have access to all data, forecasts, and calculations from any device and location worldwide. The cloud technology also addresses another issue—data security and the safety of the trader’s business, protecting it from raider attacks or forced server seizures by authorities. GrainTrack is a highly flexible program, customizable to any client’s needs and preferences. For example, GrainTrack implemented features that were impossible in Excel—custom report settings for new trading instruments, automatic trading position formation, contract status reports, financial flow monitoring, and more. Cardiff Trading also finds it convenient to work with GrainTrack due to flexible payment terms, prompt technical support, professional consultations, and customized program improvements.
The capabilities offered by the program allow traders to implement their strategic plans, expand the range of trading instruments, handle larger volumes of work, and expand their geographic reach. “We are not limited to Ukraine; we aim to work with other major exporters worldwide,” emphasizes Cherevko. In the coming years, the company plans to open offices in countries importing Ukrainian grain to track market needs and trends and calculate the most profitable source of grain — Ukraine, Argentina, or Brazil. The company can now confidently choose which terms — CPT, CIF, or FOB — are most advantageous. “We have quite ambitious and aggressive growth goals. We see ourselves as an international trader, developing new trading instruments that offer flexibility in commodity trading,” says Cherevko. “With GrainTrack, this is possible.”