Optimizing cash at a Managed ATM Services company

Client Needs

• ATM Machines were stocked at fixed frequency (daily, weekly or monthly) using third-party Armored carriers
• In case of ATM out-of-cash, emergency cash-order is placed, client pays daily interest on cash borrowed from banks
• Total spend was over $50M per year in interest
• Armored carrier costs (for scheduled and emergency fills) were on the rise The challenge was to reducing stock-outs and costs at the same time

Solution

• Reduced outstanding cash (and interest) through safety stock optimization - used forecast error in addition to historical data to compute safety stock
• Reduced safety stock by reducing overall forecast error using machine learning algorithms to capture demand patterns across groups of machines
• Optimized ATM Fill Frequency using linear programming model comprising interest vs fill cost using exponential smoothing and probabilistic demand modeling
• Reduced Emergency cash-orders using probabilistic demand model and Executive Management Control System

Results

• Reduced outstanding cash by nearly $270M while reducing stock outs by 18%
• Reduced interest spend and armored carrier costs by approx. $5.8M annualized in less than six months.
• Our team used a blend of traditional operational improvement techniques, supply chain optimization, advanced statistics and machine learning to rapidly drive operational improvements.
• These improvements generated substantial financial savings in less than six months.

Client Profile

• ATM turn-key solutions company
• 60,000+ ATMs across US, UK and Canada
• $1B in revenue