How to find profits in telemetry data

Over the past decade, our industry has done a tremendous job building data collection systems to efficiently operate and manage thousands of vending machines. I applaud the hard work and dedication of everyone who has advanced our industry from the era of paper tickets to modern-day telemetry and vending management software. Companies have employed armies of installers, managers, drivers and office staff to move technology forward. In return for their efforts, operators have received virtual mountains of data. Billions of transactions populate databases around the country. However, has this push toward automation resulted in relevant returns? Does the collection of all this data really make for better service, happier customers and a healthier bottom line? What benefits can operators expect to receive for embracing our computer driven society?

I, for one, am a firm believer in the data driven organization. I think companies who use data for continuous self-improvement have a tremendous advantage over companies that don’t. The old adage, “That which we measure, we improve” is greatly assisted by computer collected data. However — the sheer amount of data streaming into vending companies can become daunting, confusing and even counterproductive to customer service and efficiency efforts. Building better operational systems through the analysis of data requires teamwork, common goals and an enthusiasm for success. I think a company willing to systematically mine its data will find not only profitability, but improved working conditions as well. I see improvement emerging from four “mineshafts” of efficiency: cash accountability, sold out management, spoilage reduction and vend visit efficiency.

Before we begin dragging nuggets of profitability out of our database, we must first confirm our data integrity. Any computer science grad will agree that there is a primary rule for working with data: Garbage In — Garbage Out. Once we know our input data is trustworthy — let the data mining begin!

Data integrity begins with staff

Tackling data integrity involves the entire operating team. Drivers as well as warehouse and office staff all have important roles to play in the development of quality data. Each department must do their part to help their fellow employees succeed. Drivers, for example, are primarily responsible for accurate ending inventories. Each vend visit is an opportunity to make sure the physical quantities on hand match the theoretical amounts in the handheld. Drivers who verify inventories each and every vend visit make their workdays significantly easier than drivers who ignore the importance of quality data collection. Accurate inventories create accurate pre-kits. Accurate pre-kits make filling machines quicker and easier. Quicker and easier vend visits make for quicker and easier days on the road. Just 45 seconds spent verifying an inventory can save hours of extra work for a route driver every single week.

Drivers, of course, are not the only employees who should be concerned with accurate information. Warehouse staffs are also well served when they understand how accurate pre-kit orders affect the entire company. Accurate pre-kit orders result in a higher percentage of completely filled machines. Vend visits with accurate pre-kit orders lead to lower amounts of returned product. Lower returns boost morale throughout the warehouse, and quality pre-kits lead to more accurate warehouse ordering. Properly stocked warehouses send out fresher product which entices consumers to purchase more. The benefits of quality data are seemingly endless!

Office personnel responsible for data management responsibilities also have their own important role to play. Dispatchers and/or database administrators should be the primary guardians against excessive sold-outs and spoilage. Correct par levels make a big difference! Proper schedule management drives route efficiency and can increase the overall level of customer service. Low spoils and low sold-outs create machines that consumers look forward to using. I believe what’s written on every box of M&M/Mars products, “Rotate Product — Freshness Sells!”

Four mineshafts for profitability

Once data integrity becomes a priority, the company can begin focusing on the main areas of accountability: cash, sold outs, spoils and visit efficiency.

Every operator using electronic data collection devices deserves to know that the receipts accrued in a piece of equipment are making it all the way to the bank account. Handling and processing cash correctly is still incredibly important to our industry. Accurate cash accountability data not only gives operators peace of mind; it also tells us that information is flowing properly from the equipment. Cash accountability reviews can even be used to uncover technical or mechanical issues at the point of sale. Is a machine consistently collecting more coin than it should? Chances are there is a changer problem which may require a service call. Our industry has always been plagued by the claim, “that machine took my money.” Any methods we can use to minimize broken equipment will result in happier customers and higher sales.

Sold out columns are, of course, a measure of our customer service level. With accurate data and proper dynamic scheduling parameters, the data-driven company should be able to tout a level of service significantly higher than that of its competitors. Imagine being able to guarantee a client that they’ll never run out of Diet Coke again. I believe this is possible and would even suggest that the data driven company could make low sold-outs part of their service guarantee. Perhaps there could be a marketing program built around a promise: “If your soda machine ever runs out of Diet Coke, we’ll buy pizza for your office.”

Spoilage, on the other hand, is like the proverbial white elephant lying in the living room. Maybe if we ignore it, it will just go away. Spoilage (and returns) CAN be minimized with diligent monitoring of vend visit data. I believe drivers should be encouraged to enter spoilage in the handheld. It’s the office’s job to manage spoilage and reduce its likelihood in every machine.

Mining data correctly will result in more productive vend visits. Each year, vend visit service costs such as labor and gas continue to rise. Using data to ensure that each trip is worthwhile (say, 100 plus vends per visit) will either reduce the number of routes currently needed to maintain placed equipment or slow the need for additional routes in the future. Efficient visits ensure the best use of everyone’s time — not just the route driver.

Data mining also allows operators to make sure each piece of equipment is the best store it can be for clients and consumers. Whether it’s getting a machine to sell more or limiting spoilage, data allows us to make intelligent product and par decisions with the click of a mouse. Every operator has slow selling equipment that can’t be removed for one reason or another. Rather than lament a machine’s lackluster sales, let’s extend the service cycle to the longest interval possible (21 days for snacks and 28 days for beverages is acceptable to most companies) and limit pars which will minimize our need to throw product away.

Operators with advanced analysis techniques also tap into a little known sales secret: Machines with adjusted par levels actually sell more! Extensive anecdotal evidence suggests that consumers will purchase more if they think their favorite item might run out before the machine gets refilled. For example: If the Snickers row is full to bursting and has been for the past six months, a consumer is in no hurry to make a purchase. However, if the consumer can clearly see through the glass that Snickers may soon be gone, he or she will be much more motivated to pull out money and make a purchase before walking away.

From the idea that personal computers would eliminate the need for paper to the notion that cars will someday drive themselves, technology has only ever offered a promise. Real progress comes when human beings use electronic tools correctly and consistently. Data collection for vending companies is no different. Take some time this week and dig into the data mine currently residing on your desktop. Does the information look accurate? Are clients being better served? Are your people using their time wisely and productively to deliver better results than your competition? Hopefully you’ll see nuggets of opportunity everywhere you look.

 

About the Author

Ben White was the general manager at Monumental Vending in Beltsville, Md. for many years. He recently started Vending Insights, Inc. to help operators incorporate technology and advance large projects such as micro market development. Contact White via email atben@vendinginsights.com

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