Over the last few weeks, we have discussed various current and future cash supply chain and inventory management challenges that many banks and credit unions are facing and will continue to face into the future as we adjust to the “new normal.” Here is a round up of all the topics we discussed:
- Branch and ATM Cash Management Challenges During COVID-19
- The Old Ways of Ordering and Depositing Cash are a Thing of the Past
- Decentralized Vs, Centralized Ordering
- Adjusting to the “New Normal”
- “Business as Usual” is Not so Usual for Armored Car Carriers
- Managing Actual Current Demand and Usage
To complete the series, we created “6 Questions to Ask Yourself About Your Cash Supply Chain.” These six questions are meant to be reflected on to best help you optimize your cash supply chain and inventory.
The Cash Supply Chain Checklist – 6 Questions to Ask Your Cash Management Team
1. Before COVID-19, how was your financial institution ordering and depositing cash?
Gut feelings? Managing up to limits? Spreadsheets and emails? This might’ve worked in the past, but in today’s banking industry you need to be looking at your actual cash demand and usage down to the denomination because cash demands are fluid and constantly fluctuating. Click here to learn more.
2. Are you prepared for a quick 20% increase OR decrease in cash?
At the beginning of the COVID-19 pandemic, most financial institutions were reporting an increase of cash by 20 percent. Is your institution prepared to handle a significant increase or decrease in cash levels? How are you tracking your daily cash usage? True usage is by denomination the day over day currency changes, plus any orders/deposits by the armored car.
3. What is the bank or credit union’s plan to have one individual order cash for all branches, ATMs, ITMs and vaults in the event you need to order remotely?
At logicpath, we find that 50 percent of financial institutions order cash centrally, meaning one person manages all the cash orders for all the branches and ATMs/ITMs, and the other 50 percent order their cash through a decentralized process, meaning each branch is responsible for submitting their own cash orders. During the COVID-19 pandemic, we recommended banks and credit unions order their cash through a centralized process because it is not uncommon for branches to temporarily shut their doors, or for employees to get sick. In the event that this happens to your bank or credit union, would you know how to order cash for the lobby ATM/ITM?
4. The bank or credit union may have heavy cash now, but what is the plan to return to normal levels later? Are those cash levels the same as they were before?
Will cash levels return to their normal ranges from before the pandemic? Will you be able to return to the old ways of ordering cash? Each individual financial institution will be different based on changes in customer behavior, locations, and branch operation capacity. For example, Loomis has taken on servicing hundreds of branch lobby ATMs/ITMs during the COVID-19 pandemic that used to be serviced by the branch itself, but because of branch closings the institutions had to adjust their ordering and servicing process. Maybe some branches will open their doors again and return to servicing their own ATMs/ITMs, but maybe branches in densely populated areas remain closed for the time being. Banks and credit unions should not assume that their old ways of ordering and servicing cash will be the same as they were before in pre-pandemic times.
5. Do your cash inventory management stakeholders have common cash goals?
Finance, retail, operations and risk typically are the departments involved in cash management. Each of these departments play an important role in the cash supply chain, but they often operate in silos and have different cash goals as you can see depicted in the image below. Make sure to understand each department’s cash goals to optimize your cash supply chain.
6. Do these stakeholders understand the entire cash inventory management process?
There are many more stakeholders involved in the cash supply chain than you may have originally thought. After an unexpected event like the COVID-19 pandemic, it is more important than ever to regularly communicate with all the stakeholders involved in the supply chain and inventory process. Buy-in from everyone involved will lead to a more efficient supply chain and allow for more flexibility to make adjustments in the cash inventory process as necessary.
You can download the “The Cash Supply Chain Checklist – 6 Questions to Ask Your Cash Management Team” by clicking the link below, and make sure to check out our comprehensive page, “Your Guide to Cash Supply Chain and Inventory Management,” for more information.