As an example, the packaging type determines the size and weight of the defined cash products/ articles and consequently the amount of transport units per shipment. The packaging of banknotes in packets, in bundles or loose into safebags or cash boxes define in following the maximum packaging density per container or truck and determine subsequential in next decision level the space for storage in vaults or the amount of transports. The environmental impact – measured by CO2 emission per transported cash product – is strongly influenced by required packaging type and size of the transport unit. Actions on route planning can help optimizing them but must also consider the parameters of size and weight of the transport units in all further logistics processes within the cash cycle.
Another example with the ability to influence cost efficiency and emission reduction are how clients and the service providers define delivery and pick-up time frames for each cash point. Narrow time windows are highly restrictive on route planning, so extended accessibility of cash points enables the CiT carrier to react more flexibly and faster on changes in order volumes. Today's norm of fixed route schedules can be replaced with a dynamic route planning including an optimized route and inventory management per cash point. The service days with pick-up and delivery time frames - defined in the customers’ agreements - determine consequentially the route structures and daily planning processes which has a big impact on CiT fleet utilization including pricing and the ecological footprint.
Sustainable approaches with a positive range of influence
Ideally actions support all targets within the cash cycle, enabling cost efficiency and emission reductions alongside achieving high reliable quality standards. Future-oriented approaches to watch are:
1. Cash recycling technology at branches and at ATMs
The demand for cash delivery and pick-ups within the network of branches, retail stores and ATMs determine the transport routes. A low stop frequency and a shorter distance between the stops and to the next cash hub/ center, both factors have a positive impact on costs and the environment. Optimized cash recirculation can be leveraged (a) on level of recycling ATMs, (b) on level of in-branch cycles and (c) within the network by direct exchange of cash stocks between cash positive and cash negative cash points. All three levels help to reduce stop frequency and increase transport efficiency in combination with cash forecasting and dynamic route optimization software by not less than 40% depending on size of network, customer cluster and cash volumes.
It is remarkable while automated and reliable cash recycling technology for ATMs and assisted self-service/ automated teller terminals for branches has been available for more than a decade, the potential is still unused in major world regions with banks discouraged by poor note quality or dependence on non-adaptable IT legacy systems. Whereas Japan began embrace cash recycling back in the 1980s and deploys ATM recyclers today at nearly every cash point, other countries are at the start line of implementation, including Brazil, Mexico, Russia and the region of Central Asia, or India. The recycling technology plays an important role in banks’ transformation projects.
2. Optimized packaging system based on returnable cash boxes
Worldwide, banknotes and coins are mainly packed and shipped in non-reusable transport units such as safe-bags or cardboard boxes. But the order structures in many markets show a phenomenal potential for returnable cash boxes with a normal recirculation rate per transport unit of 70% to 85% for bank branches, of 100% for ATMs based on cassette swaps, and even for retailers where box recirculation can reach over 50% because many retail shops request frequently coin exchange. The wholesale cycles of Central Banks are organized with heavy cardboard boxes for notes or containers for coins delivered from printworks and mints on pallets. These boxes and containers are usually repacked at each cash center to fulfill the different order sizes of the commercial clients.
Why do all these organizations focus on one-way packaging and prevent returnable transport units when the cash boxes will circulate up to once each week? There are obvious ecological and economic benefits to use returnable boxes.
Returnable cash boxes are available in the right size for wholesale cycle of Central Banks and branch cycles. The units are tamper-proofed, robust and adapted to manual handling with a max. weight of 15kg, sufficient for 10’000 notes. The design is compliant to standards required for handling in Automated Storage and Retrieval Systems (ASRS), conveyors, Automated Guided Vehilces (AGV) and for automated truck loading and unloading systems using sufficient trolleys.
The reason is often an immature supply chain software that cannot effectively manage the containers/ boxes. So container management is carried out manually and is neither standardized nor integrated. The poor information about box movements and inventory in the network results in cash boxes being located at the wrong places and going missing. Digitalized container management based on smart, connected cash boxes with electronic seals and logistics software tools that are compliant to GS1 international standards for box identifiers, data capture, and data exchange, can solve these downsides. This allows the optimization of recirculation rates and the investment in cash boxes, eliminates the loss of boxes, reduces costs for empty box handling and avoids additional costs relating to alternative packaging.
