Software Providers Update Coffee Service Operators on System Capabilities

Software providers update coffee service operators on system capabilities Growth and profitability were two of the key themes at the recent Coffee Summit presented by the National Automatic Merchandising Association (NAMA) at the Crowne Plaza Hotel in Cherry Hill, N.J. Hence, nobody was surprised when a panel of software executives presented an overview of what software can do nowadays to make OCS more profitable. The panel included representatives from four companies and was moderated by Michigan State University Prof. Michael Kasavana.

First to speak was Warren Philips, president of Validata Computer & Research Corp., who emphasized the importance of ongoing software education for operators. “It (software) has evolved from a paper-based system to the most automated, integrated system,” he said. “No matter where you are in the evolution of your business, there are strengths and weaknesses of your organization.”

“Good systems will help you knit things together on a daily basis and reinforce good habits by your employees,” he said.

Areas where software can help operate more efficiently are: route scheduling, route reporting and account profitability.

Philips noted that route mapping tools have come down in price.

The benefits of flexible route scheduling include changing stops and knowing what product needs to be replaced at what rate, he said. These benefits will save the driver time and allow him or her more time for sales.

Philips said a routing program can yield a 22 percent gain in efficiency.

A route reporting program will help monitor driver accountability. “We can give route supervisors an excellent view of what happened and what did not happen on the route,” he said.

Cliff Fisher, national sales manager for MEI’s MEI/Easitrax group, said one of the key benefits a good software should provide is shortening accounts receivable days outstanding. Others include improved accountability, greater efficiency, and enhanced employee retention.

He noted that handhelds can yield an 85 percent time savings in back office activities, including accounts receivable.

RETURN ON INVESTMENT CAN BE MEASURED

“How do you deploy and implement technology with the return on investment you must live with?” Fisher asked. He said his company focuses on performance management. They do this by providing the right mix of people and technology to measure key business metrics, understand trends and gain context, allowing users to make consistently good business decisions.

MEI’s Easitrax software solution includes handhelds for the route and the warehouse, along with portable printers, forecasting tools, all underpinned by training and support.
“None of this will work without a firm commitment to success, a good plan, and well educated users consistently supported,” he said.

Laurin Miller, national account manager at Crane Streamware, said the handheld is an indispensable tool for route delivery operations. He said his company’s system supports both route delivery and pre-sell OCS operating models. The system provides account management and order taking capabilities to the field.

The system also supports product promotion in the field, which improves sales. “You can do a much better job promoting your product when you’ve got a sales person standing in front of the person rather than on the phone,” he said.

The system will also allow an operator to view a complete sales history by customer. In addition, it can flag a sales person about customers on credit hold.

The warehouse application allows drivers to take inventory on the truck and in the warehouse.

Miller said the system integrates with Microsoft’s MapPoint routing program, and can integrate with service call tracking with email dispatch.

PRE-SELL AND ROUTE DELIVERY MODELS

Mark Kronenberg, president of CompuVend, said his company’s programs can be used for both pre-sell and route delivery models. The software also allows operators to analyze profitability by customer, by sales person and by order.

Kronenberg said the reports can be viewed on a computer screen and exported to other programs, and can also be printed to a printer.

CompuVend interfaces with MapPoint, which automatically optimizes the route schedule to maximize fuel and time efficiency, Kronenberg said.

CompuVend offers onsite training and Web-based training, he added.

Asked about how the companies overcome “old school” objections to using technology, the panelists offered various responses.

Philips of Validata said “old school” is not necessarily anti-technology. He said his system can combine automated and manual systems.

Fisher said competition and profit concerns are driving the adoption of technology.
One operator in the audience noted that technology allowed him to shorten each route by one hour per day.

Consultant Rick Leffke cites need to sustain excitement with employees and customers
The big turnout at the Coffee Summit was exciting in itself, reminding many of the attendees that excitement is a driving force in sales. Rick Leffke, a consultant and a NAMA Knowledge Source Partner, addressed the importance of sustaining this excitement in his presentation, “The Coffee State of Mind.”

