Downstream oil and gas buyers are constantly looking to identify and expand their supply options. In much the same way, sellers are seeking optimal market moments to make a move. Each end of every transaction simultaneously considers numerous factors related to supply, location, price, and product quality. Every day, the oil and gas industry juggles hundreds of transactions moving through multiple stages while also looking for ways to increase transaction volume. All that data tracking needed to maintain and grow a business creates the ideal space to embrace digitization and automation.
It’s all about speed. By simply improving the underpinning data management and delivery, the downstream digital commerce ecosystem can rapidly open up capacity for more transactions, allowing participants to capitalize on arbitrage and spot deals while improving bottom-line performance.
Fast fluctuations in supply and demand have always defined the refined fuels markets. The ability to match decisions to the speed of the market is key to sustainable transactional growth. Integrating automated pricing data allows both buyers and sellers to meet the market where it is, but there is a capacity constraint: the human brain. An individual can perform about a thousand basic operations per second — or about 10 million times slower than a computer. Accurately managing transactions and maintaining margins in a volatile marketplace demands automation.
Computers perform basic operations about 10 million times faster than the human brain.
Digital feeds of the latest pricing data into proprietary trade volume thresholds and models allow technology to do the heavy lifting, surfacing, and serve the right information in the best context for optimal buying and selling decisions. With automated analysis, traders and downstream industry professionals can make decisions more quickly as favorable market conditions and arbitrage opportunities become apparent in real time. This is the foundational data engineering principle behind the Energy Digital Commerce Solution from DTN.
With automated pricing intelligence, buyers and sellers are both better insulated from sudden market shifts because it minimizes the lag time of manual responses to market movements. Customers can be notified automatically, helping compress quote-to-order timelines. By making faster and better-informed decisions on anticipated day-to-day transactions, additional opportunities to engage and benefit from spot deals become more realistic, increasing overall transaction volume. The demand for this kind of agility was confirmed in a 2022 DTN survey of downstream energy leaders: 57% want to increase operational agility — the ability to respond rapidly to market conditions. Connecting systems and automating processes deliver the kind of decision efficiency that creates opportunities to respond to market conditions and the space to explore additional day deals in any given hour of any given trading day.
By nature, the digital approach supports faster transactional processes. The replacement of manual entry, tracking, and other activities is proven to reduce error rates and reconciliation times, accelerate order completion, and support real-time inventory management. A quicker path to reconciling deals allows more income and resources to be focused on the next transaction.
The average typing accuracy rate is 92%, leaving an 8% margin of error that can cost you significant time and money.
Manual data entry is notoriously prone to error. Consider that the average typing accuracy rate for an individual is 92%. An 8% margin of error across the multiple individuals involved and the thousands of inputs that support a fuel transaction is a recipe for rework, backtracking, late bids, missed opportunities, and lost margins. Preventing those errors is key, but reconciling them is far simpler with digital audit logs, which can help prevent loss of transaction velocity.
When transactional processes are digitized, billing cycles are shortened since the accounting system is integrated into the purchasing data flow. This creates the capital to invest in additional deals. Aggregated DTN data shows that for DTN TABS® customers, streamlining the sales process to optimize profit margin and avoid slippage increases the margin per trade by 10 to 15%, resulting in $60,000 of additional sales per month based on a 15M gallon a month average initial supplier volume.
It’s time to step into automation
Recent McKinsey research shows that while almost every company has been running digitization projects across various parts of their operations, 70% have not moved beyond the pilot phase. For downstream oil and gas companies, introducing automation is an opportunity to quickly transform the bottom line for both the buying and selling sides. A simple first step is to adopt an online, streamlined marketplace that integrates with an existing system (like DTN TABS) to put the right data in the right place at the right time. The ability to set prices across the market, instantly, from a single dashboard (and establish custom pricing parameters for specific customers) increases transactional velocity. Automatic uploads of sales orders directly into ETRM create additional time to pursue spot deals and arbitrage. Live chat facilitates real-time negotiations. Automated customer profiles remove uncertainty from transactions with the pre-purchase credit and allocation payment terms already confirmed.
One simple step toward digitization can yield decision and transactional efficiencies that create the space to boost the number of fuel transactions for downstream energy companies. Stepping into automation initiates a ripple effect through which oil and gas companies can capture the maximum value of the markets, taking advantage of volatility to seize incremental transactions.
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