Cash logistics and visibility is critical to business. Packages sent to your home are tracked efficiently, so you know exactly where and how they move. Shouldn’t it be possible to track your money the same as your packages? I can track my Domino’s pizza from the oven to my door, but I can’t track my cash. That’s why the Federal Advisory Council and GS1 US, along with partners in the cash industry, are pushing for standardization in the cash logistics sector.
The Current Arrangements Pose Many Challenges
Right now, the arrangements for cash deposits and withdrawals from commercial cash centers take a long time. Cash packages can take up to six hours before they are transferred to a receiving vault from an armored car. This is because hundreds of packages must be recorded manually and brought together with a paper manifest as each package changes hands.
It’s an extensive process. Another challenge in cash logistics is not knowing what’s inside the shipment or package. Ineffective planning of inventory and management of the workforce also make the process complicated. Therefore, when problems arise, it takes days to find the necessary paper records to resolve the issue.
The current practices in the cash logistics industry are time-consuming, inefficient, prone to error, and unnecessary. Decades ago, several industries wanted to adopt standardization to reduce errors and costs. By following standard policies such as electronic message formats, the industry can eliminate significant inefficiencies.
In Europe, several central banks use these same standards in cash logistics. By following these standards, they discovered incredible benefits, such as improved efficiency, transparency, and accountability. Standardization shows incredible advantages, which the cash logistics industry truly needs.
The Federal Reserve Is Working with GS1 US to Develop and Maintain Global Standards in Cash Logistics
Seeing the need for a change in the cash supply chain industry, the Federal Reserve is taking the first step toward standardization with FedCash Services. The institution realizes that standards must be adopted globally in order to be effective. To do so, they are working with partners such as financial institutions, solution providers, merchants, and armored couriers.
The Fed is working with these partners to test and adopt the same identifier standards and open messaging with GS1 US’s support. Their goal is to improve cash visibility, so the cash supply chain can progress without using deposit tickets or paper manifests. In this vision, a unique global barcode called a serial shipping container code (SSCC) is printed on the cash packages.
The SSCC is scanned, which allows it to be automatically reconciled against an electronic shipping manifest, or e-manifest. Everything is done electronically, therefore eliminating the long hours of manual recording and reuniting packages with a paper manifest. Digitizing this procedure would greatly help to reduce unnecessary and inefficient steps in the cash handling process.
GS1 US Is the Global Standard for Effective Cash Logistics
The Fed has chosen the Cash Visibility initiative led by the Federal Advisory Council and GS1 US. GS1 US is part of an organization renowned for developing and maintaining supply chain standards in many industries. They will work with the Fed and the leaders in the cash handling industry to improve the cash logistics.
The Federal Advisory Council and GS1 US created the Cash Visibility Discussion Group, composed of GS1 US, the Fed, financial institutions, armored couriers, retailers, and solution providers, to help develop a standardized framework. This framework will be used to electronically identify, track, and exchange information about cash while it is moving through the supply chain. Through this framework, the cash handlers can communicate with each other using a standardized process. These partners recognize that these standards for cash supply chains must be widely adopted for them to have real benefits for the field. As the Federal Reserve Banks adopt this new system, they will work with industry partners to adopt these standards as well. The Fed’s goal is to exchange e-manifests with all the armored couriers that deliver or pick up cash at their docks.
The E-manifest and What It Means in the Cash Transfer Process
With the standardization, the industry will begin using an e-manifest in place of the paper manifest. Along with new identifiers, the e-manifest provides a massive improvement to the cash transfer process. Instead of the usual six hours, the transfer process of the cash packages could be reduced to one to two hours.
As a result, there are expected dramatic improvements in efficiency of the equipment, vault, and delivery personnel. Besides replacing the paper manifest, the e-manifest also has a unique identifier known as a global location number (GLN), which is accepted globally by package shippers. Because of this, there would no longer be a need for deposit tickets. The process is further digitized with the What to Expect (WTE) file, which is sent electronically in advance of receipt to communicate the contents and value of the cash package, the SSCC identifier and the GLNs of the parties involved, like the sender, receiver and transportation provider. When the cash package is received, an e-Receipt is generated to communicate what was received and if there are discrepancies between the WTE file.
At the same time, there will be more accurate accounting records. Better records mean that it will be easier to search for records when anomalies arise, and problem resolution will be faster as well. When there is a major weather event or a natural disaster, such as a hurricane, cash can sometimes go missing for days or even weeks. Though this is rare, it does happen, and the losses can be great. For example, Walmart transitioned their cash logistics to cash recyclers after losing $1 billion after a natural disaster. With the e-manifest, Walmart or any other company could avoid the risk of losing enormous amounts of cash because they could prove that the cash was lost during a natural disaster, rather than searching for the lost money and finding it underwater weeks later.
Most, if not all, cash-in-transit companies have a closed loop or property method to track cash. This means that their systems work only in their environments, and they have no easy way to integrate their systems with other organizations. By standardizing cash logistics, banks and cash-in-transit companies could overcome this issue because there would be a universal method of tracking cash, even between different organizations. In any case, standardization proves to be a necessary change in the industry.
Retail adopted a standardized method in the 1970s with the UPC and continues the path with RFID. It’s time for financial institutions, solution providers, merchants, and armored carriers to work together to establish a standardized method for cash visibility. This isn’t about software, hardware, or manual methods; this is about efficiency and insights.