Leffke, president of R.C. Leffke & Associates, noted that focusing on the future is always a good tactic when involving others in building a business, be they employees, associates or customers. “We look forward to the future,” he said.

In reviewing inventions that have changed peoples’ lives, he noted, “If I can predict human nature, I can predict outcomes.”

Leffke then segued his views on change to the coffee industry, noting the opportunity to sell higher value. “You (as a customer) will pay more if you have perceived value. What you have done with coffee is you have expanded the understanding of what coffee is.”

Leffke compared building a coffee business to preparing a cup of good coffee. You need quality ingredients, the right equipment, and the right brewing process. The right brewing process is analogous to having the right business strategies.

COMPANIES MUST FOCUS ON THEIR CULTURES

Much of his presentation focused on developing a company culture that meets and exceeds customer expectations. “It (the company culture) is what defines your business and how you show up to your customers,” he said.

He then reviewed strategies for success from Ann Mulcahy, chairman and CEO of Xerox Corp. Her first strategy is to listen to customers. This is especially critical to sales. Leffke said customers like to be educated on what to buy; they don’t like to be sold.

“People do not want to be sold. They want a resource they can go to meet their need,” he said. He noted that OCS has an opportunity to do this with all of the variety now available.
Rather than you as provider telling them the picture, let them “own” the picture, he said.
In discussing listening, he noted that there is an important difference between hearing and listening, the latter being more productive.

He said it is important to create clear expectations for employees on an ongoing basis. Those who are “front line” employees need to be engaged with the customers.

The second strategy he addressed was innovation in technology, which requires investing in customers. The result of doing this will be better account retention, which brings a stronger bottom line.

Leffke quoted Mulcahy, who said retaining 5 percent more customers will add 25 percent to 50 percent to the bottom line.

EMPLOYEE ‘BUY-IN’ NEEDED AT ALL LEVELS

The third strategy is making sure everyone in the organization has meaningful interaction with customers, Leffke said. Success cannot occur without “buy in” at all levels of the company. This will result in value-based customer service and improved customer retention.

“If we focus only on the money, we lose the opportunity to create a fabric that’s fun,” he said. He gave Starbucks as an example of a company that created a fun corporate culture.

“You focus on the dream, and the money takes care of itself,” he said.

Leffke noted that 7 Eleven built its business on the value proposition of convenience, not the lowest prices. “They understand the difference between cost and value,” he said.

The fourth strategy is to know what the customers value. “It’s all about how we choose to play the game,” he said.

The fifth strategy is to exceed expectations. Leffke said 75 percent of the customers who were satisfied by a service provider still left them. Those who were very satisfied, on the other hand, were six times more likely to stay with the service provider.

FAIR TRADE, SUSTAINABLE, ORGANIC COFFEE: SESSION SPELLS OUT THE DIFFERENCES AND THE SIMILARITIES

For several years, vending and coffee service operators have been hearing about various “cause” coffee programs such as “sustainable,” “Fair Trade,” “organic,” “shade grown,” “bird friendly” and others. Because these labels carry different meanings that sometimes overlap with one another, the recent Coffee Summit included a seminar that explained these different programs.

The session, titled, “Partnering with Customers for Growth,” was led by Eileen Cooke, manager of workforce learning development at AMR Research, and Marie-Claude Dessureault, director of brewing technologies at Van Houtte Inc., the parent company of Filterfresh Coffee Service Inc.

Dessureault began by noting that today’s customers are more educated and more emotional about purchasing decisions. She said there is a lot of misunderstanding about sustainability, which is why operators should get educated about what sustainability really means and should follow a partnership approach in introducing this concept to customers. She said that programs supporting sustainability will allow customers to feel like better citizens.

