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AWI’s Wool Exchange Portal approved with $38 million benefit

Terry Sim, June 7, 2017

AUSTRALIAN WOOL Innovation’s proposed Wool Exchange Portal could be running within 16 months at a cost of $3-$4 million, generating industry benefits of $38 million in its first fifteen years.

AWI today announced that its Wool Exchange Portal working group (WEP-WG) has endorsed the construction and implementation of a digital wool exchange platform “for the longer-term benefit of the Australian wool industry”.

Based on an assumption that 15 percent of Australia’s wool growers producing about 36pc of the nation’s clip would use the WEP in its first five years, a WEP business case commissioned by the group has extrapolated $38 million in consolidated industry benefits over 15 years.

WEP-WG chairman Will Wilson said these benefits are assumed to come from cost savings to growers generated by the public reporting of broker fees, a $5/bale transaction fee — $2.50 from the buyer and $2.50 from the seller — and a $150 per annum subscription fee, but waived for the first two years of the WEP.

Mr Wilson said the Wool Selling Systems Review calculated that the cost of getting a bale of wool from shearing shed to port to be around $166.

“We reckon that by creating greater transparency in that process we can see those costs come down by some $17 per bale in terms of intermediary charges, and a further $10 by people using lower cost transaction methods.

“That is, instead of using the traditional open cry auction or even the more expensive Wooltrade product offered by AuctionsPlus, we could perhaps gain cost savings of $10 – so in total $27 per bale,” he said.

“We will be offering people a lower-cost (online) pathway if people want to take it up.”

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WEP expected to be self-funding within three years

Mr Wilson said the WEP’s annual operating cost has been estimated at $860,000-$890,000, but based on the business case model it is expected to be self-funding within three years. Australian wool growers would retain majority ownership of the WEP, possibly within a ‘WEP Co’ structure with some AWI board members as directors.

“There is no interest in relinquishing control or ownership to anyone else, because it is important that the benefits, such as they are described, should continue to flow to growers,” Mr Wilson said.

“If we get started tomorrow, then it is expected that it could be up and running by the last quarter next year.”

The Australian-based technology company Levo has been contracted by AWI in a “discovery phase”, to build the online portal at a cost $3-$4 million.

The main functions of the WEP include:

  • Develop and manage a national woolgrower registration system, which will enable growers to access information such as their historical data, or the supply chain to better track provenance
  • Provide an industry information forum and repository to link woolgrowers nationally and promote industry trends and innovations
  • Provide a central repository of wool test and wool price data for the industry
  • Deliver information and education tutorials on how to get the most out of the WEP
  • List and evaluate all current selling options
  • Connect with those selling options to allow for transactions to occur
  • Provide a proprietary bulletin board, listing bids and offers, with 24/7 access

Mr Wilson said the working group hoped to get people using the WEP for trading wool and for getting information on trading options. He said a ready reckoner would be developed so growers can input their “specific parameters” and find out their most cost-efficient way of selling their wool.

He said the WEP could also have a role in facilitating long term supply contracts with processors within the industry regimen of testing and payment guarantee.

“This is all about putting the industry on a platform that will allow it to take advantage of industry developments in the future and perhaps take greater advantage of technology innovations that are occurring on a day-to-day basis.”

AWI believes the WEP will deliver greater pricing efficiency and increased competition within the wool selling system as well as providing all industry participants with a one-stop portal where all buying and selling options can be transparently evaluated and future price realisation mechanisms can be accommodated and made available.

AWI said its engagement of Levo will allow the industry to target specialty service providers to best fit the various offerings that the WEP will aim to provide. It will also be a more cost effective use of funds and reduce the likelihood of duplication where certain software may already exist, AWI said.

AWI chairman Wal Merriman thanked the members of the WEP-WG for their diligent work through a long and involved process of consultation, discussion and consensus. The industry and stakeholder consultation involved with the WEP began in 2014 and has involved a significant number of meetings, discussions and publications.

AWI anticipates that a subset of the WEP-WG will remain intact to act as a steering committee to provide direction to an internal WEP project team.

During the “discovery phase”, the project team will work with Levo to generate the following:

Detailed functional requirements specification (utilising user scenarios/stories);

Detailed solution architecture (including data integration requirements);

Change management strategy and deployment plan;

Detailed integrated implementation roadmap including finalised resource plan;

Operating Model design and strategy (including decisions regarding the commercials to access the required historical and current data) to be defined.

As well as Mr Wilson said the WEP-WG members included executive officer, Mark Rodda; Peita Piper, change management; wool growers, Robert Lawrence, Neil Jackson, Tony Flannery and Ed Storey; exporters Steve Hill and Tim Marwedel; John Roberts from AWI, and; representatives from Elders, Landmark, Ruralco and AWH, AWTA and AWEX.

Click here for more information about the AWI Wool Exchange Portal.

 

Source: AWI.

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Comments

  1. Glenn, June 9, 2017

    I’d be interested to hear how the platform is being developed. From what I have read, it sounds that large sums of money will be spent developing the platform before releasing it for use. It seems extremely high risk to invest 16+ months and $3-4 million to build a full featured application instead of developing an MVP (minimal viable product) which is then released to customers, where actual user feedback can be used to improve the application. Giant projects built in this way are out of fashion for very good reasons; they often fail to meet the needs of the people they are built for. Full names required in future for reader comments please Glenn, as per our long-standing comments policy: https://www.sheepcentral.com/about-us/sheep-central-comment-policy/ Editor.

  2. Edward Wymer, June 8, 2017

    What a waste of time and money – $38 million benifit over 15 years – wow, $1 per bale, hallelujah. Again plenty of waffle words, but only used once each this time. Old favourite, could, used in first sentence. Was used seven times in one paragraph page 5 of Wool Selling Systems Review final report, February 2016. So that’s an improvement. Where did that $27 alleged saving come from? An
    afterthought? The answer — sell wool properly classed and policed, with the present system.

  3. Chick Olsson, June 7, 2017

    Could be running in 16 months? Could provide benefits of $38 million? Is this some type of Brothers Grimm fairytale?

    Once again, AWI makes huge claims before any evidence is available. How can anyone believe in anything they say with such blatant posturing?

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