A good inventory system is important to the growth of any business that manages a supply chain. For most industries, inventory ties up cash figuratively in products sitting on a shelf or in a warehouse, but for financial institutions, branch, ATM, vault and device cash is a financial institution’s inventory. Like any other business, not enough or too much inventory can be costly to the business and inhibit growth or even day-to-day operations in their supply chain. Over the past few months financial institutions have experienced more strain than ever on their cash supply chain and inventory due to the COVID-19 pandemic, so today we will discuss how to address customer demand for financial institution branches operating in business-as-usual status or adjusting for seasonal events, trends or even a global pandemic.
Determine branch usage for each cash end point
Determining the actual cash usage in a branch, ATM or ITM is necessary in implementing or managing a successful cash supply chain and inventory management system. We aren’t just talking about vault cash. This includes all the places in your branch that cash could be sitting idle.
Here are the common cash end points that may be holding excess cash:
- Teller drawers
- Cash Dispensing Machines (CDMs)
- Recyclers (TCRs)
- Automated Teller Machines (ATMs)
- Video/Interactive Teller Machines (PTMs/ITMs)
- Kiosks
- Vaults (Branch, central or at a money supplier)
Once you identify all potential cash end points, look at the usage of each one to make sure there is enough cash in those specific end points to meet customer demand.
Don’t use ‘gut feelings,’ use data
It’s easy to just trust your gut when it comes to cash ordering. Whether your institution’s cash ordering process is centralized or decentralized, gut feelings can only get you so far.
Software can never replace the knowledge and experience of your employees, but with the use of functionality such as predictive analytics, automation and reporting, these tools can significantly improve insight into the actual cash inflow and outflow of the branch while providing accurate recommendations on order and deposit amounts.
Find out the highest usage days
Maybe there’s an annual music festival, maybe it’s every other Friday paydays, or maybe every Christmas is the busiest time for some of your branches. No matter what the reason, there’s always a handful of days every year where more customers than usual come to a branch, ATM or ITM requesting cash.
Knowing what days throughout the year are your high usage days allows your team to submit accurate currency orders without the fear of running out of cash or keeping excess cash around just in case.
Alternatively, it’s important to also prepare for those unexpected high usage days. Back in March, at most financial institutions, we saw a 20 percent increase in cash overall due to COVID-19 and as a result, most banks and credit unions began to order significantly more cash than usual. Technology helps us to prepare for these types of unforeseen circumstances.
Understanding denomination level usage is necessary
Inventory management dives much deeper than a total sum. Let’s switch over to an example that everyone may be familiar with at a grocery store before we come back to cash.
ABC Grocery Store knows that it needs 500 cereal boxes to get from this week to next week’s shipment, but does the grocery store know per branch what cereal type is needed? It’s not just about knowing you need 500 boxes, but knowing that you need 150 Cheerios, 200 Froot Loops, 50 Frosted Flakes and 100 Apple Jacks to last you between deliveries. Financial institutions need to look at their cash inventory through a similar lens.
Instead of types of cereal, make sure to look at denominations at each location in all the cash endpoints mentioned above. Perhaps you have too many $100 bills, but you’re consistently running low on $5 bills.
To implement and manage a successful cash supply chain and inventory management system accurately, you need to understand the actual denomination usage. This will prevent you from keeping too much, or not enough of a specific denomination around the branch. Having what you need, when and where you need it creates an efficient branch and a solid customer service experience.
If you’d like more helpful inventory management tips, be sure to check out our new two-part webinar series, Cash Smarts, to learn more about how to implement a successful cash inventory system to reduce your excess cash in the branch without the fear of ever running out.