3. Mature supply chain software supporting an integrated E2E cash logistics
Digitalizing the cash logistics is a key differentiator. But many companies struggle to realize expected potentials because not closing the technology gaps and their management choices. Examples of these technology gaps are the steps ncessary to streamline routine activities, for example using web-based platforms to place orders, managing the deposit processing workstream and enhancing analytical practices using cash forecasting tools. But value is added most when operational changes are combined. For instance, forecasting tools offer substantial savings by reduced cash inventory and stop frequency. If the service provider can also support a dynamic route planning and execution, then reduced inventory and stop frequency can be acheived without a decline in service levels. Similarly the implementation of returnable cash boxes can fail if the technologies are not in place to support the new operations.
The right approach to digitalize the cash supply chain integrates suitable technologies and redesigned operations. Many managers are familiar with the basic transformation process: defining a vision for the future operations, checking the current situation and developing a transformation road map. Digital transformation requires additional features to be successful. The “to-be” scenario will call for a combination of utilization of “no-regret” improvements and changes which can be further developed over time into the targeted vision. The “as-is” evaluation should consider whether operations and technology are supporting an end-to-end process, and whether the organizational structures are adapted to encourage a continuous improvement processes. In addition, the timescale of the transformation path needs to be compact with the possibility for upgrades to latest digital solution.
4. CiT fleet with IBNS technology in connection with eco-friendly drive
The route distances in metropoles are generally not longer than 150 km per CiT shift, an optimal distance for trucks with full electric drive. Such “green” trucks have no-emissions in comparison to trucks with combustion engines, and have less noise pollution making them ideal for inner city cash deliveries and pick-ups. However, the fully armored CiT truck with an electic engine and battery has a higher unladen weight in comparison to diesel trucks. The cargo weight of the eco-friendly CiT van is reduced by approx. 300 kg, if the van respects a limited gross weight of 3.5 tons necessary for accessing city centers in Europe and modern metropoles worldwide. This means that highly efficient routes servicing banks, retailers and ATMs in inner cities must be split into routes with a lower load and stop density. The ecological advantage of this technical set-up is gone or becomes negative.
The future technical set-up for an electric truck fleet must consider lightweight composite materials for effective armoring. In comparison to steel armored vehicles, the composite panels optimizing the weight to ballistic/ protection performance ratio required for the different international markets. The lower weight of lightweight composite trucks compensates the additional battery weight of electric trucks and vans, reduces the power consumption and the wear of the chassis with positive effects for service and maintenance costs of the CiT fleet.
The same benefits are valid for lightweight soft-skin vehicles equipped with IBNS technology (Intelligent Banknote Neutralization System). The IBNS technology secures banknotes using cash boxes/ smart trays with ink dye for transportation and "over pavement" operations. In the case of unauthorized access and openings, the banknotes are reliable stained and therefore valueless protecting them against external attacks or internal fraud. As a result, more and more countries worldwide accept, or are regulating for the introduction of IBNS in cash logistics. The transformation road map for IBNS can consider additional efficiencies in operational planning of routes and truck crews. The deterrence against attacks with access to cash allows the reduction in truck crews and guarding staff. The route planning can be structured highly effective on hub-spoke models. For instance, shopping centers with multiple pick-ups can be served by two messengers, carrying out cash collections in parallel while the IBNS protected truck is parked on a controlled and secured perimeter.
These examples show effective actions with both ecological and economic benefits. The list of measures can have different starting points, where desicions about customer and product levels are given the most importance. Central Banks can drive an effective cash cycles by setting their regulations for recirculation and clean banknote policies, offering cash articles and services, accepting packaging systems and establishing interoperability standards for electronic data interchange (EDI) and data capturing (barcodes/ RFID-EPC types). The impact on the environment based on improved cash recycling and the terms of fixed service days and narrow time windows for cash deliveries and pick-ups are still underestimated by customers with environmental green commitments. Agreement on standards of mature IT software systems and IBNS for end-to-end cash protection shape what cash infrastructure and operations of client’s organization and its service providers will look like in the future. Contract management, including Service Level Agreements between the parties is therefore a key element and should reflect the required price and quality levels, but also support the deployment of modern technologies and roadmaps to reach benchmarks of green logistics.
Do you want to know more about recirculation concepts for branch and ATM networks, design of optimized packaging systems, selecting of returnable cash boxes, mature cash supply software, or the set-up and procurement of future-oriented CiT trucks, please contact us.
Cash InfraPro analyses and studies 2021; Diebold Nixdorf: Sustainable Banking, 2020; DNB working paper no.610: Life cycle assessment of cash payments, October 2018; McKinsey: Digital transformation studies 2017/2020.