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August 15th 2018

Payments Talk With Walmart: Cash Management, the MCMF, and the Payments Landscape

Our upcoming Merchant Cash Management Forum (MCMF) is less than a month away, and in the build up to the event we decided to catch up with some of our guest-speakers. We chatted with special guest-speaker and Senior Director, Global Treasury Operations, for the world’s largest retailer, Walmart, about the importance of the MCMF, the cash industry, and what the future holds for merchants.

How do you effectively manage cash processes (AT, Banking, COT, procedures etc.) for such a large estate?

Walmart is a great example of cross functional teams working well together. Treasury, Process Design, Execution, Store Communication, Loss Prevention and Shared Services all partner to make sure stores have all the cash they need, when they need it and that customers have an excellent experience shopping in our stores. At a high level the treasury team manages the depository banking and armored carrier relationships as well as the cash recycler program relationships. Design, Execution and Communication own the in-store process and the continuous drive for consistency across all stores. Loss Prevention and Shared Services alert on risk issues, perform investigations and perform daily reconciliation of our cash position. Walmart works closely with our banks, carriers and recycler partners. We have long planning cycles and a healthy project pipeline and enhancement rollout cadence to make sure we are always improving.

How does a company, like Walmart, test the business case for new procedures/processes, such as implementing cash recyclers?

Like most organizations, Walmart runs discounted cash flow models to analyze ROI on project ideas. If a proposal makes sense on paper it goes to executive approval and then live store testing. This is usually a 1 to 5 store proof of concept for 6-12 weeks to prove out the assumptions in the business case. We learn a lot at this stage regarding the optimal in-store process, how to get the data flows working optimally and if applicable, test out the vendor service components. A 50 to 300 store pilot will follow to make sure the project can operate at scale. Full chain rollout will follow at an appropriate pace depending on the level of store impact.

What do you see as the key challenges within the cash industry? And, additionally, what are the barriers to change?

Like many industries, the pace of change is a key challenge. Customers’ preferences are changing and retailers are having to react faster than ever before. This was a large part of the drive to install recyclers for Walmart, the opportunity to reduce time spent on office work and increase the allocation to customer facing roles. Customers are using cash less often, are shifting to self checkout at POS and are seeking differentiated service as a reason to come to brick and mortar stores. These challenges require changes to how operate the cash office. We need to be lean and efficient and processes need to be simple and intuitive. One barrier is data sharing and transparency. Traditionally retailers, bank and carriers have developed manual processes to track cash through the supply chain. Evolving those processes to data-centric, real time reporting is a challenge.

"Customers are using cash less often, are shifting to self checkout at POS and are seeking differentiated service as a reason to come to brick and mortar stores. These challenges require changes to how operate the cash office."

Dave Shelly | Walmart

Looking to the future, what would be your top areas for merchants to look at as consumer cash trends evolve?

Looking at hardware options for automation is a top priority. The price points are coming down relative to the cost of traditional models of cash management. For those who have already invested, generating maximum return out of hardware investments would be a top area of focus. In Walmart’s case, the initial benefits of the recycler rollout are now in the base. We need to continue to optimize the model to expand those benefits. Looking at smarter ways to handle coin is a priority, starting with analysis on eliminating pennies and more generally finding ways to reduce coin handling costs. Becoming more dynamic on cash ordering is another focus area. Days of the week and times of the year will be incorporated into the algorithms of central change order programs. Dynamic register funds by day and by register will also be a focus. Better sharing of data and status updates for bags of cash as they move through the supply chain will also be a focus.

Why are events like CMSPI’s Merchant Cash Management Forum so important for the industry?

Learning from peers in the industry is a key element of continuous improvement in cash management processes. Doing so in a face to face environment makes the interactions even more beneficial. The MCMF provides practitioners with an excellent opportunity to hear relevant content and benefit from networking opportunities with industry players.