When it comes to ATMs, any amount of downtime is almost like a death sentence for the bank whose name is splashed across the machine's shell. ATM manufacturers know this and try to help their clients work to avoid such scenarios. At Wincor-Nixdorf (Austin, Texas/Paderborn, Germany) automated teller machine servicing and maintenance is now being taken to a different level through a partnership with FedEx/Kinkos.
Wincor-Nixdorf, although not quite a newcomer to the U.S. market, would still like to extend its reach in the country. However, according to Uli Seemann, who is in charge of the company's service organization, the vendor's distribution center, which was located in Austin, created challenges. "We had many depots around the country with spare parts, but Austin was not exactly strategically located for many of our customers."
Additionally, the individual depots were staffed and managed by Wincor-Nixdorf engineers who would have been better utilized simply repairing the machines, rather than managing the depots as well, Seemann adds.
About a year ago, Wincor-Nixdorf did some searching among various logistics companies and was interested in the model offered by FedEx (Memphis). The plan would allow Wincor-Nixdorf to utilize 1,900 FedEx/Kinkos outlets as its parts distribution centers. For now, Wincor-Nixdorf is using just more than 100 of the stores, but Seemann says the agreement allows for a great deal of flexibility if the ATM manufacturer needs to grow or shrink that number. Furthermore, Wincor-Nixdorf now uses the FedEx warehouse in Memphis, where the cut-off time for flights is 11:00 pm CST or midnight (versus 7:00 pm CST in Austin) for distribution to major metropolitan areas, says Seemann.
Edward Woods, senior analyst with Boston-based Celent, says that creating a more efficient and far-reaching distribution capability in the ATM market is vital and not often easy to achieve. "FedEx clearly has an efficient national distribution network," he says. "FedEx/Kinkos can leverage its distribution scale, while Wincor can access it at a far lower cost than paying by the parcel, or building and maintaining its own distribution network."
The Right Part at the Right Time
The program so far has proved to be a valuable service for Wincor-Nixdorf's customers, both financial institutions and retailers, Seemann comments. "We are fully integrated with FedEx's IT systems so we can see what parts exist in a given FedEx/Kinkos location in real time," he explains. "We have 24x7 access. This is about having the right part at the right time."
Most recently, Wincor-Nixdorf enhanced the program by introducing a courier service. Available only in certain metropolitan areas for now, FedEx couriers meet the vendor's engineers at client sites with the spare parts. This aspect of the program was developed to alleviate engineers of the hassle of traversing city streets while carrying equipment, Seemann says.
Looking ahead, Celent's Woods suggests perhaps expanding on the relationship on the personnel side to create even more efficiencies. "As much of this deal has been about parts distribution, there is also the hands-on servicing issue; getting people out to the machines," he says. "Could the teams servicing the Wincor and FedEx/Kinkos networks (hardware, software, cash, etc.) too come together? Leveraging physical parts distribution scale is a solid achievement, but leveraging both the physical and human capital elements could make a significant impact to their business models."
The end goal, Wincor-Nixdorf's Seemann notes, is for the vendor's warehousing systems to integrate completely with those of FedEx. "We have a direct link to FedEx's warehousing system. But the next stage is to integrate it to our logistics and warehousing system," he explains. "It runs fine as it is now. But going forward, we think it makes sense to have full integration of the systems."
Seemann believes the deal with FedEx addresses what he sees as a growing trend among his bank customers to look deeper at their ATM provider relationships. "We're finding it's easier for clients to agree to SLAs [service-level agreements] with this program," he explains. "Our customers are using more parameters to control their service delivery. Our program drives availability up. And this is good for consumers as the end users."