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#Currency Management

Pathways to an optimized, sustainable cash cycle

5 Mins.

Players across the cash cycle are under pressure to bring both lower costs and greater environmental sustainability to their processes for transporting, exchanging, and storing banknotes. How can standardization help deliver on these goals?

It’s a paradox of cash that continues to surprise. Despite the rapid evolution of payment markets and the further acceleration of digital commerce during the COVID-19 pandemic, demand for banknotes has increased substantially in recent years.1 While cash is being used less for purchases – at least in some economies – its role as a store of value has been reinforced.

Those changing dynamics are putting pressure on organizations across the cash cycle to bring higher levels of efficiency, automation, and performance to the transportation, exchange, and storage of cash. At the same time, all participants are responding to the need to reduce the carbon footprint of the cash cycle at multiple points.

A key focus for those twin goals of optimization and sustainability is the standardization of cash logistics and, in particular, the diverse – and often incompatible – transport formats used to handle cash.

Removing barriers to cash logistics standardization

It is a move that is arguably overdue. In countless industries – from consumer packaged goods and shipping to pharmaceuticals and retail – the containers used to package and move batches of products around the supply chain have been standardized for many years, delivering huge gains in efficiency and speed.

The nature of cash logistics, however, has not always lent itself to such end-to-end standardization. At each position in the cycle, different players have operational requirements and priorities that govern their selection of transport units. Cash-in-transit (CIT) companies might opt for plastic safebags to meet a requirement for fast and easy exchange at retail endpoints, while commercial bank cash centers might choose to standardize on trays that facilitate the automated processing of loose notes. Moreover, the best cash scenario depends on the conditions in a particular country or market, such as the geographical spread of the cash center network or the banknote volumes that need transporting.

The upshot, though, is all too evident: a proliferation of different designs of trays, boxes, cassettes, pallets, trolleys, cages, and bags – and in all kinds of materials, from plastic, metal, and cardboard to foil, wood, and canvas.

“All over the world, we see more and more governments, central banks, commercial banks, CITs, and businesses looking for new solutions to make the cash cycle more sustainable“
Nike Stein
Head of Business Management/Currency Management Solutions

But change is in the air, as Maximilian Ziegler, G+D’s Global Technical Sales Director, Automation and Logistics, observes. “As the amount of cash that needs to be processed is gradually falling in many Western countries – even if there is more cash in circulation – the standardization of transport units is now seen as a key approach that can tackle the pressure on cash.”

It’s not just a question of optimization and taking cost out of the cash cycle. Sustainability is increasingly a driver for many standardization initiatives. “All over the world, we see more and more governments, central banks, commercial banks, CITs, and businesses looking for new solutions to make the cash cycle more sustainable,” says Ziegler’s colleague Nike Stein, Head of Business Management/Currency Management Solutions.

It is a tantalizing vision: as well as enabling more sustainable solutions, the standardization of transport units can be the catalyst for higher levels of automation, speeding up the movement of cash and enhancing security.

Four scenarios for a joined-up cash cycle

In a white paper, G+D’s Ziegler and Stein recently explored the different challenges behind such standardization ambitions. Their research identifies the main factors that determine organizations’ capabilities and motivations to standardize their cash transport units.

The investigation highlights four scenarios of transport unit standardization, effectively “ideal blueprints” that can be adopted to enhance automation, storage capacity, and environmental sustainability to varying degrees. The white paper scores the different scenarios on how well they address each of these criteria, widely regarded as the most important focus areas for cash-cycle players – today and into the future.

Scenario 1: high automation

By using standard plastic trays, the movement of cash between and within cash centers can be highly optimized. A prime example is G+D’s NotaTracc® tray, which is designed to enable the secure movement of banknotes across different cash-cycle processes while also integrating seamlessly with the automated loading and packaging technology of banknote processing systems.

Scenario 2: high sustainability

Building on the standardization gains of Scenario 1, this approach dials up the sustainability benefits through the additional use of stackable plastic boxes in place of the cardboard boxes typically used for storage at printworks. “The scenario is a lot greener, as it encourages the reuse and exchange of transport units between cash cycle players,” highlights Stein.

Scenario 3: high volumes

Extending the use of standard plastic boxes to more points across the cash cycle facilitates high-volume shipments of banknotes between players. However, the unsophisticated nature of such boxes eliminates many opportunities for automation that a tray solution offers, as well as necessitating more manual repacking processes.

Scenario 4: high storage capacity

The use of cardboard boxes (instead of plastic ones) across a major part of the cash cycle has a highly positive impact on storage capacity and high-volume transportation. But it does so at the cost of efficiency and sustainability, due to its single-use packaging and the extent of manual repacking required between the cardboard boxes and other types of transport and processing units.

See the white paper for in-depth details on these scenarios.

“Higher standardization throughout the cash cycle will reduce the cost of cash as well as its carbon footprint, improve performance, and keep cash competitive against other means of payments“
Maximilian Ziegler
G+D’s Global Technical Sales Director, Automation and Logistics

Comparing the different scenarios, the white paper’s authors conclude that there is no single scenario that scores best in all situations. “It is always a trade-off between the different criteria of automation, storage capacity, and sustainability. The individual optimal scenario for a cash cycle always depends on the conditions of the respective market.”

But what emerges from the scenarios are clear pathways to greater optimization and sustainability. “Higher standardization throughout the cash cycle will reduce the cost of cash as well as its carbon footprint, improve performance, and keep cash competitive against other means of payments,” says Ziegler.

Re-imagining cash-in-motion

Optimization and sustainability ambitions can’t be achieved in isolation, though. “Collaboration is a big step towards the cash cycle becoming more sustainable, more secure and more efficient,” says Ziegler. “We need collaboration models that establish the best overall transport solutions for maximizing the sustainability and efficiency across the borders of different players. But, critically, also ones that ensure all participants attain advantages by committing to new standards. If all cash cycle players work together on an overall solution for their part of the cycle, finally the cost of cash will be reduced and the players can reap the benefits of standardization.”

Their call to action is simple but far-reaching: cash cycle players need to collectively reimagine their use of transport units and define (and implement) the best-case scenarios for the future.

  1. The paradox of banknotes: understanding the demand for cash beyond transactional use, European Central Bank, 2021

Published: 15/03/2022

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