Technology jumpstarts New Jersey vendor's growth


On first impression, United Vending in northern New Jersey seems like a typical small vending operation. Owned and operated by a father/son team, the 4-route business boasts a 25-year history, emphasizing personal service.

But view the company's Website, http://unitedvend.com, and it becomes clear there is nothing typical about this operation. United Vending offers remote machine monitoring, "open" cashless vending, an extensive "green" vending initiative, energy efficient vending machines, and more. United Vending uses new technology to provide "higher efficiency and exceptional customer service," according to the company Website.

In many ways, the company's background is similar to others. In 1981, Ed Campbell, a Seven Up bottling operation veteran, purchased a Coca-Cola distribution franchise. His son, Jamie, worked in the business growing up, and when Jamie came on full time in 2002, he steered the company in a new direction.

Today, United Vending is one of the few in the country to have most of its routes using dynamic scheduling supported by remote machine monitoring. As a result, the company's routes do more than twice the sales of an average vending company, based on industry statistics.

In the past five years, Ed and Jamie Campbell have utilized some of the most sophisticated industry technology available, and they are using it to win new business. The company has been adding new business steadily during the current recession.

Asked how they did it, the father/son duo are quick to credit the team they put together over the years. They noted the need to have the right employees in place to take advantage of the best available management tools.

But the full story is more complicated. The company's evolution from a small beverage distribution franchise to a rapidly growing vending business was an extensive learning process.

Humble Beginnings

In 1997, the Campbells found themselves with about 35 soda machines and seven snack machines after Coca Cola Enterprises Inc. purchased most of the assets of their beverage distribution business. For the next five years, Ed operated the vending route single handedly.

In 2002, while he attended night school at Monmouth University, Jamie helped his father out part time in the small vending business. The average location had about 40 people, the largest having almost 100. Later that year, they bought their first new snack machine from Crane Co. and have purchased new Crane equipment ever since. In 2003, they hired their first route driver.

The Campbells felt the fixed schedule route system was less efficient than the product delivery systems used in other retail industries, based on their experience dealing with retail operations as a former beverage distributor.

They also realized there wasn't a good system for managing product selection in the machines. They were familiar with the concept of category management from their previous exposure to retail businesses. They felt they needed to be able to track item level sales in the machine.

Item Level Tracking Was A Challenge

They attempted to track item level sales using Excel spreadsheets, but this was very time consuming. It also required accurate and honest record keeping on the part of the drivers, which they realized was not something they could take for granted.

They asked their drivers to put core items in all the machines. But a spot check would invariably find that 60 percent of the machines did not have the cores in them.

The Campbells also realized there was no way to track the performance of the non-core items. They recognized this as a major problem, since secondary items over the course of a year represented a lot of business.

They tried to develop a more efficient delivery system by pre-kitting their delivery loads in the warehouse. But they had to rely on paper route cards filled out by the drivers, which was highly inaccurate.

"We knew what we wanted; we just couldn't make it work," Jamie said.

The Campbells decided they needed better management tools if they wanted to grow the company and be profitable. "There was no way for us to manage it prior to the handheld system," Jamie said.

In Search of New Tools

The Campbells knew from reading Automatic Merchandiser that DEX handhelds offered a way to manage item level sales by machine.

In 2002, they attended the National Automatic Merchandising Association National (NAMA) Expo in Washington, D.C. and came across USA Technologies Inc. and were intrigued by the possibility of cashless vending. Jamie did an analysis on cashless vending for one of his college business classes. In the course of this project, he learned that the USAT technology allowed an operator to view sales data from a remote location over the Internet. He recognized that remote machine monitoring (RMM) offered great possibilities for operating a vending business.

"The 'bigger fish' was the concept of knowing what the sales were in the machine without having to be there," Jamie said.

The following year, after visiting the NAMA Show in Atlanta, Ga., the Campbells fell in love with the emerging vending technologies. The only problem was that the software companies told them they needed at least five to seven routes for the technology to provide a good return on the investment in a reasonable amount of time.

To grow the company to a larger size, they needed to offer food, hot beverages, OCS and water filtration. So they invested in food and coffee machines, and they incorporated freezers and onboard power generators on their delivery trucks. They also invested in marketing literature and a Website.

In one year, the Campbells managed to land seven accounts with 150 or more people.

The company wasn't even utilizing DEX reporting, but Jamie envisioned a future where the business would be managed by RMM.

