Post on 01-Jul-2015
Currency Management &Optimization (CMO)
Manage your Cash Logistics efficiently
Girish Nehete,Business DevelopmentGlobal Line of Business Banking, APJ05th June 2008
Why CMOWhat is CMOThe Solution OfferingValue Proposition
CMO Overview
Cash Points:BranchesATMs
Cash Points:BranchesATMs
CentralBankCentralBank
Cash CenterCash Center
SAP CMO enables banks to handle their cashlogistics more efficient
Key Priority:
1.To reduce the cost of cash handling2.Mitigate business and transportation risk3.Integrate new business models to raise customer satisfaction.
Key Priority:
1.To reduce the cost of cash handling2.Mitigate business and transportation risk3.Integrate new business models to raise customer satisfaction.
To reduce the cost of cash a bank needs tohave precise information on customers cashdemand in the future.To reduce dormant cash in ATM’s and vaultsof a bank, currency has to be transferredtimely and in the right amount.To avoid expensive emergency cashreplenishment timely and adequate cashsupply is required
Heads of planning have no transparency into the processes of cash logistics and havedifficulties to predict the right amount of cash in the right place.
Mag
nitu
deP
ain
Result: High levels of dormant cash and high cost of cash logistics
Cash Points:Branches
ATMs
Cash Points:Branches
ATMs
CentralBank
CentralBank
Cash CenterCash CenterCash Points:
BranchesATMs
Cash Points:Branches
ATMs
CentralBank
CentralBankCentralBank
CentralBank
Cash CenterCash Center
Manifestation: Pain for a banks planningdepartment
Save 5 – 30% of the total cost offinancial operations
Deliver complete transparency into allcash movements
Reduction in number of armored carsreduces the overall business risks
SAP enables a bank to meet one of theirkey priorities: To reduce the cost of cash and to mitigate
business and transportation risk, while integrating new business modelsto raise customer satisfaction.
.
Banco ItaùBrazil largest Bank
3,000 branches and 21,000 ATMs all over Brazil
Key benefits recognizedSignificant reduction in dormant cash in ATMs and vaultsSave 15% of of the total cost of financial operationsTransparent processes allow to take strategic decision regarding cash logisticsReduction of overall business riskDirect impact on a banks bottom line
SAP CMO enables banks to handle their cashlogistics more efficient
Why CMOWhat is CMOThe Solution OfferingValue Proposition
Agenda
The Cost of Transportation Is Sometimes High
Cash Points:BranchesATMs
Cash Points:BranchesATMs
CentralBankCentralBank
Cash CenterCash Center
What is Currency Management & Optimization?
SAP Currency Management & Optimization supports the currency supply chain for banks –including:SAP Currency Management & Optimization supports the currency supply chain for banks –including:
Forecasting cash requirementsForecasting cash requirements
Cash transportation optimizationCash transportation optimization
Cash transportation order processingCash transportation order processing
Cash order automation and invoicematchingCash order automation and invoicematching
Banks treat currency as a commodityExcess amount of cash held to satisfy customers demandNo forecast of currency demand
Banks are not aware of their cost of holding currencyNo visibility of supply networkControl of cash replenishments sometimes with third parties
Banks have not yet centralized the process of currency management
A simple fact:
Current surveys estimate dormant cash level in ATMsto be between 30 and 60%
Issue #1: Dormant cash
A simple fact:
26% of cost in cash logistics is related to cash handling
Supplier NegotiationBanks have no global visibility on their transportation needsWeak negotiation position with service providers
Order execution and managementCash transports not optimized by third party providersBanks match manually service orders with invoices / no integration
Issue #2: Inefficient service providermanagement
Risk associated with the handling of currencyEmbezzlement lossesThreat of robberies
Business riskThreat of out of cash situations
A simple fact:
From 2000 to 2007 there was an increase of 25,1% in bank robberies in the US*
Issue #3: How to mitigate risk
Why CMOWhat is CMOThe Solution OfferingValue Proposition
Agenda
CMOSystem
WTU
Bank
Central bankAccount
Cash Point
Cash Management& Optimization solution
SAP Banking solution
$
$/# $/#$
#
Conceptual structureof the cash supply chain & solution scope
Process of Currency Management andOptimization
1
Model of currencysupply chain
4Executetransportation orders
5Monitoring and managing
exceptions
2 Forecast of demand
3Create global currency
distribution plan
5 1
2
3
4
Build a Model of the Currency Supply Chain
Time SeriesAugust September
W32 W33 W34 W35 W36 W37 W38 W39 W40 W41
Time SeriesAugust September
W32 W33 W34 W35 W36 W37 W38 W39 W40 W41W32 W33 W34 W35 W36 W37 W38 W39 W40 W41
Bills
Loca
tion
Period
Bills
Loca
tion
Period
BillsBills
ATMs and AgenciesATMs and Agencies
5 1
2
3
4
Flexible data modelMultiple dimensions in time,locations and notesDescribing transportationroutes, capacities and otherrestrictionsIntegrates basic businesslogic
Forecast of Demand
5 1
2
3
4
AUTOMATED
PICK
BEST
Constant
Trend
Season(without trend)
Trend - Season
Others
Causal Analysis
Composite Forecast
Versatile planning methodsCombining different forecasting methodsis improving forecast accuracy.Best Pick functionality makes sure thesuited forecast method is chosen.Adding a casual analysis of factors like“day of week” and holidays will furtherenhance accuracy.
