Vending operator/manufacturer thinks outside the box

Multi-max of San Diego, Calif. manufactures smart vending machines used in mid-sized offices and factories throughout the Western Hemisphere, the Pacific Rim, Asia and the U.K. These software-driven units forecast inventories and track the buying habits of individual employees using their company-issued debit cards. Founded in 1995, Multi-max sells its machines to vending operators. It also owns and operates Corporate Refreshments Services, a refreshment services operator serving over a thousand machines.

The sophisticated software in Multi-max equipment also protects the machines against product or cash theft, giving the company a competitive edge in Mexico, Central and South America where vending machine break-in is commonplace among low-income workers. That’s why Coca-Cola Bottling Co. of Mexico and other large south-of-the-border firms installed thousands of Multi-max machines.

In his initial 28-year career as a software developer, Mark Miller, president and CEO, had virtually no contact with or direct knowledge of the vending machine industry. That ended in 2002, when he was hired as an outside contractor to write software for a new generation of machines.

“Being an industry outsider gave me a distinct advantage,” Miller said, “I was able to think outside the box because I wasn’t married to existing vending machine technology.” Two years later he did join the industry by becoming an operator and by 2008 owned 400 machines. Today, his personal holdings now number 750 machines. It was obvious that the CEO thought enough of the company to become a stockholder as well, and now holds a sizeable stake of company equity - though not majority ownership. Miller does retain controlling interest of its Corporate Refreshments Services subsidiary.

However, even with the introduction of Miller’s new software, it wasn’t clear sailing. “When we got to the manufacturing stage of our new machines, our assembly costs were indeed lower and performance was greatly improved, but delivery problems persisted,” he said. “This was due to our limited leverage with our circuit board assembly contractor who understandably put larger-volume customers at the head of the line. The only way this issue could have been avoided was to tie-up $200,000 of working capital to retain a year’s worth of assembled board inventory. For that kind of money, we thought we could buy the equipment to assemble boards in-house. And that’s exactly what we did.”

Manncorp equipment was selected, “because that company, based in suburban Philadelphia, Pa., and San Diego, came in with a turnkey line consisting of an automatic stencil printer, a pick-and-place, reflow oven and wave solder machine – all for much less than what other guys were asking for their pick-and-place machines alone.”

“The benefits of our move to in-house automated surface mount printed circuit board assembly were dramatic and proved Manncorp’s contention that any OEM can and should do it because the savings are just too great to ignore,” Miller said. “Not only did we reduce our final board costs by 75 percent, we speeded our manufacturing cycle from six months down to just three or four weeks. Our added labor consists of just one new employee. With our latest-generation products, below-market costs and as-promised deliveries, we soon became a major source for vending machines – especially in Mexico, which until 2008 accounted for almost 80 percent of our sales.

The recent recession took an enormous toll on vending machine sales and the products they dispense. At the peak of the downturn, Multi-max endured heavy losses, especially in Mexico which was hard hit by business closings -- not only due to the economy, but to a major swine flu epidemic and devaluation of the peso. Was it time to throw in the towel? “No way!” was Miller’s response. What justified his optimism are significant upticks within the past two years from growing U.S. sales and exports to The U.K., Japan. Canada, South Africa and smaller countries like Guatemala and Columbia. Yes, even Mexico is coming back strong.