RMM, Jamie realized, would allow dynamic scheduling. But the first step was to pre-load the route trucks in the warehouse using DEX handhelds.

They realized they needed to have all equipment with the latest DEX reporting capability. Hence, they purchased only new equipment.

Investment In The Future Begins

The investment in new equipment and DEX software was a big one for a small company. Fortunately, the Campbells had a good relationship with a bank that agreed to loan them the funds they needed.

They also had a good relationship with their bottler partners. The beverage bottlers agreed to provide them with newer beverage machines. Ed noted that the company always honored its product selection agreements with its beverage suppliers, something he said many vending operators don't do.

The Campbells spoke to other operators who use DEX handhelds, and they were convinced that this was the first step to operating more efficiently. They also spoke to operators who did not use handhelds. The main objection, they learned, was that introducing handhelds was seen as too much work.

By 2005, the Campbells had a growth plan. They decided to be a vending company managed by new technology. Not only would this make them more efficient, but it would give them a unique selling proposition in their market.

While their company was still small by comparison to most companies that use DEX handhelds, they saw this as an advantage. "We were small enough to make this change doable," Ed said.

Kathleen Roemer was hired to organize and run the entire front office for the organization. Eileen Flanagan was recruited to serve a dual role as the back office manager as well as a key account manager.

The Technology Partnership Begins

After studying different software systems, they decided to invest in Crane Streamware software. The investment in DEX handhelds was fairly big for an operation with only three routes, but the company was confident they would be able to grow.

Shortly after introducing DEX handhelds in 2008, the Campbells changed the company culture and recruited new talent to work within this new system. They ran a classified newspaper ad, and filled their two route vacancies after interviewing close to 100 applicants. They hired Jim Malinowski, who now heads up the service department, and Tom Buckley, who is now a utility driver.

Mike McAteer was added as the third route driver during the summer of 2009.

After training their new drivers to use DEX handhelds, the newly formed team was able to consolidate three routes, each doing an average $250,000 in annual sales, to two routes, each doing an average $375,000. "We were working smarter, not harder," Jamie observed. "There was no way for us to manage it prior to the handheld system. We would always run out of something (on the truck.)"

The item level tracking gave them the ability to determine the best selling products in each machine. It also allowed them to accurately track what was being placed in the machines.

The Streamware software includes a sales analysis tool, which helps identify the stronger and weaker sellers. The software automatically flags the worst selling two or three items every one to two weeks. They did item level reporting for all machines: cold drinks snacks, hot drinks and food.

By reviewing item level sales in each machine, the team knew which products to double up on. This not only increased sales, but it allowed them to forecast machine fills and schedule their routes based on these forecasts. They were able to load the trucks with a more accurate idea of what the machines needed.

In addition to writing more accurate service orders, pre-kitting deliveries minimized product handling, which reduced spoilage.

The item level reporting also provided quick feedback on how well a newly introduced product performed. "It's a great way to introduce new products," Jamie said.

No More Fixed Schedule Routes

The United team did away with fixed routes. Instead, locations were scheduled for service based on when they needed service.

Prior to handhelds, machines were 10 to 15 percent empty when serviced. After handhelds were introduced, the machines were 40 percent empty. With dynamic scheduling, this percentage is approaching 60 percent.

Most locations were serviced less often under the new route system. And while this was more efficient, it did create a customer relations issue. Some customers wanted to know why the drivers weren't visiting as frequently. The Campbells explained that their software was allowing them to work more efficiently.

Pre-kitting was just as important to improving the efficiency of the cold beverage machines as the snack machines. United Vending primarily uses glassfront beverage machines which showcase more variety than the older closed front machines.

The company has separate planograms for Coke and Pepsi machines, and warehouses a total 125 beverage stock keeping units (SKUs).

They also planogram the food machines, most of which are glassfront as opposed to carousel.

While pre-kitting made their routes more efficient, the Campbells believed RMM would enable them to forecast their locations' needs with even greater accuracy. "You were only so accurate (with the handhelds)," Jamie said.

The Campbells were aware of various RMM systems. However, they wanted to stay with Crane Streamware since they enjoyed a good relationship with the company.

In 2009, they made their next strategic move: RMM. They started with 30 RMM devices on the snack machines on two of their four routes. Jim Malinowski, who had worked his way up from driver to service manager, installed the RMM devices, which send data to Crane Streamware's server via a cellular signal.