Create Global Currency Distribution Plan
5 1
2
3
4
--50,000Sunday
125,000150,00091,000Saturday
--90,000Friday
250,000200,00095,000Thursday
--88,000Wednesday
--75,000Tuesday
200,000200,00065,000Monday
Adjusted PlanPlanedTransportsDemand
--50,000Sunday
125,000150,00091,000Saturday
--90,000Friday
250,000200,00095,000Thursday
--88,000Wednesday
--75,000Tuesday
200,000200,00065,000Monday
Adjusted PlanPlanedTransportsDemandSupply Network Planning
Calculate amounts to be delivered to thelocationsDynamic and multi stage safety stockcalculation based on target service levelSimulation and comprehensive tacticalplanning of sourcing decisionsOptimization of transport loads byconsidering constraints and penalties toplan cash flow along the supply chainOptimizes total process cost
Execute Transportation Orders
Integration into back endAutomated order generationElectronic Data Interchange with suppliersAutomated matching orders to invoices
5 1
2
3
4
LocalBranchCentral-
bankVault
Headquarter
MoneypickupMoneypickup
Carrier
Money onRoute
Money onRoute
Delivery isscheduled
MoneyReceivedMoney
Received
Delivery ofmoney isrequested
LocalATM
loaded
Execution & Monitoring
Why CMOWhat is CMOThe Solution OfferingValue Proposition
Agenda
CMO Solution Components
PlanningSAP Advanced Planning andOptimization
ExecutionSAP ERP
TrackingSAP Event Management
MonitoringSAP Business Intelligence
IntegratingSAP NetWeaver
SAP Offering vs. “ATM Providers”
( ) Process is not executed in real time
-Three-way order matching
-
( )
-
ATM Providers
( )ATM monitoring
Integration into back office
Order automation
Order processing
Sophisticated demand planning
Inventory management
SAP Offering
-Three-way order matching
-
( )
-
ATM Providers
( )ATM monitoring
Integration into back office
Order automation
Order processing
Sophisticated demand planning
Inventory management
SAP Offering
Only SAP is offering highly structured, traceable, standardized and fully integratedprocesses of cash logisticsOnly SAP is offering highly structured, traceable, standardized and fully integratedprocesses of cash logistics
Why CMOWhat is CMOThe Solution OfferingValue Proposition
Agenda
CMO – Value Generation
Create Value
IncreaseProfitability
IncreaseROA
IncreaseRevenue
Reduce Costs
Reduce useof Circulating
Capital
OptimizeUse of Fixes
Assets
Increased cash availabilityIncreased service level
Reduce transportation expensesReduce risk costsReduce operational costsReduced contracting costs
Reduce cash inventory
Optimize use of fixed assets(ATMs, Vehicles, etc..)
CMO is all about value generation
Key capabilitiesPlanning
Superior Demand Planning through sophisticatedforecast methodsOptimized inventory managementRole based planning processes leveraging localknowledge
ExecutionTransparent service provider managementAutomated Procurement and Order ProcessingWorkflow based Invoice settlementLogistics route planning
IntegrationFull integration with ERPOpen infrastructure through SAP NetWeaverFull regulatory compliance (e.g. SOX, IAS, BII)
Reduction of currency logistic spend upto 15-30% per year*
Raise customer satisfaction throughincrease in service level
Mitigation of overall business risk
Reduction of dormant cash up to25%*
1
Flexibility to adapt new business modelse.g. outsourcing / shared service center
2
3
4
5
SAP Value Proposition Currency ManagementOptimization for Banking
Value impact
*) Expert Estimation
CMO Customer Reference – Banco Itau
Banco Itau
www.itau.com.br
CMO Customer Reference – CESKASPORITELNA
Summary
SAP CMO enables a bank to meet one of their key priorities: To reduce the costof cash and to mitigate business and transportation risk, while integrating newbusiness models to raise customer satisfaction.
CMO is based on the best-in-class SCM application proven with 350+customers in all industries
CMO has unique and highly sophisticated planning features like multi linearregression.
CMO is a global integrated solution combining the power of SAP SCM for theplanning side and the robust execution side provided by SAP ERP for ordermanagement, transport execution and invoice control.
CMO is fully enabled by SAP NetWeaver™ and takes all the benefits of theEnterprise Service Architecture.
© SAP Summit 08 / Page 29
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