LF&CO Logistics: The Consulting Division of Loomis, Fargo & Co.

Integrating the Financial Supply Chain for the Banking Industry

As one of the country's largest and leading cash-in-transit companies, Loomis, Fargo & Co. has been providing armored car, ATM and Cash Management services to the nation's financial community for years. An integral part of the banking industry's cash distribution system, we have a unique advantage in understanding the supply side needs of multiple unit banks. Drawing on our wealth of experience, Loomis, Fargo & Co. has formed LF&CO Logistics, a group of professionals who bring down-to-earth blue sky solutions to the complex issues of cash inventory and distribution.

This article introduces the unique issues involved in bank distribution management, the opportunities available, and the process that LF&CO Logistics brings to the table to optimize cost reduction in this critical area.

The Problem

On the distribution side of their business, banks are traditionally organized into three operations groups, or silos: cash-in-transit, ATM and vault services. The management teams within each silo are responsible for reducing cost within their specific sphere of operation. The reality, however, is that total cost savings within the total inventory/distribution paradigm can often be much greater than the sum of individual silo cost savings.

Because Loomis, Fargo & Co. is involved in all areas of banking distribution, LF&CO Logistics can be a valuable partner in providing system-wide cost reduction solutions to banks.

The Premise

Video surveillance and dispute management solution
ATMeye^.iQ video security management solution reduces the risks of fraud and vandalism, resolves conflicts with clients, and allows monitor security events 24/7 to whole ATM network remotely. Watch ATMeye.iQ video.

Managing cash inventory and distribution is a complicated process. Within the cash-in-transit silo, this complexity is reflected in such issues as how much cash is required to and from the Fed, how much cash distribution to individual branches, issues of overall timing and windows, as well as order patterns by operating unit. Within the ATM silo, inventory and distribution issues include replenishment volumes, replenishment frequencies, and hourly, daily, and weekly variances for each unit. Finally, vault management is concerned with such issues as inventory volumes, inventory audits, reporting procedures and frequency, and outsourcing versus consolidation of operations.

Several demand driven factors influence a bank's ability to manage inventory and distribution, including the expectation that the proper amount of currency will be delivered when and as needed, the demand for accurate information on cash availability, and the need for improved service levels. On the other hand, industry driven factors include the need to minimize inventory investment, improve operating management, and maximize supply chain efficiency.

Indicators that these needs are being poorly met include:

Increasing inventory and distribution management effectives can positively impact a bank's bottom line. Inventory costs are better understood and controlled; the supplier base is reduced; safe cash levels are better identified; end-to-end cycle times are reduced; and, most importantly, inventory levels can be reduced without a negative impact on operations or customer service levels.

The Process

LF&CO Logistics employs a simple but effective three step process to study and improve supply side operations.

Step One is the Orientation and Planning Phase. During this period, both a work plan and a communications plan are developed, as well as a schedule for program implementation.

Step Two involves Analysis. During this phase interviews are conducted, information is requested, site visits are conducted, process mapping is developed, research is conducted and assessment is made.

Step Three involves Development of the Implementation Plan. During this phase, short- and long-term improvement profiles are designed with specific value proposals; strategic alignment, customer impact, readiness and financial impact are analyzed; and the Implementation Plan, which includes timing, resources, costs and scheduling, is developed.

The team is structured to include bank executive team members, a LF&CO Logistics Manager, teams members from both groups, and advisors and subject matter experts as required.