Monumental Vending Raises The Performance Bar Using Technology In Greater D.C.

Launching the business in 1991, partners Craig Kushner and David Gordon established the first operation to have DEX handhelds on all their routes. Technology has proven a big competitive advantage.

In 1991, business partners Craig Kushner and David Gordon started Monumental Vending, Beltsville, Md., with one vending machine placed in a hotel in Washington, D.C. Fourteen years later, Monumental Vending Inc. is one of the largest independent vending service providers in the Greater Washington, D.C. area with more than $10 million in sales, and continues to post double-digit sales increases annually.

"We are fortunate to have recognized from day one that the most important factor in any successful business, long-term, is having the right people in place and creating an environment that fosters employee dedication to performance," said Kushner, co-founder of the company.

"Our formula for success is fairly simple: Our people plus our technology equals better service and happier customers," added Gordon, co-founder.

As students of accounting, business management and economics at the University of Maryland, the pair came across various ideas about how to build a company.

One popular theory they chose to ignore is that small businesses should wait until a new technology has proven itself before investing in it.

Many business veterans believe that jumping too fast into a new technology may result in a longer learning curve, and that the investment makes more sense at a later time when the application is better understood. Many vending operators adhere to this philosophy today.

Kushner and Gordon, on the other hand, opted for the converse of this theory, which holds that the early adopters of technology are able to use it as a competitive advantage, in spite of a potentially slower learning curve. This theory made sense to them, given their philosophies and commitment to developing sustainable competitive advantages.

Recognizing DEX Benefits

Kushner and Gordon recognized the benefits that digital exchange technology (DEX) offered to the management of a vending operation. Monumental Vending is considered by many to be the first operation in the country to become "fully-DEXed," meaning they were the first to have all of their vending machines and routes tracking machine transactions via DEX handheld computers.

The company's early mastery of DEX technology not only gave them a competitive advantage, but also superior operating efficiencies.

Monumental Vending has set the standard for other operators throughout the country interested in adopting DEX technology. Sodexho Vending Services, LLC, one of the nation's largest vending management companies, uses Monumental Vending as a model operation in setting performance standards for its vending partners nationwide.

"Part of our job is accountability for our clients, and technology allows us to do that," said Mike Ryan, president of Fort Lauderdale, Fla.-based Sodexho Vending Services, LLC. "I look to them (Monumental Vending) as a flagship operation for anyone we're looking to do business with."

Auspicious Beginnings

Kushner and Gordon were just getting started in their careers in 1991 in the Washington, D.C. area after graduating from the University of Maryland. Kushner earned a degree in accounting while Gordon majored in economics.

Kushner, working as an accountant at KPMG, relied on vending machines for sustenance when he was burning the midnight oil preparing tax returns during the tax season. He and his fellow accountants often became frustrated when the vending operator failed to keep the machines in the cafeteria stocked.

He began discussing the possibility of starting a vending business with Gordon, who was working in his family's construction company. They studied the vending industry and became intrigued.

"We recognized that it was a very large industry, and that if you were able to provide good service, there is an opportunity for you," Kushner said.

Duo Does Due Diligence

They purchased a snack machine and placed it in a business owned by a family friend. The results were encouraging. They attended vending conventions and visited a local equipment distributor. They learned that technology was offering more efficient ways of operating the business, and that it would allow vending operators to better meet their customers' needs.

Keeping their day jobs, Kushner and Gordon launched their vending business on a part-time basis. They networked with friends and associates, and were able to place a handful of machines. They looked for machines to do $100 per week.

One day, out of the blue, an acquaintance who happened to be a high school principal asked them to place a snack machine in his school.

An Early, Lucky Break

Kushner and Gordon knew from their research that most secondary schools did not have snack machines, but they didn't know why this was so. They reasoned that if the machine didn't pan out, they could find another home for it. So they placed the machine in a hall of the school just to see what would happen, and were pleasantly surprised by the results.

