Photo credit: Markee
Ten years ago, the first pioneering vending operators implemented new operational models that included pre-kitted delivery routes. In the last few years, many have also implemented dynamic scheduling on top of pre-kitting. The benefits have been proven:
1. Pre-kitting allows drivers to be 25 percent more efficient. Or said another way — operators that implement pre-kitting can take one out of every four trucks off the road.
2. Dynamic scheduling allows even greater efficiencies beyond pre-kitting, allowing drivers and operators to be at least another 20 percent efficient.
When a company goes from using no technology to implementing pre-kitting and dynamic scheduling, often four to five out of every 10 routes can be consolidated.
The old versus the new
Under the old route model, routes do not have handhelds, do not capture product level tracking, are not pre-kitted and are not dynamically scheduled. The warehouse manager/purchaser typically purchases products to fill the warehouse.
Drivers requisition products and/or pull products as needed on a daily basis to refill their trucks. Drivers use route cards for tracking inventory and cash accountability for each service. Service schedules are fixed, with each machine scheduled for service by day of the week or every so many business days.
Under the new route model, routes utilize handheld computers, capture product level data, are pre-kitted and may be dynamically scheduled, especially when wireless data is available. Trucks can be loaded for the drivers in the warehouse.
This article will examine how the roles of general manager, supervisor, warehouse/purchasing manager and route driver change under the new route model.
General manager role, old and new
In the old model, the general manager (GM) relied heavily on the basic key result indicators to determine performance and profitability. Route averages, machine per service averages and profit and loss (PNL) averages did not provide a true valuation of the inventory.
The GM had very little data to guide him as to what the root causes may be and on how to improve areas of low performance. Many companies used commission-based driver compensation to motivate drivers to improve performance and/or manage the driver’s compensation as a percentage of sales.
The new model focuses heavily on capitalizing on the available technologies. In essence, it is a game changer for the GM role. The new GM uses a data analysis and process driven approach. With the use of handheld computers and/or wireless collecting DEX data, the GM must take a data integrity champion role from day one. The typical manager will spend more time on processes to make the data collection more efficient and accurate than ever before.
Most business decisions will be based on the statistical data provided by the respective system. If the new GM is successful at managing the efficiency and accuracy of the data collection, they will reap great rewards. If mismanaged, the incorrect data will affect all areas of key performance indicators (KPIs) and, most importantly, customer service and retention. It can have a negative financial impact if the GM does not know the new system and manages data ineffectively.
The upside is that when properly managed and implemented, the new model becomes a very empowering experience for the GM. With the collection of item-level tracking, the GM can gather detailed DEX cash accountability and warehouse inventory transactions. The GM can now dive into the data to effectively manage the KPIs and the PNL.
With the vast amount of data to manage, the role requires a more analytical skill set than before. Someone who can read and understand various formats of data either directly obtainable from the system or exportable to spreadsheets will succeed. Think of it like a doctor reading a pulse of a body. If you can understand it and the data is clean, the GM will have the pulse of the business at his fingertips.
Beyond pre-kitting, dynamic scheduling provides the GM and route supervisors a great means to increase the return on each service by stretching the service cycles. However, the GM, working with his supervisors, will need to constantly measure the service data to make sure the services are not pushed too far and business is lost. It is the GM’s role to capitalize on dynamic scheduling as well as make sure the promise to the customer is kept. That promise is still clean, filled and working.
Supervisor, old and new
Under the old model, the supervisor’s role required a hands-on style of management. This is because he had little to no information to manage the KPIs. For a supervisor to get the pulse of the drivers’ performance, he had to do site visits, ride-alongs and/or wait until he had time to cover the route. It was at this time the supervisor could get a feel if the driver was filling to planogram, to par and managing the waste.
Under the new model, the supervisor, like the GM, takes a data integrity champion role. In most cases, the GM relies heavily on the supervisor for validation of the data through site audits and feedback when he covers the route.
Similar to the GM, the new model is very empowering for the supervisor. He can quickly get the pulse of his driver’s performance by just reviewing a few select reports. It is now more efficient for the supervisor to manage schedules, merchandising and waste to improve the KPIs.
Pre-kitting makes the job of covering routes far easier than ever before for the supervisor.
The learning curve for a new driver is cut in half. This puts supervisors in an empowered role. He becomes more comfortable about moving a low performing driver. A supervisor, like the GM, must have a more analytical skill set and be able to run and review reports to capitalize on the new model. He must be proficient, or at the minimum, comfortable with handheld and personal computers.
Flexible schedules: new issues
With dynamic scheduling, the supervisor, like the driver, will need to be flexible and resourceful. Not having static schedules will create new barriers to get specific jobs done.