CUSTOMERS WANT TO BE GOOD CITIZENS

Cooke said many customers want to support companies that are good corporate citizens. “This has a very strong emotional pull for people,” she said. She further noted that 86 percent of Americans are likely to switch to a brand if they know it is associated with a good cause and that 78 percent want companies to talk about positive things they are doing.

Because of this, Cooke said many big corporations today have entire departments focused on sustainability. “Because it is such a widely traded commodity, coffee has a huge impact on people and the environment in what is often some of the poorest countries on earth,” she said. “The simplicity of a coffee program that is green packaged has a huge impact on customers.”

Sustainability is defined as follows:

1) Capable of being sustained.
2) Relating to or being a method of harvesting or using a resource so the resource is not depleted or permanently damaged.
3) Relating to a lifestyle involving the use of sustainable methods.

FAIR TRADE PRINCIPLES DEFINED

Fair Trade is a different category. Fair Trade has been a leader in promoting sustainability. The principles of Fair Trade are:

1) Guaranteed minimum prices.
2) Fair labor conditions, including the prohibiting of child labor.
3) Direct trade whereby importers purchase from the Fair Trade producer groups as directly as possible.
4) Democratic and transparent operating practices. Fair Trade farmers and workers decide democratically how to invest Fair Trade revenues.
5) Commitment to community development, whereby Fair Trade farmers and workers invest in social and business development projects like scholarship programs, quality improvement training and organic certification.
6) Commitment to environmental sustainability, whereby harmful agrochemicals and genetically modified organisms are prohibited in favor of environmentally sustainable farming methods that protect health and preserve the ecosystem.

Fair Trade coffee is grown by cooperatives consisting of small family farms, Dessureault said, and more orders are being placed with these cooperatives each year.

Dessureault said TransFair USA is the only third party agency that is authorized to certify coffee as Fair Trade in the U.S. “The roasters are audited on a regular basis,” she said.
She noted that offering Fair Trade is a way for coffee operators to differentiate themselves from the competition. “Customers want to deal with suppliers that have sustainable policies,” she said.

ORGANIC COFFEE MUST MEET STANDARDS

Organic certified coffee is defined as organically grown according to the standards of such organizations as the Organic Crop Improvement Association. The certification is delivered in exchange for an annual fee or a percentage of the sales.

Organic green coffee sales increased 23.5 percent in 2005, Cooke noted. “Organic products are growing like crazy,” she said.

Shade grown coffee is coffee grown under a canopy of diverse species of shade trees, often on small farms using traditional techniques. Traditionally, all coffee was shade grown since most varieties are naturally intolerant of direct sun.

A benefit of using shade grown coffee is that the shade trees provide food for animals and nourish the environment.

Coffee from southwestern Mexico, El Salvador, Peru, Nicaragua and Guatemala is mostly shade grown, as well as from Sumatra, Timor, New Guinea and Ethiopia.

Coffee grown in Colombia, Brazil and Costa Rica is sun grown unless certified as shade grown.

Dessureault said Fair Trade and certified organic coffee both have shade grown as part of their criteria, although they don’t certify what percent of the coffee is shade grown.
Bird friendly coffee is shade grown coffee that is certified by the Smithsonian Migratory Bird Center.

OTHER ORGANIZATION BENEFITS

In addition to the more commonly known organizations, there are several others that are gaining popularity in the U.S.: Rainforest Alliance, Utz certified coffee, and Common Code for the Coffee Community, also known as 4Cs.

Another organization that operators come into contact with is Coffee Kids, which is not a certification, but an organization that improves the quality of life in coffee growing regions. The international organization offers families access to “micro credit,” education and community development. Despite the name of the organization, Coffee Kids is not solely designed to help children.

“You have no idea what a Guatemalan woman can do with a $50 loan,” Dessureault said. “Coffee Kids supports real projects that have completely changed these communities.”
Cooke said operators should tell their employees real life stories about people being helped by programs such as Coffee Kids. She said customers will want to join in supporting these programs.

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