How to maintain inventory and pricing controls

I have always believed that there is no right or wrong way to operate a vending company, but only whatever way works for each particular operation. However, after more than 40 years of running my own vending company, I have found there are a number of things that everyone should do to make their company successful. One of the most important aspects to success is to have inventory controls in the stockroom, in the route trucks and in the vending machines. Monitoring these areas allows operators to control waste, cash and the number of SKUs they carry.

Technology is not a one size fits all

We have been bombarded in recent years with all kinds of new technology to help us achieve proper inventory, reduce waste and create cash accountability, but there are vendors who can’t afford the upgrades or have volumes half a million or less, which might not warrant the investment. This article is for them.

If an operator is planning to continually grow his or her business, then technology is great, and he or she should get on board now and make handhelds, machine monitoring and other innovations part of the strategy for growth. For those finding it hard to grow, or who can’t afford to incorporate all the new technology yet, it is still possible to have very tight controls of inventory and cash by doing some very basic things.

How to start asset management

The first thing an operator needs to do is to take inventory of the stock room every week, on the same day, by product and price point. Make sure the route drivers are charged with the product they take out of the stockroom on a daily basis by product price point. Operators should also make every route driver take inventory of the product they have on their trucks on a weekly basis, on the same day as the stockroom, also by price point.

Understanding price points

What do I mean when I say ‘by price point’? Start by taking a look at the vending product list. Let’s say there are five different price points. For example, all gum and mints are one price, all candy (and I would include crackers in this category) are another price, all same-size chips are a price, all long shelf life snacks like cookies are one price, and all fresh pastries with a short shelf life are one price. That’s a total of five different price points. When buying new products, operators can chose those that fit into these price point categories.

Price points at the point of sale

If not already doing so, operators must simplify the vending machine and create the five price points out on the street. For instance, let’s take a machine with five shelves each with 35 slots, including five for gum and mints. In our example, an operator could divide the slots this way: eight spirals for chips, seven spirals for long life, five for fresh pastries, five for gum and mints and 10 for the candy category, which includes crackers. Have each category filled to capacity.

Also, don’t neglect the changer fund. Create an inventory for that in each machine as well. At each service, the changer should get filled to that pre-determined level.

Creating a service card

At this point, I recommend using a service card. It should have six columns, one where the driver can write the date the machine was serviced and then one for each of the different price point categories along with the inventory for that price point in that machine. When the machine is serviced, the driver will fill in the date and how much of each product (based on the price point category) was placed into the machine to completely fill it. These numbers are considered the sales for that service. The money collected should equal those sales figures. In order to make sure that the sales figure equals the cash collected, the driver needs to put money back into the coin box for any slots left empty so it will equal the selling price of that product.

Operators will be able to easily checkout the routes. Start with the truck inventory, add the product requisitioned during the week, next subtract the ending inventory and finally, multiply the amounts used by the price points to match against cash collected. It also makes it easier to check the machines behind the drivers to see if they are filling the machines correctly and if the cash in the machine, at the time it’s checked, matches the sales.

Adhering to this method will produce not only better control of product inventory, but also create a culture of accountability for employees.

Vending management software certainly has a place in the vending operation, but even without it, it’s possible to have tight asset control. Categorizing products by price is an essential piece to keeping a well-run stockroom and vending machine, as well as making sure there’s cash accountability at the point of sale.

Dominic Finelli is a 43-year veteran vending operator in the Washington D.C area. Finelli can be reached at dom@askfinelli.com.

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