Not knowing when the next service will occur will be an issue at times. If multiple drivers service a stop, that will create another level of specific challenges for a supervisor to overcome (i.e., providing the right keys.)
In the dynamic scheduling model, the learning curve for new drivers is longer. Even with GPS systems, it is hard for a driver to be successful without seeing all his stops during a given cycle. The training period for dynamic scheduling is somewhere between the old model, an average of four weeks, and the static scheduled pre-kit route, which is an average of two weeks.
Some companies will designate one person to do the dynamic scheduling for the entire company. Oftentimes, these roles may be filled by existing supervisors who are freed up during route consolidation. In some cases, vending operators may hire a “merchandiser” from the outside who may have a merchandising background.
Warehouse manager job evolves
The old model warehouse manager/purchaser was a simple job. They maintained par levels in the warehouse and just ordered to replenish what was requisitioned and/or pulled for the drivers on a daily basis. The hardest part was the periodic spikes and valleys created by drivers because on some weeks, drivers would slack off at filling, then the next week would pull more product. Purchases where not entered into any system at the product level.
The new model presents a paradigm change. There will be more people, transactions and areas to manage. The warehouse manager/purchaser will need to have more communication with operations than ever before.
The warehouse now has a more direct connection to customer service and operational KPIs. Seeing that orders are pre-kitted properly at the warehouse is important because each order can affect the efficiency of the driver and the customer service experience.
The warehouse may even be responsible for loading the trucks in some companies. Based on the current skill set, an existing warehouse manager may or may not be able to manage in this new environment. The skill set for the new warehouse manager/purchaser requires the skills listed on the sidebar on page 40.
Dynamic scheduling creates a very fluid demand and environment for the warehouse manager/purchaser. The warehouse manager/purchaser and his team will need to be flexible. He will need to manage a higher level of inventory and be able to fulfill any spikes in demand.
He may need to adjust work week periods from Monday through Friday to Sunday through Thursday to take advantage of Sunday’s remote data for Monday’s picks. The work hours may also need to be adjusted to picking at night, requiring the warehouse manager to oversee a second shift.
For the route driver, the old model required a broader skill set. The driver had to manage truck and machine inventories. He had to manage merchandising and processes to service each account efficiently. He had to address customer service issues such as refunds, and product requests as well. To be successful, he needed a skill set that included inventorying, merchandising, and customer service and logistics management.
The toughest aspects were inventorying and merchandising skills.
Motivating an “old model” driver is key to helping improve KPIs and the PNL. Hence, the commission-based program which incentivized drivers to be efficient, grow sales and retain customers. In the old model, the difference between a good and bad driver was huge and could make the difference in keeping or losing an account.
New model simplifies driver role
Like all other positions, the sense of urgency for maintaining data integrity is critical when introducing the new model. Especially at the driver level. The machine level data is the foundation on which all other aspects rely.
For the driver, the new model narrows the skills needed to be successful. The inventories are managed from the back end via the pre-kits. Spoilage can be reviewed and managed by the supervisor with the driver’s assistance.
Merchandising can be reviewed and managed from the back end as well. However, the driver can and should still be involved with the merchandising. Keeping drivers in the loop keeps them as part of the sales generating team.
The new model should take into account analytics from the software and include input from the driver. The driver remains the company’s customer-facing individual on a day-to-day basis.
For the driver, dynamic scheduling can be a great opportunity and a challenge. It requires patience and flexibility. Typically, drivers are most comfortable with a routine, so a new routine based on software can create anxiety.
But if a driver can adapt and work within this new model, his productivity will improve, and on a commissioned-based compensation program, the driver shares in the upside.
As companies contemplate the new model, driver compensation is a hot topic. Experience shows that some drivers “get it” and some don’t. The best drivers may have been doing a pretty good job of organizing their routes and filling machines, but the rest (80 percent) probably have not.
The new model, which relies heavily on software, hardware and clean data, is like car racing. You can buy the greatest and fastest car. But if you do not have people with the right skill sets and focus on keeping that car going and the right driver to capitalize on its speed, you probably will be heading for a wall and not the finish line.
It is imperative that at every level you provide the proper amount of training. If there is one aspect of the new model companies consistently fail at it is proper training! This is the most common reason why ROI falls short of expectations.
People are still a company’s greatest asset. People drive systems, systems do not drive people. Make sure you have the right people at every position and you will be successful in the new model and make it safely to the finish line.
Erich Markee is a veteran vending operations manager in New England and currently serves as the deployment manager for VendScreen Inc.
Glenn Butler co-founded Streamware and CTO Services. He is currently co-founder and CTO of VendScreen Inc.