Demand-driven MRP helps banks optimize cash use

At Diebold Nixdorf’s Intersect event in Cannes, Shalima Adam and Danie Van Den Berg discussed demand-driven material requirements planning for bank cash management. They outlined how the method can change how banks manage cash across branches and ATM networks.

They defined demand-driven material requirements planning, or DDRP, as a planning method that uses recent consumption data and demand signals to set inventory levels and trigger replenishments, instead of relying on fixed schedules or long-range forecasts.

Under DDRP, dynamic buffer levels are set by recent usage patterns. When cash usage drops below or exceeds those buffers, the system triggers replenishment or redistribution. The model aims to keep required denominations available while reducing the total amount of cash that must be held on site or moved between locations.

The presenters described operational effects that follow from this model. Fewer excess notes would remain idle in tills and machines. Fewer unneeded cash movements could lower logistics and handling costs and reduce associated security needs. ATMs and branches could experience fewer emergency replenishments, which can improve machine uptime and customer access to cash.

Adam and Van Den Berg also addressed liquidity implications. They reported that DDRP can allow operations teams to hold lower cash volumes on site while meeting availability targets, which could reduce the frequency of cash-in-transit operations and the related carbon and security footprint.

They identified requirements for implementation: reliable consumption data, clear buffer rules, and integration with existing cash management and logistics systems. Banks must define service-level targets for branches and ATMs and calibrate buffer profiles to local demand patterns, such as weekday versus weekend use or special events that cause atypical demand.

The speakers traced DDRP back to inventory practices used in manufacturing and outlined how those principles are being adapted for cash management. They said the technique is aimed at cash cycle managers, operations leaders, and network planners focused on more efficient use of physical cash while maintaining customer access.

The presentation at Intersect described DDRP as a data-driven inventory method for cash that replaces fixed schedules with consumption-based triggers, with the intended effects of reducing idle cash, cutting handling and transport needs, and improving availability of needed denominations.