MICR Reader Preventative Maintenance Analysis

Proposer/liaison: Connie Hook

Meijer is a supercenter retailer. The stores house a full grocery center along with forty other departments from clothing to sporting goods. On average each store has twenty- eight checkout lanes.

Paper checks are encoded with Magnetic Ink Characters (MICR) describing the financial institution, customer account number, and check number. Upon tendering a payment for an order using a paper check, the check’s MICR is read by the store Point of Sale system. This information is captured and used in the lane to verify that the check is good.

MICR reading is not a 100% reliable, exact science. In the course of a week’s business, a MICR read failure rate of around 5% is normal. This may be due to bad MICR encoding on the checks, cashier error, or marginal MICR reading equipment.

Based upon cursory analysis, we see great variability in MICR read rates by lane from week to week. When a MICR reader runs high failure rates for several weeks, the reader can be adjusted and possibly replaced. Not all stores exhibit the same characteristics – possibly because of a different population of checks, age of equipment, or maintenance schedule.

This project entails data analysis to answer the following:
1. How often should we be doing MICR performance analysis?
2. What failure rate and frequency indicates a “bad” MICR reader.
3. Does adjusting a reader “fix” the problem or does it need to be replaced?
4. If “fixed”, how long will it last?

The information delivered from this project will be used to establish a MICR Reader monitoring and preventative maintenance strategy for 157 Meijer stores.

This summary was prepared by Connie Hook.

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