Believing they had stumbled upon an opportunity, Kushner and Gordon quit their regular jobs in 1993 and began calling on high schools. They simply told principals about the positive experience of the school they were already servicing, and many principals were interested. They viewed it as another source of revenue. "We had no competition," Gordon recalled.

Working out of Kushner's garage, the duo signed on as many schools as they could service themselves.

It wasn't more than a year before they needed to rent a storage facility and bring on additional help. This was a critical stage for the company.

Early Focus On Controls

Being an accountant, Kushner understood the importance of tight financial controls. While this is true in any business, he believed that it was particularly important in vending since it is a cash business.

Prior to hiring their first route driver, Kushner and Gordon purchased an accounting software system that kept track of service schedules, commissions, accounts payable and inventory. They came across this basic system at one of the vending conventions they attended regularly.

Since founding the company in 1991, they knew employees were a major key to success. Hiring and training talented and committed people is one of the fundamental foundations to Monumental Vending's growth and business achievement. Their first hire was a route driver at another vending company who was not happy where he was.

Kushner and Gordon learned from continuing education seminars about the need to find committed people, and that finding them was never going to be easy. They made it a point to look for people from within their own ranks as much as possible.

Quest For Committed Employees

Meanwhile, they sought out as much continuing education training as they could. Besides attending convention seminars, both attended the Young Executives Seminar sponsored by the North Carolina Vending Association. In addition, Kushner joined the Young Executive Committee while Gordon enrolled in the Young Presidents Organization. These are programs where executives meet regularly with other executives in non-competing industries to share strategies and learn from one another.

They eventually realized that to grow the company, they needed to expand beyond school accounts. School accounts had their advantages; they were captive locations, predictable workloads, and high-volume accounts. However, they were seasonal, which made it challenging to hire people on a full-time basis. There weren't a lot of people who wanted to work only nine months out of the year.

Search Begins For A Point Of Difference

To compete in the more traditional vending market, Kushner and Gordon knew they needed to find a point of difference. The traditional market was highly competitive. They knew that competing on price and commission was a recipe for failure. But they also knew that technology was evolving, promising new ways to serve customers, and that most operators were reluctant to embrace it.

In the mid-1990s, vending product manufacturers and some software suppliers were touting the benefits of category management, a system that simplifies product selection at the route and warehouse levels and enables management to control the machine menu.

Some vending software companies were also talking about electronic cash audit, which allows the driver to download cash totals from the coin mech and bill validator using an electronic data collection device.

All of these improvements relied on the ability to pull data electronically from the machine. This was a slowly emerging technology in the mid-1990s, and very few operators were even paying attention to it.

"Nobody had succeeded in implementing a DEX program companywide," Kushner said. He and Gordon reasoned that if they could do this, they would have a unique attribute to share with prospective customers.

DEX Challenges The Industry

This was no small goal, as any vending operator who was following the evolution of DEX was well aware. Only the newer machines included DEX ports in their circuit boards, and machines from different manufacturers did not report DEX data in uniform data streams.

It was nearly impossible for vending software to gather the data from different machine models in a useble manner. The only way to achieve data uniformity was to install a DEX audit box in many of the machines, and this was a costly proposition.

But Monumental Vending, having been launched in 1991, was in better shape than many vending companies because most of its machines were of recent enough vintage to include DEX ports. "We had an enormous head start over other companies that chose to follow up on this endeavor," Gordon said.

The duo had another advantage as well. They had a friend, Mike Butz, who worked for one of the software companies that was trying to develop DEX software. That company, Streamware Corp. (now known as Crane Streamware), was developing a DEX handheld system and was looking for vending operators who were committed to working with DEX.

Streamware understood the benefits DEX promised the industry, but in order to develop products that operators could implement, they needed to work with operators who were willing to test prototype software. This was a time commitment that most vending operators weren't willing to make.

At the time, Streamware and other software providers were working with equipment manufacturers on standardizing DEX protocols.

"We wanted to succeed, and they (Streamware) wanted a company to point to as a success," Kushner said. "They knew if we could make it work, they could sell the product. It was something we needed to do to move our company forward."

