Loomis has been under pressure before.

On Nov. 13, 1991, three drivers for Loomis Armored Car Co. lay shot to death at the Loomis vault in Vallejo, Calif. They had been ambushed by people who were thought to have had inside information about Loomis' operations and tried to steal the cash that the drivers had picked up that day.

On his fourth day on the job, Jim Mattly, Loomis' CEO at the time, was visiting families of the dead. "That snapped me to attention quickly," he says. "To this day, we're dealing with issues embodied in that robbery."

Loomis was bleeding $1 million a month in cash when Mattly was brought in to run the company by Wingate Partners, an equity firm which had bought the business.

According to James Dunbar, who also tried to buy Loomis but was outbid by Wingate, the company was allowed to run down after the Loomis family—the descendants of Lee Loomis, who ran supplies by dogsled to miners during the Alaska Gold Rush—sold it in the late 1970s. Trucks were breaking down and facilities were neglected, Mattly says.

Immediately, Mattly raised rates so Loomis wouldn't go out of business. A quarter of the customers went away, but most of these were unprofitable anyway. He tightened hiring procedures because Loomis was infiltrated with "criminals," he says, and tightened security procedures so that large amounts of money were not left unprotected. He tried to instill pride in Loomis by creating committees of employees to discuss how to improve the company's branches and attract new customers. He got "good insights and bad insights," he says—some employees were eager to get involved, while others were only interested in higher pay and "what's in it for me."

Ultimately, however, he was able to raise wages, and he drove down Loomis' cost of risk from 13% of revenue in 1991 to a little over 6% when Loomis was sold to Securitas in 2001. Securitas doesn't disclose cost of risk, but Loomis spokesman Mark Clark says it has continued to fall. Loomis' cost of risk is the cost of insurance plus deductibles for losses or theft of cargo, along with the cost of workmen's compensation claims filed when employees are shot during a robbery, injured lifting heavy loads of cash or involved in vehicle accidents.

Eager to grow revenue, Mattly in 1997 acquired competitor Wells Fargo Armored, his first employer after he got out of Harvard Business School. That move backfired when Wells Fargo Bank—a $2 million-per-month account—dropped Loomis because of service problems at Wells Fargo Armored (a separate company), which competed purely on price and had 800 one-man routes, Mattly says. He recalls that event as "a big cathartic shock," just like the murders in Vallejo. On the verge of bankruptcy, Loomis raised rates again—100% or more—and Mattly began holding management retreats to figure out how Loomis could turn things around and start to grow.

The group—which by that time included Pete Silewicz, Loomis' current senior vice president of banking services—started thinking about how Loomis could save national chains like Wal-Mart or Target millions of dollars a year by getting their deposits credited the same day the stores collected the money. Out of those meetings grew the idea for an online Customer Information Exchange, where Loomis could count cash and electronically transfer the amount directly into a bank's books.

"If you become an integral part of a customer's process, it's so very hard to fire you when you're so interlinked with them," Mattly says.

Grochett, Loomis' former CIO, whom Mattly hired in 1999 a few months after Silewicz, says Loomis had been resisting pressure from customers to do business online while it stabilized after the Wells Fargo Armored acquisition. What Grochett, a former information-technology executive at Compaq Computer, saw when he got to Loomis was a $380 million business that was almost entirely manual. Banks that needed cash ordered from Loomis the same way they had for years, by calling an automated telephone ordering system or sending a fax.

Thieves exploited gaps in Loomis' systems. For example, while Grochett was working out the company's strategy for using information technology, a Loomis route manager in San Jose, Johnny Guzman Jr., was robbing ATMs. Over eight months, from August 1999 to March 2000, Guzman committed 101 robberies and stole $284,000, according to documents in U.S. District Court in San Jose. He used a route key—a key that, when activated by random access codes generated by Loomis' computer center in Maryland, allowed him to unlock specific ATMs. The key was assigned to an employee who had left Loomis but had never been deleted from Loomis' system, according to the court documents. The company did not detect the thefts, which were small amounts attributed to "mechanical or administrative errors," until Guzman took $240,140 in one day. Then, Loomis called the FBI. Guzman pleaded guilty and was sentenced to 18 months in prison.

