SCL Conference 2015: Overcoming the challenges of the travel money market (CMS)

Overcoming the challenges ofthe travel money market

Presented by:Dr Andrea Donafee, Managing Director

We don’t just do stock management

Presented by:Dr Andrea Donafee, Managing Director

About CMS

1991CMS was founded

CMS manage sites across

28 Countries

Skilled team of consultants &

mathematicians

25,000Sites managed

including FX bureaux, ATMs,

vaults, banks & shops.

Industries we work with

ATMs

Foreign Currency

Financial Institutions

Vaults/Cash Centres

$56BN

Cash ordered/sold by our systems every year

Challenges & difficulties

Challenges & difficulties

Lack of controlVolatile market No visibility

Risk challengesInitiatives

Challenges & difficulties

Lack of controlVolatile market No visibility

Risk challengesInitiatives

Volatile market

On the face of it, the FX industry is an extremely volatile market. However, with the

appropriate application of expert analysis, it is possible to consider and quantify key

factors such as;

Rate fluctuation

Demand fluctuation

Events

Historic trends

Current trading levels

Economic factors

Volatile marketMulti currency demand

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

MXN AUD EGP AED THB CAD BGN HRK

CHF NZD NOK DOP CZK PLN JMD ZAR

Volatile marketSingle currency demand

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Challenges & difficulties

Lack of controlVolatile market No visibility

Risk challengesInitiatives

Visibility and control

Business analytics and reporting are the key to obtaining better visibility and control

of your estate

Challenges & difficulties

Lack of controlVolatile market No visibility

Risk challengesInitiatives

Initiatives

New distribution channels Sales initiatives New locations

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2013 2014 2015

Online Growth

Challenges & difficulties

Lack of controlVolatile market No visibility

Risk challengesInitiatives

Risk challenges

Reputational damage

Rate fluctuations

Missed Sales

Theft

86.0%

88.0%

90.0%

92.0%

94.0%

96.0%

98.0%

100.0%

Jan Feb Mar Apr May Jun Jul Aug Sep

Cash availability

Simulate, Simulate, Simulate

More than just forecasting

Forecasting

Forecasting

CIT

CIT

Supplier

Supplier

Store

Cash Cycle Management

Forecasting

CIT

CIT

Supplier

Supplier

Store

Forecasting

Forecasting

CIT

CIT

Supplier

Supplier

MonthlyVolatility

Seasonality

Historical Data

Trends

Store

Supplier

Forecasting

CIT

CIT

Supplier

Supplier

Distribution

Pricing

Ordering Rules

Lead Times

Currency Availability

Store

CIT

Forecasting

CIT

CIT

Supplier

Supplier

Emergency Order Policy

Depot-by-Depot Performance Levels

Scheduling

Pricing

Reliability

CIT Transit Limits

Store

Forecasting

CIT

CIT

Supplier

Supplier

Store

Store

Competitors

Promotions/Pricing

Recycling

Denominations

Risk Policy

Availability Levels

Currency Profile

Safe Limits

Site Type

CIT

Forecasting

CIT

CIT

Supplier

Supplier

Time Windows

Collection Profiles

Crew Monitoring

Route Management

CIT Transit Limits

Store

Supplier

Forecasting

CIT

CIT

Supplier

Supplier

Re-banking Analysis

Re-banking Costs

Reconciliation

Store

Other initiatives:Case study

Case study

Our client was fulfilling orders placed online for collection in store from vault stock

Could any of these orders be fulfilled from existing store stock?

Would any customers not be able to receive their order?

CMS do not manage the stock for these stores so needed a rule based,decision making approach.

The challenge

Case study

By using historic data we were able to construct a model for every store and analyse these orders.

Simulating demand and growth of this channel.

CMS was then able to devise algorithms that could be used to determine how these orders could be fulfilled.

These new algorithms improved the findings identified in the initial

business case.

CMS reduced the number of customer failures.

The CMS approach

Other initiatives

Due to security reasons I can only hold a certain level of stock. What currencies should I hold?

How can I hedge future positions?

What would be the impact on sales if a wider range of stock could be held?

Availability is the most important thing to me. What is the cost impact of 100% availability across all currencies?

My supplier contacts are out to tender but they have all come back with different operating models. How can I model the impact of each response?

Final thoughts

Final thoughts

Use business analytics & arm yourself with as much data as possible

Measure each part of the cash cycle

Simulate, simulate, simulate

Accurate forecasting alone will not solve all problems

Thank You

Presented by:Dr Andrea Donafee, Managing Director