Establishing Employee Support

Kushner and Gordon met with their employees and explained the direction they wanted to take the company. They explained that DEX was a new technology that needed to be tested before it would make the company more efficient.

They told their drivers they would implement DEX one route at a time, and that as soon as a driver was able to report cash totals electronically, that driver would receive a bonus.

The first step was to ascertain the level of DEX for every machine in the field. Some machines needed DEX retrofit modules.

"No one had made a commitment so that every machine was DEXed," recalled Glenn Butler, vice president and chief technology officer at Crane Streamware. "They (Monumental Vending) had more new equipment than your average company."

Butler spent a lot of time learning how each of their machines reported DEX data. If a machine did not report a certain data element the way other machines did, he needed to replace the memory chip in the machine. There were also some pieces of equipment that did not come with the necessary DEX cable attached; hence, the cable had to be ordered.

There were also machines that did not report the level of detail as other machines. These needed to have retrofit DEX modules.

Kushner described the process as "enormously challenging." Each route took four or five months to have all of the machines capable of reporting DEX in a uniform data stream.

Once this was accomplished, management focused on implementing electronic cash audit. Electronic cash audit is only one benefit DEX technology offers, but it is one that provides an immediate benefit: route cash accountability.

Electronic Cash Audit

The handheld automatically reads the cash totals from the coin mech and bill validator. The driver simply downloads the data with a handheld, collects the cash in the cash box, and at the end of the day turns in both the cash and the handhelds. There is no need for the driver to record meter readings.

"With DEX, you know how many coins are in the coin box and how many bills are in the stacker," Kushner said. With electronic cash audit, the only reason for a variance is when a coin or a bill gets stuck in the changer or validator.

Once a route's machines were DEX ready, a supervisor spent two weeks in the field with the driver. Then the driver was on his own.

At the end of the first week, the supervisor sat down with the driver to review overages and shortages.

Another benefit DEX technology offers is the ability to download column-level sales, also known as line-item reporting. This enables a company to monitor the sales of all line items on a daily basis, and use this data to menu the machines according to their own individual sales history.

The software includes a variety of reports that allow management to analyze sales on an individual machine basis, on a route basis, and on a company basis.

Line Item Reporting Creates Benefits

Kushner believed the benefits of line item reporting would be every bit as important as cash auditing. It would allow the company to menu all machines based on that machine's sales history.

Once the machine's most profitable menu was uploaded into the system, the driver could simply call up that menu on his or her handheld. The company would be able to control product selection at the warehouse instead of relying on drivers to select products.

"When taking it out of the driver's hands and putting it in control of management, we can better decide based on the machine's history what to sell," Kushner said.

By controlling product selection in this manner, the company was able to pare its snack and soda SKUs (stock keeping units) from 200 to 84, Kushner said.

Drivers inventory their trucks every week to make sure the physical inventory matches the handheld reports.

Column level sales reporting has also allowed the company to utilize another efficiency known as "pre-kitting" or "pre-packing." The labor savings have been significant.

Every evening, the system automatically prints route loads for the next day's deliveries. The warehouse crew packs the bins and the drivers simply load these bins onto their trucks in the morning. Drivers spend no time walking through the warehouse pulling products.

Software Determines Par Levels

The software system determines the par levels for every product. The par levels are based on an average from the previous six trips. By carrying the right amount of product, the driver does not need to go to the machine, count what's needed, and go back to the truck to get it.

The trucks typically leave the warehouse full in the morning and return empty at the end of the day.

The routes that have implemented this system have witnessed a 40 percent productivity gain, Kushner said. "The efficiencies are tremendous."

Prekitting does add to the warehouse workload, he said, but this is a lower labor cost than the route labor.

Locations with highly variable sales, such as hospital emergency rooms, presented a challenge since machine inventory needs are difficult to predict. To address this, Monumental Vending utilized remote machine monitoring.

