In a previous blog we discussed how to set a realistic target or limit to successfully optimize your cash supply chain and inventory. Let’s review the five steps in creating a target or limit:
- Plot usage and discover your branch or ATM’s cash trends
- Don’t use the status quo – just because a limit has been $500,000 in the past doesn’t mean it’s a good limit to have now
- Don’t use insurance limits; these are typically much higher than actual usage
- Get buy-in from your staff on limit levels so everyone is on the same page
- Review and adjust the branch’s limits monthly
In this week’s blog post we want to discuss how to effectively review your target or limit performance to make sure your limits are set to optimize your cash inventory and ordering process.
1. Compare Usage vs. Limits
How close is your actual cash usage to your limit? Knowing your actual cash usage is vital in understanding and optimizing your cash supply chain. Is your limit significantly higher or lower than your cash usage? If either are true, you will want to readjust your limit. True usage is defined as day over day cash ending by denomination PLUS the armored car orders/deposits for each day.
2. Make sure your branch and ATM/ITM Managers are adhering to the set limits
In our tips for setting a limit, we mention that it is important to get buy-in from your staff. Once you have that initial buy-in, ensure you are checking in with your cash managers to make sure they are adhering to the agreed upon limits. If they are ordering more cash than the designated limit you will want to have a further discussion about why and make sure it is based on their actual cash usage.
3. Coach branches to manage cash down to usage instead of up to a limit
Once you confirm everyone is adhering to the previously agreed upon limit, be sure you emphasize the importance of managing your cash orders down to usage instead up to a limit. By managing cash based on actual usage, the financial institution’s staff is taking the first step in adopting a data informed mindset. A data informed mindset helps your team learn to recognize and identify patterns and correlations within a data set. In this example, the data set we are referring to is actual cash usage. By using a data informed mindset, your team will be less reliant on ordering up to limits and be more comfortable making cash orders based on actual usage. This shift in mindset will lead your financial institution down the path towards an optimized and efficient cash supply chain.
To learn about more Smart Tips for managing your cash supply chain and inventory, be sure to download our webinar, “Cash Smarts – Part 2.” Click below to download the webinar and continue to check out more Smart Tips on our blog.
