The tour of the Hershey chocolate factory was a highlight of my midcentury childhood. My brother and I watched mesmerized as a claw-like machine scooped and stirred an enormous vat of brown goop. Our shared thought: Will there be edible souvenirs?
More recently at the Boston Fed, I watched an experimental robot moving shrink-wrapped blocks of cash from point A to point B. The experience was eerily familiar, a lot like the machine at the chocolate factory. And it inspired the same thought: Will there be fungible souvenirs?
Turns out, there are a lot of similarities between chocolate production and FedCash Services, which takes in crumpled bills and turns out shrink-wrapped bundles of neatly pressed $1s, $2s, $5, $10s, $50s, and $100s.
- Quality control: maintaining consistent chocolate texture, removing ripped bills from circulation
- Heavy stuff to move around: a crate of chocolates, a pallet of $100s
- Inventory to track: Hershey Kisses or $20s
Today, let's focus on supply chain management. A collaboration of the Federal Reserve and all the organizations that help get cash to businesses and consumers is working to bring supply chain best practices to the tracking of cash as it circulates among the Federal Reserve Banks, financial institutions, retail businesses, and armored carriers. The foundation for this endeavor: uniform standards and barcodes.
This effort, named "Cash Visibility," will replace paper manifests and physical signatures with electronic records of cash custody. Currently, cash delivered to Reserve Banks from financial institutions is labeled with the financial institution's ABA number and accompanied by a paper manifest listing the dollar value per bag. The armored carrier waits while the Reserve Bank counts and examines the bags, and the paper manifest is edited by hand to account for any adjustments. For example, a ripped bag may be rejected and its entry crossed off the manifest. Each party—armored carrier and Reserve Bank—signs and retains a copy of the paper manifest. Later, a Reserve Bank worker keys the information into the FedCash Services system from the paper manifest.
Going forward, this paper process will be replaced. Each bag will be barcoded and associated with an electronic (or "e-") manifest including the total deposit amount, and, in a change from current practices, a denominational breakdown of the cash in the bag. Hand counting of bags will be replaced by scanning. Adjustments will be made to the electronic record, not to a paper list, and entry to inventory and accounting systems will be automated.
For armored carriers, going digital has the potential to reduce the time it takes to deliver and pick up cash from the Federal Reserve Banks. For FedCash Services, financial institutions, and armored carriers, digitization is expected to reduce manual data entry, cut down on keying discrepancies, and streamline exception processing.
In addition to increasing efficiency and decreasing risks like those cited above, uniform standards also could open up new opportunities. For example, entities in the cash supply chain could gain insights into the movement of cash to support innovation and decision-making. Automated methods could speed up the notification of cash deliveries in weather or other emergencies, strengthening the overall resiliency of the cash supply chain. Building on the electronic record, financial institutions could report more efficiently to cash-intensive retail businesses that are their customers.
To standardize tracking, participants in the cash supply chain will apply to the international standards organization GS1 US for a company prefix—that is, a unique number that will identify each entity in the cash supply chain. The Federal Reserve has developed an API (FedCash E-Manifest Service) to support the electronic systems for receiving and paying cash and is helping financial institutions and armored carriers implement the API.
Cash is paper. But record-keeping about it doesn't have to be.
For more questions or to participate in E-Manifest, please contact Cash Visibility. If you are in the Midtown Atlanta area any day Monday through Thursday, visit the Atlanta Fed's Monetary Museum and you will be able to watch our cash team—including the robots—in action.