Canadian Vending

Features Business Operations
The Future Could Be In Your Hands

Sales Data Optimizes Critical Vending And OCS


April 30, 2008
By Stacy Bradshaw


Topics

Everyday, vending and OCS operators have to make tough decisions about
their business: when to visit a machine, what to put in the machine,
and how much product to load up for the day.

Sales Data Optimizes Critical Vending And OCS

14Everyday, vending and OCS operators have to make tough decisions about their business: when to visit a machine, what to put in the machine, and how much product to load up for the day.

Unfortunately, without access to their own critical sales data, operators are forced to base these decisions on unreliable guesswork and speculation. By relying on their intuition, they’re contributing to their own inefficiency.
Today, vending trucks are being sent out with two and a half days worth of inventory, said Damien Moroney, VP of sales and marketing for Crane Streamware. And if that data doesn’t strike you as alarming, well, he says it probably should.

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Overstocked trucks (by an industry average of one and a half day’s worth), drivers spending too much time pulling product from the back of the truck, and too much time in the warehouse, are just a few of the problems with the current model typical of today’s vending and OCS operations.

In what Moroney refers to as the “emerging vending model,” the energy and money wasted on these time-consuming practices is eliminated. Sales data, which he assures can be obtained with or without vending software, is used to guide more efficient business practices. Progressive operators are analyzing their sales data to determine when to schedule a visit to the machine, or from a merchandising perspective, which products to push and which products to pull.

Many are using vending-specific software to track inventory at the item level. This means they can account for exactly how many Snickers or how many Root Beer turn in a day. Scores of reports analyzing sales, shrinkage, and account profitability give operators the information they need to make healthy business decisions quicker.

Vending-specific software is designed to improve three functions: route scheduling, item-level merchandising and accountability for both cash and product. By automating these critical functions, companies are able to take their operations to the next generation of cost- and time-efficient vending and coffee services.

“There’s a shift in the marketplace in the way of doing business for vending and coffee companies,” said Moroney.

The shift comes in response to changing consumer habits and the availability of more advanced, but often unfamiliar, technologies. Keeping pace with the modern consumer requires an increased level of control.

Vending software, handheld computers, DEX technology, and cashless vending all offer the opportunity for increased control over cash and product, but they also require an increased level of management. Training
employees to embrace these unfamiliar processes and, of course, finding the capital to invest in the new technologies are some of the hurdles operators must overcome.

Any assessment of the shift in fundamentals on an industry-wide basis would be incomplete without some understanding of what operators are doing today, and what they could be doing in the future. Today, machines are typically serviced on a fixed schedule and route drivers are deciding what fills them. Commonplace these days is for a driver to pre-visit the machine, return to the truck to pull product and go back into the location to fill the machine.

One of the problems with this seemingly simple model is that, on average, one out of every five machines does not need servicing.

“Are you going to machines that don’t really need servicing? Because it’s a huge waste of money,” Moroney said quite matter-of-factly.

In the emerging vending model, the time and cost of sending drivers to these machines is eliminated.

Operators can run smaller trucks because they know exactly what product is needed. They’re going out with just what they need plus an additional 10-20 per cent in case of shortages.

Vending software systems will forecast what is needed in each machine by making projections based on the machine’s previous sales. “Pre-kitting” stations are set up to fill bins with the projected amount, eliminating the need for the initial pre-visit to the location.

With software solutions like Streamware’s VendMax, pre-kit load sheets are printed, by machine, the day before servicing. The sheet lets the pre-packer or “pre-kitter” (a lot of operators hire a part-time employee or student to fill pre-kit bins for a couple of hours per day), know what product to fill the bins with for each machine; the bins are then placed on the truck.

The idea is that the driver isn’t coming in to the warehouse to pull product.

The benefit is that the average of two hours spent pre-kitting are given back to the driver, who can turn around and do more business on the route. Or, according to Moroney, one truck for every five, and in some cases every four, can be eliminated from the lineup. Some companies choose to do the latter and consolidate routes to save money, while others choose to add on more business.

With or Without Vending Software
Vital to the success of optimizing routing and scheduling is a process called, “forecasting.” With forecasting, data is the most valuable asset. Using sales data to make actionable predictions about each account provides a level of control necessary to compete in today’s automatic merchandising sector.

Forecasting is made easier with vending software, but the full-line software packages required to track machines at the item level can be costly. As Moroney pointed out at the recent “Tools for Growth” seminar held by Crane National Vendors in Toronto, software packages like Streamware are designed for operators running, on average, at least five routes.

“It takes a lot of resources to develop the product and it takes a lot of resources to maintain it. What we’ve found is that when we deliver it to smaller companies, they haven’t been able to maintain it,” explained Moroney.

He hinted that sometime in the future Streamware will focus on developing a software for the smaller market. In the interim, it seems the company has reevaluated how it fits into this developing market and how it can benefit its customers of all shapes and sizes. At the “Tools for Growth” seminar, Moroney took off his sales hat for a portion of the presentation and shared some simple ways a smaller operator can implement forecasting without the use of vending software. (See the accompanying story, “Forecasting without Vending Software.”)
To optimize route scheduling, the key (with or without vending software) is using metrics. Operators must decide what they are willing to put up with from a customer service point of view: 30 or 40 per cent depletion? Two, three or four sell-outs?

“We’re looking at sales data to determine whether or not to service a machine; that should be the determinant, not what the drivers think should be in there,” said Moroney.

Vending software solutions have built-in mapping software that will plan a driver’s route, indicating which machines need servicing based on the metrics the operator decides on. This “dynamic scheduling” is based on a range of parameters, such as number of sell-outs, per cent depletion, amount of money in the machine, and the number of days since the last service.

Without vending software, the metrics can be calculated in an Excel spreadsheet similar to the one outlined on page 15. Then service calls can be mapped out using a cost-efficient mapping program like Microsoft MapPoint, which features automatic routing and driving directions.

There are plenty of resources available for today’s vending and OCS operator. Some are more advanced, costly systems that will pay for themselves in the long run, but only for medium-to-large operations. Others can be implemented with a basic PC (personal computer) and a little creativity.

With or without software, optimizing these three vital functions – merchandising, routing and financial management – will help operators make smart business decisions and, in turn, increase the bottom line. o