How do you optimize the cash supply chain to minimize fulfillment costs? The first thing you need to do is ask yourself if you have armored car deliveries that are coming too often or too infrequent that are costly to your financial institution. In this blog post, we will discuss certain armored car cost scenarios that could be impacting your cash supply chain’s overall efficiency and bottom line. In addition, we will share our smart tips for an armored car cost analysis.
For example, if a branch order delivery costs $40, and the branch orders cash one time per week with an average of $20,000, the question to ask the cash management team is could this branch receive every other week deliveries for $40,000? Do you have to order emergency shipments more often because you don’t have enough deliveries scheduled? Are you going over your insurance limits with the armored car carrier? All the above scenarios can be expensive and the key to lowering costs while increasing efficiency in the cash supply chain.
Remember from our previous blog, a good cash automation process integrates all of your cash end points – allowing increased visibility to your actual cash demand and potential excess inventory sitting in your various cash end points (recyclers, ATMs/ITMs, vault, teller drawers, kiosks, and cash dispensing machines).
In addition to asking yourself about the above scenarios, you also need to think about growth. As your financial institution grows, or in the case of a potential merger or acquisition, your bank or credit union’s needs will become more complex. You can successfully optimize a more complex cash supply chain by managing ordering frequency per location, ensuring you have enough cash on-hand, and meeting changing demands simultaneously across all locations and cash end points.
Smart Tips for an Armored Car Cost Analysis
1. Usage
Understand the actual usage of cash at your branches, ATMs and ITMs down to the denomination.
2. Carrying Costs
Define the financial institution’s reinvestment rate for currency. Is it Fed Funds? Is this the Yield on Earning Assets? Or is this Yield on Investments?
3. Frequency
Ensure your cash delivery schedule makes financial and operational sense, are you receiving smaller deliveries once a week that could realistically be delivered once a month at a higher amount? Unnecessary frequent deliveries increase both risk and cost associated to deliver cash.
4. Insurance Limits
It can be costly to request cash over the insurance limit. You can avoid this by completing an armored car cost benefit analysis by looking at the actual usage versus the carrying cost versus the delivery cost.
To learn more about automating your cash supply chain, download our “Supply Chain Management 101 for Financial Institutions” e-book and check out our latest e-book, “7 Areas of Waste that are Killing Your Bank’s Efficiency.”