They installed cellular phone transmitters from Montreal, Quebec-based DigiVend Systems Inc. The transmitters regularly send data over the Internet to the main office, where it is used to compile orders for the next delivery. To date, there has been no problem with cellular signal reliability.

Technology Facilitates Company Growth

The technology has given the company excellent control of its cash, inventory, product selection, and route labor. It has allowed the company to expand beyond the critical 7- to 10-route size. This is the point at which vending companies generally enjoy greater economies of scale.

But improving operating efficiencies is only one purpose of the technology. It has also improved customer satisfaction. The company has received accolades from customers who are impressed with the fact that the machines are always well stocked with the most popular products.

Many customers also appreciate the detailed sales reports the company provides.

Line item tracking has also made it easier for the company to address rising concerns about nutrition. Because the market for healthy items is so limited, many vending operators are hesitant to get into it.

Monumental Vending, by being able to track a product's performance quickly and accurately, has not hesitated to target that elusive yet important health-conscious shopper.

This past year, the company launched its "Healthy Initiatives" project under the direction of Ben White, operations manager.

"We are in the seat of the federal government, and initiatives on health care and obesity initiate from our town," White explained. "We have to be out in front of the issue. Obesity has become a large concern."

To Monumental Vending, this need represented yet another way for the company to differentiate itself from the competition.

Healthy Eating Initiative Begins

While much of the public is clamoring for healthier options, vending and foodservice providers have often hit a brick wall when trying to define a healthy product. To overcome this challenge, Monumental Vending enlisted the services of a company that designed a broad mix of options: low-fat, low-salt, low-carb, sugar-free and organic. The company, Healthyvending.net, has a whole array of products that meet all of these definitions, and point-of-sale graphics that draw attention to them.

"We're trying a sampling of items that cover a wide variety of dietary needs," White explained. "People's concept of 'healthy' differs." Products carried include Snyder's Veggie Crisp, Pirate's Booty from Robert's American Gourmet, and Stacy's Pita Chips.

White regularly shops the organic food supermarkets to see what else he can find for the program.

Monumental Vending has determined, based on a machine's sales history, how much of each machine should be allocated to healthy selections. These alternatives go on the left columns of each snack machine.

Software Enables Healthy Options

Line item sales reporting ensures that these offerings will not undermine a location's sales, White noted. About 20 percent of the real estate in any machine is occupied by slow movers. Hence, there is more than enough room for healthy alternatives.

"In many instances, the person who isn't going to eat a candy bar won't eat anything else that isn't healthy," White noted. "We're trying to gain that non-traditional vending customer."

"We offer a healthy balance. We then tailor that balance by location," White said.

To date, this program has been most successful in white collar accounts, followed by government accounts, then schools.

Response to date has been promising. "The clients are thrilled," White said, regarding the location managers. And the consumers? "The consumers are beginning to purchase them out of the machines."

The company has even placed dedicated low-carb vending machines from Low Carb Vending LLC in some accounts.

Technology, People and Success

Kushner and Gordon are most proud that they are able to make good on their mission which is, as stated on their marketing materials: "Our people plus our technology equals better service and happier customers."

They have paid special attention to bringing in the right management group. "Having experience doesn't necessarily make a good driver," Kushner said. "We're built on qualified people with outside industry knowledge."

Ben White was a trainer at the Dale Carnegie Institute before coming on board as operations manager.

John Street was a customer service rep for a local hardware chain who rose from route driver to customer service supervisor.

Sera Bezabeh was human resource manager at Marriott International Inc. before taking the position of human resources director. She oversees the company's formal training program, known as Monumental University.

Gil Lopez was a longtime purchasing manager at a janitorial supply company before taking the role as purchasing manager.

One exception is Tim Snead, director of sales, who brought 20 years of vending experience from PepsiCo.

Another is Mike Butz, who joined the team in 2001 to oversee the expansion into OCS. Having been director of sales at Crane Streamware, Butz was intimately familiar with handheld OCS benefits. He believed that many OCS operators were slow to utilize the benefits of state-of-the-art OCS software.

