To Survive in a Changing Market, Plugging Profit Drains is Only the First Step

Vending companies need a culture of excellence that incorporates cost controls and encourages outstanding employee performance. Veteran industry consultant Tom Britten examines these elements in a three-part series.

Stages of vending industry change

The vending business has passed through its first three phases -- fragmentation, shakeout and maturity, and now solidly rests in phase four, decline and beyond. I see no extinction
phase; there will always be a vending industry, albeit largely different.

Human nature indicates that most people don't enjoy ill tidings.As a result, bad news is often disregarded or discredited. However, the bad news is here, and this is no time for happy talk. Consider some of the headlines in Automatic Merchandiser in recent years:

• "The best news about fiscal 2003 for the vending industry is that it's over."
• "Industry loses another 5 points as employers curtail manpower."
• "Account downsizing hammers operators for second year."
• "Economy slows, vendors face more competitive environment."
• "Smaller work sites and rising costs slow sales."
• "Customer downsizing pulls top line down."

I think that you have two choices:

1) If you don't like bad news, get out of the vending business.
2) Accept that your job, as a leader, is to hear as much bad news as there is out there and figure out how to deal with it.

The business has changed, and you must change as well

The need to understand change in your industry may seem obvious. However, companies misinterpret clues and arrive at faulty conclusions all the time. Despite all the talk about the need for organizational agility, an astonishing number of businesses stay stuck in neutral when they need to implement new strategies. It is a business certainty that if you stay in place, the competition will run over you.

The marketplace for vending is experiencing more change than most others. Today's economic conditions and fierce competition have resulted in an environment that is markedly different from that experienced in past decades.

Your company needs to be aligned with the changes taking place. You need to have a strategy in place to do this.

In order to survive, you will have to make money at smaller accounts, achieve higher per capita sales, open new markets, introduce new products, utilize technology, sell new locations, and most important of all, you must tenaciously hold on to your existing business.

Concurrently, you must operate as efficiently as you possibly can and become absolutely relentless in smoking out waste and inefficiency.

The demise of any business is an insidious process; it may seem you're just in a slump, just a streak of temporary bad luck. Unfortunately, when this condition continues unchecked, it robs the organization of not only capital; it drains its people emotionally and they lose the will to fight.

Soon, you may find yourself in a tailspin you can't pull out of.

Going forward in a different business environment, there are two broad "must haves": 1) Excellent controls, and 2) A strategic plan encompassing a culture of excellence.

This month, I'll discuss the first item, the controls, which you can address immediately. Controls are a part of a strategic plan, but the strategic plan also includes creating a culture of excellence in the company. Next month, we'll examine ways to develop this culture of excellence.

The "It ain't broke" theory has done more to forestall progress than any other theory since the beginning of time. It needs to be replaced with "good is the enemy of great."