By the winter of 2010, the company put its drivers on salary while it tested the RMM devices. During the test phase, many hours were spent learning, theorizing and testing different methods and strategies. Jamie, Tom Buckley, Mike McAteer and Jim Malinowski were responsible for fine tuning the system the company runs on today.

Once they were convinced that the wireless devices worked, they began installing them on all machines on two of their routes. The impact on route efficiency was almost immediate.

With RMM, Jamie was able to monitor item level turns remotely. Instead of waiting for the driver to return and download the data, he could go to his computer and view more current data; the RMM devices send the data daily to the Crane Streamware server.

Each machine in a vending bank has a wireless modem. One of the machines in the bank has a wireless gateway that collects all the machines' data and sends it to Crane Streamware's server.

RMM Provides Better Data

The RMM data was not only timelier, but more complete.

In addition to knowing which were the top moving items in a machine, he could now know which item was the fastest seller, which was the second fastest seller, etc. This allowed him to determine product par levels in the machine with greater accuracy.

Jamie not only doubled up on top sellers, he tripled and even quadrupled some facings.

With more accurate forecasting, Jamie was able to introduce dynamic scheduling to the two routes with RMM.

The software automatically determines the next day's route schedule. Each day, a different set of locations is organized into new routes. Jamie oversees the route schedule every morning for the next day. This gives the warehouse enough time to load the trucks for the next day's deliveries.

By the spring of 2010, they needed a warehouse employee. They hired the husband-wife team of Brienne and Dan Hillmann, who work rotating schedules. The Hillmanns facilitate product receiving and the pre-kitting in the warehouse.

Machine Pulls Jump

United Vending has several locations that are scheduled for service when they are 60 percent empty instead of 40 percent empty. Average machine pulls jumped from $110 to $165, Jamie claims.

"It (the route schedule) all revolves around the first SKU (stock keeping unit) that's going to run out," he said. "You can flip flop accounts every week between different drivers."

The better forecasting accuracy allows the drivers to make one trip to the machine, and to return the truck almost empty.

In 2010, United Vending consolidated four routes to two and a half routes. Annual route volume rose from $500,000 to $750,000 on one route and to $675,000 on the second one. The two drivers whose routes were consolidated were reassigned to other tasks.

Handhelds Still Have A Place

Because the locations are scheduled for service a full day in advance, Jamie feels handhelds are still necessary on the routes for precise inventory and cash reconciliation.

Eighty percent of the machines are now being serviced less often than prior to RMM, Jamie said, while 20 percent are serviced more frequently.

RMM has been a strong selling tool for United Vending. Some customers are impressed by the ability to report sales in such a fast, reliable manner.

Also contributing to the company's success has been the introduction of bill recyclers and the new glassfront snack machines from Crane, the Merchant 6.

Cashless Vending Emerges

Positioning itself as a technology leader, United Vending has also introduced cashless readers.

The company currently has about 30 of USA Technologies ePort devices and is in the process of rolling out another 100. Cashless has proven a good selling tool along with RMM, Jamie said. In the future, he expects cashless sales to grow as more consumers use payment cards for low value transactions.

The ePorts have their own data gateways. United Vending has arranged to have its ePorts send data to Crane Streamware's server.

The credit and debit card payments must be tracked separately from the cash data.

The Campbells noted that a big part of succeeding with cashless is knowing where to install it. United Vending's strongest cashless account is a courier service, where about half the sales are cashless.

Over the next five years, the company expects to offer cashless in all of its machines.

This past year, Chris Kudryk joined the company as sales coordinator. He has upgraded the Website and the marketing literature, which highlights the company's use of new technology.

In 2009, United Vending and the YMCA teamed up to spread the message that healthy options are available in vending. Utilizing NAMA's 35-10-35 Fit Pick, United has found that healthy products do in fact sell when merchandised and managed properly. This program has been expanded and is now called "Making the Healthy Choice the Easy Choice."

A Promising Future

"We are very optimistic and we are very excited about what the future of vending holds for us," Jamie said. "We're in the middle of the beginning of the change."

The company has posted double digit growth every year through the recession.

In the next 10 years, the Campbells hope to reach $20 million in annual sales.

"We have already achieved good results," Jamie said. "We are expecting fantastic results in 2011, offering further proof that all of these concepts and technologies truly do in fact work."

Ed and Jamie Campbell have proven that new vending technology not only improves operating efficiencies, but customer service. More importantly, United Vending has proven that technology, when combined with a dedicated team, allows even a small company to offer the best possible customer service.

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