Expansion Into OCS Begins

Because OCS requires more personal client interaction, Kushner and Gordon had long believed that to succeed in the coffee market required a dedicated approach. They recognized a successful venture into OCS was going to be more involved than adding a product line and new equipment to Monumental Vending's menu of services.

In January 2002, Kushner and Gordon partnered with Butz to create a new company named Peakland Coffee Service. Operating as a sister company to Monumental Vending, the new enterprise allowed the team to further extend their "people, technology and service" focus into the Washington, D.C. metropolitan marketplace.

Client expectations for OCS have significantly evolved in the Washington, D.C. area as the caf' culture has developed.

Recognizing the need to provide a higher level of service along with new brewer technology gave Peakland Coffee Service an opportunity to capitalize on a changing market.

After having spent several years on the management team of Streamware Corp., Butz recognized that the handheld computer software solution would provide a significant competitive advantage for the new company.

The handheld computer gives the OCS driver complete account information, including par levels and pricing at the point-of-sale. The driver can call up past sales along with a complete list of what's available in his truck, and print an invoice on the spot.

The handheld is downloaded in the warehouse at the end of the day and orders are automatically made for the next delivery.

Butz, Kushner and Gordon all completed the NAMA Quality Coffee Certification program, an intensive training course that includes education in brewing, temperature and extraction. All three feel the training has enhanced their understanding of coffee and their ability to educate customers.

"Demonstrating to prospects our knowledge of coffee, the brewing process and the technology involved in delivering an exceptional cup of coffee is a necessity in today's competitive environment," said Michael Butz, president of Peakland Coffee Service. "The NAMA Quality Coffee Certification program has provided our sales team with a strong foundation for that discussion."

Rather than create a new brand through a private label coffee, Peakland signed an exclusive distribution agreement with a local premium roaster with an extensive retail presence in the Washington, D.C. area.

Based on existing market conditions in 2003, Butz decided to primarily offer digital airpot brewing systems and the Gevalia portion pack single-cup brewer. "Clientele in the Washington market simply will not accept glass-bowl pour-over brewers," added Butz. "Our equipment offerings are aligned with the expectations of our customer base."

Butz sees the new crop of pod brewers offering better selection and better technology while improving upon the quality of the finished product when compared with existing portion pack brewers. "We see a sizable opportunity here," said Butz.

Branding The Company

When Monumental Vending implemented column level sales reporting in vending, they learned from the sales reports that the name brand products were the strongest sellers. This got Kushner and Gordon thinking about the importance of branding their own company.

They recently hired a marketing specialist to redesign the logo, the brochures, the website, the uniforms and the vehicles. VisionNorthAmerica.com, founded by Joe Preston in Bethesda, Md., has designed marketing solutions for Fortune 500 companies.

"It's so refreshing to work with a client who understands that technology and customer service are paramount to distinguish yourself from the competition," Preston said of Kushner and Gordon. "By creating a brand identity, they're able to attract more clients and generate new business. It's appropriate for the vending operator to come in with a high caliber image and a strong brand."

The company website is now better organized and features professional photography.

In the near term, Kushner and Gordon want to continue to grow at the same rate as they have in the last few years. They recognize their biggest challenge is to continue to develop a strong team of associates. As long as the staff is capable of delivering the product, their company will prosper.

"Every plateau the company hits offers a new set of challenges," Kushner said.

Recognition From A National Operator

One enviable accolade is that Sodexho Services Inc., one of three national vending companies in the U.S., utilizes Monumental Vending to service its own corporate headquarters in Gaithersburg, Md. Sodexho Services has route operations nationwide, but not in the D.C. area.

Monumental Vending's success in implementing DEX software so impressed Sodexho Services' management that Sodexho has used the same software supplier for its own vending routes.


Operation Profile
Name: Monumental Vending Inc.
Headquarters Location: Beltsville, Md.
Founded: 1991
Owners: Craig Kushner, David Gordeon
Number of Routes: Not revealed
Number of Employees: Not revealed
Annual Sales: $10 million+

Loading