In past articles, we have explored topics such as cashless technologies, software systems, and DEX while touching on remote monitoring (wireless) systems. In this article, my goal is to explain (in layman’s terms) how these technologies interact and can work together.
The good news is that standards have gotten better, and the benefits of utilizing technology have been proven by a number of operators throughout North America. The bad news is that it is often very difficult for operators to make sense of it all, and issues with systems not being integrated frustrate everyone in our industry.
Generally, all the suppliers strive to provide solutions that work together, but their priorities are driven by the demand from operators and bottlers. Our industry standards provide a framework with the DEX and MDB protocols.
Let’s examine remote monitoring, back-end software, front-end software, and closed and open cashless systems in greater detail.
REMOTE MONITORING SOLUTIONS
Remote monitoring solutions allow the operator to communicate with their vending machines remotely. The systems available today use cellular modems, Ethernet, or phone lines to allow machines to “call home” at night or during the day to report inventory levels, machine fault conditions, and open cashless system (credit card) transactions.
The same technology is widely deployed in ATMs and kiosks to enable cashless transactions and let companies best manage their remote assets.
For operators, the benefits of remote monitoring are to service machines more proactively (knowing when to service a machine and what to bring), minimize downtime (addressing an unplugged machine or bill jam), and take open system credit card transactions where a connection is needed to authorize the transaction.
In addition to these benefits, “two way” solutions can change prices at a machine remotely or change prices on a schedule dictated by the vending account.
Remote monitoring data needs to be shared with a “front end” system to provide benefits to the operator.
Back-end software solutions are the Enterprise Resource Planning (ERP) systems used by vending companies today. They provide everything a vending operation needs to run and account for their operations, including: cash control and accountability, inventory accountability, profit and loss analysis, billing support for OCS or subsidy vending accounts, and commissions and sales tax accounting.
Large companies often integrate their back-end vending software into their accounting systems.
Front end software helps the operator optimize route service schedules and make sure that the right products are in a machine. Many vending operators still allow drivers to choose product selections and don’t pay close attention to service schedules, resulting in lower top line sales (due to bad product mix and sellouts) and unnecessary labor (due to servicing machines too often). Good front-end software can solve both problems.
Front-end solutions are available from the software providers and from remote monitoring providers, and are available as software installed at the operation, and Web-based solutions. Either way works, and combining remote monitoring with front-end software can give excellent results.
OPEN CASHLESS SYSTEMS
Open cashless systems (like credit cards, or student or employee identification systems) can increase top line sales by offering a more convenient form of payment to the consumer. The card associations (Visa, MasterCard, American Express, and Discover) have a huge focus right now on enabling cashless transactions in vending.
The fees for taking credit cards at vending machines are still challenging for machines with lower-priced products, but the associations are working to provide a model that works in vending. The next generation of consumers (high school and college students) are increasingly becoming used to a cashless world, and the vending industry needs to provide solutions that are convenient, especially for these younger consumers.
CLOSED CASHLESS SYSTEMS
Closed cashless systems (stored value cards) are great for closed environments where the consumer is known and cash may be an inconvenience. As examples, certain prison locations do not allow cash in vending, and many college campus environments use a proprietary cashless system for purchases.
At certain accounts, a closed cashless system is required to get the business and is a benefit to the consumers at the location.
The table on page 22 provides a summary of the different technologies available, and shows how they benefit the operator and end location, and the vending consumer.
STRATEGIES TO MAKE IT WORK TOGETHER
If you plan on utilizing technology in your operation, the first step is to make sure that the vending equipment you are planning to use is compatible with your software system, cashless system, or remote monitoring solution.
There are two NAMA standards that you need to be aware of.
MDB (Multi Drop Bus) is the standard that allows most modern payment equipment to connect to the vending machine and communicate with the vending machine controller (VMC). Most cashless systems and some remote monitoring solutions require that a machine support MDB.
DEX (data exchange) is an audit standard adopted from retail that allows a vending machine controller (VMC) to communicate with handheld systems and remote monitoring systems for product sales and cash audit data.
Both protocols are supported by most machines made in the last 10 years, though there are exceptions. It is best to consult your software, remote monitoring, or cashless provider to ascertain compatibility. Oftentimes, firmware upgrades are available for machines from the manufacturer that will assure compatibility.
There are software providers and remote monitoring providers that provide dynamic scheduling, pre-kitting, and merchandising – but that doesn’t mean that they will work together.
HOW TO MOVE FORWARD
Deciding how to proceed here depends on many factors, including your current size, and the capabilities of the providers that you choose.
Some back-end systems can accept remote DEX data from any remote monitoring solution that can provide the DEX data, and will do pre-kitting and dynamic scheduling using this data. Some companies are utilizing a few different remote monitoring solutions and feeding the data into their back-end system.
Some remote monitoring systems can provide Web-based pre-kitting and dynamic scheduling for all machines that are equipped with their remote monitoring solution, and they offer an option that will synchronize the data with various software systems.
If you are planning on deploying remote monitoring on all your machines, and the remote monitoring solution you choose has enough functionality to run your business, this is a viable option.
Other companies may choose to deploy remote monitoring only on certain machines, and in this case, you need a software solution that will integrate with the remote monitoring solution(s) you deploy, and keep everything running across your operation.
CASHLESS SOLUTIONS AND RECONCILIATION
Open and closed cashless solutions provide a few challenges to opertors, but the DEX and MDB standards supported in most modern machines provide everything that is needed to make these solutions work in your operation.
The major challenge facing vending operators when using either closed or open cashless systems is reconciling cash when some of the transactions occur via the cashless system. This should not be an issue if you are using DEX and your back-end software system can separate the “card cash” data in DEX from the coin and bill information.
Your cash reconciliation procedure should compare cash to DEX cash, and product reconciliation should be done using the total item level sales reported by DEX to total cash and products removed from the truck inventory.
The second challenge is reconciling the cash you receive from the cashless provider to what is expected from DEX reported in the cashless fields. In many cases, this process has to be done manually, but I am confident that better solutions to this problem will emerge as cashless becomes more widely deployed.
CASHLESS AND REMOTE MONITORING
Can open cashless systems and remote monitoring systems use the same network?
If you are considering an open cashless solution or deploying remote monitoring, you have probably wondered if both systems could run using the same network and “box” in the machine. Some companies provide this capability today, and some can send DEX data to a software system to be utilized for front-end optimization.
I believe that most companies providing credit cards solutions or remote monitoring today realize that the only solution that will become widely adopted by most operators has to provide both features and be fully integrated with a software solution.
WINNING NEW ACCOUNTS
The best time to bring up technology and its benefits is when soliciting new accounts. In many markets, there are operators today that are taking the focus off of low price and high commissions by offering a better end user experience: new machines, better selection, better payment options, and a promise of better service through remote monitoring.
Offering a well thought out and integrated offering is the key to winning the account at a price that works for you.
CHANGE IS COMING
As the demographics of the North American workforce continue to change, the vending channel is adapting. Many vending installations are serving a professional, and less cost conscious consumer, where premium service and selection are more important than the lowest price. Consumers are looking for variety.
Healthy snacks, juices, and energy drinks can command higher prices and better profit margins, but people don’t want to spend $2.50 one quarter at a time. Cashless technology and bill recyclers are much easier for them.
There is no question that the future of our industry rests with technology that improves efficiencies for the operator along with new value for both the location and the end user.
Existing tools can enable operators to initiate change.