The Commodities Industry: more SMAC stack than Smokestack?

The Industrial Revolution introduced mechanical production facilities, steam power, and tall chimneys with clouds of smoke billowing into the air. Those smoke stacks have remained synonymous with manufacturing and the related commodities business ever since. But the Information Age has ushered in the rise of the SMAC stack, which leverages social, mobile, analytics, and cloud technologies to define and disrupt business operations and boost both efficiency and productivity.

A step change in IT

So what does this mean for commodities businesses that have already developed lean, just-in-time, and demand-led models by trimming all excess fat from their operations? For businesses that rely on dynamic, risk-managed commodity purchasing rather than fixed procurement agreements? Or those that have invested significant resources into creating super-efficient international supply chains, transport, and logistics operations? These technology-led investments have already transformed the industry - and will continue to be important sources of efficiency. But the SMAC stack represents a step change in the way we think about technology in the enterprise, and delivers even bigger advantages by maximizing use of previously unavailable data.

Social networking – beyond the selfie

No other medium has connected so many people at such scale. Twenty-five per cent of people on the planet use social media, including 153 million active social media accounts in India. The number is still growing at more than 100 percent year on year in emerging economies. Tapping into social conversations can bring previously unavailable insight into the decision-making process. For a timely view on consumer purchasing trends, spending patterns, weather events or even transport issues, social media is an invaluable source of raw data. Turning it into insight, and incorporating it into the decision-making process leads to more responsive and agile organizations.

Mobile - smaller and smarter

Of those 153 million social media users in India, 130 million rely on mobile technology. In total, India has approximately 1.01 billion mobile connections. It’s not alone. By 2020, global mobile internet penetration is expected to reach 60 percent, with smartphones being the only means of internet access in many emerging markets. For the commodities business, mobile brings the very edge of the supply chain into the information network. It enables unique, timely data sets to be gather at source, whether from agriculture workers or mining operators. At the other end of the chain, mobile apps can record trades, access analytics, and monitor the most important interactions from any location. Notably, the future growth of mobile also includes devices that are connected through the Internet of Things. Machine-to-machine communications can be seen everywhere from the development of smart power networks, to digital oil platforms, to automated feed systems for livestock – all of which hugely increase the volumes of data involved.

Advanced analytics – predictive and powerful

To date, limited data has typically been fed into business information tools and used to generate reports and key performance indicators that form the basis of the decision-making process. Analytics change all that, optimizing the value of all raw data now available. Specialist analytics like Eka’s Commodity Analytics Cloud can replace spreadsheets and bridge the gaps between ERP, CRM, and E/CTRM systems, and can free commodities organizations from retrospective decision-making. Predictive and proactive models allow users to identify current trends and respond accordingly. The most sophisticated analytics are also some of the most instinctive to use, enabling business users to find the answers they are looking for rather than relying on IT specialists to input limited queries, and deliver limited information.

Cloud – cost-effective computation

All of this requires substantially more computer power than most organizations have in-house. Cloud is the final layer in the stack because it ensures always-available access to essential systems, while eliminating upfront hardware costs. Cloud allows organizations to respond to the volatility, variety and velocity of data sets by rapidly scale their compute power. They can run resource-intensive, end-of-day reports or simulations without disrupting the rest of the business – a flexibility that frees them from the tyranny of scheduling, and creates more innovative and agile organizations.

Integration is key

The SMAC stack is therefore more than the sum of its parts. The value derived from each of the four components is magnified when they are integrated. Instead of another discrete solution to address a specific business challenge, it’s a multi-faceted platform that drives an interconnected business. It is also a decisive step away from the big-bang installations of the past. Businesses can choose where they are likely to see the most immediate value, and invest accordingly. As the Internet of Things becomes more mainstream in manufacturing, industrial, and supply chain processes, SMAC technologies will become the defining characteristic of the commodities industry. Solutions like Eka’s Commodity Analytics Cloud, which analyze data from social media, the Internet of Things, and throughout the value chain, will enable faster, better decision making. Smoke stacks will still be with us. But the SMAC stack will be the source of power.