Grochett knew he had to move quickly and decided to build on the few systems Loomis had in place—Oracle Financials software for billing customers, Glory USA's Glory software package for tracking and managing the contents of Loomis' vaults, and the Web. Oracle became the system of record for Loomis, covering sales, operations and finance—it calls the system SOFI. This is the repository of all customer information—a source of orders that are used to develop route sheets, which, in turn, are used to generate bills after the armored-car crews record their stops and enter their route reports into SOFI.

Sitting in front of SOFI and Glory is the Customer Information Exchange portal and gateway. Its signature feature is the Internet Change Order system, based on Microsoft BizTalk, which Loomis first developed with a customer, a credit union, in 2002.

Rather than call or fax Loomis, banks and their customers can now log on to Internet Change Order and fill out fields on an online form to order cash in the right amounts and denominations. The order is routed through Loomis' network to the appropriate branch, where the order is packed and shipped to the customer location. Order history is maintained and remains visible to the customer. If there's a holiday or special event coming up, the bank can signal Loomis to lift the maximum amount of cash it's allowed to order by tweaking the business rules that underlie the forms.

For ATM orders, banks can feed files over the Internet, using File Transfer Protocol, directly into Loomis' computers from their own cash forecasting systems, which populate the order forms so a bank can order cash for multiple ATMs at once.

Loomis can tell banks how accurate their orders are by signaling back to them how much cash their ATMs are actually consuming. This cuts down on work for Loomis, Silewicz says, because sometimes banks order too much cash—by as much as 45%—so the ATMs won't run out, and Loomis has to count and process and haul all of it.

In June, the Internet Change Order system handled 20,000 requests for cash, with a transaction value of $15 billion, from 160 customers, according to Grochett—but that's still only 10% to 15% of Loomis' customers that are ordering cash online, although they are Loomis' largest customers. For the rest, Loomis employees manually enter the orders into SOFI. Silewicz says manual processes are more work for Loomis and the company has discussed charging fees to manage those accounts.

Customers aren't always ready for automation, though. Wachovia Bank, one of Loomis' best customers, doesn't order cash online. Wachovia uses the company as a "virtual vault" in several states where it has retail customers but no physical bank branches. Every day, Loomis or another armored carrier picks up cash from Wachovia's retailers and delivers it to a Loomis vault. Loomis counts it and signals the totals through the Customer Information Exchange back to Wachovia, which credits each store in a particular retailer's national account. But not all stores have Internet connections at the local level, says Tom McGurk, a senior vice president at Wachovia.

Lately, Loomis has begun selling an electronic safe directly to retailers. A future version will automatically count cash and signal provisional credit to the retailer's bank if Loomis doesn't pick up the cash that day. Retailers could also order change over the Internet, Silewicz says.

Regardless of where the money is located, however, humans still have to pick it up and deliver it. In 1993, when Heather Tallchief was said to have disappeared in Las Vegas with Loomis' truck and $2.5 million, drivers and guards were neither evaluated nor trained. Today, Loomis spends $2,800 to $4,000 per employee on training, says Jeff Carnicom, who started out as a driver in 1991 and is now president of Loomis' Midwest region. He says Tallchief, who pushed hard to get Loomis to hire her, is the inspiration for most of the company's current hiring practices. These include 40 hours of classroom training, 80 hours of in-cab evaluation, and pre-screening devices like personality tests.

"There is an intrigue about money, trucks and guns," Carnicom says. "It attracts a certain type of person. I liked the independence. But you don't want to give a bag of money to John Wayne."

Story Guide:

Main story:

Base Technologies: What they're using to do what they're doing, and what they'd use to do it better.

Next page: Most Logistics Problems Involve Less Shooting

Next: ' Most Logistics Problems Involve ' >>

Discuss Loomis Fargo & Co.: Making Money Move, Efficiently   >>> Be the FIRST to comment on this article!

>>> More Projects: Processes Articles          >>> More By John McCormick