Technology has become a go-to strategy to drive profitability. Just-in-time inventory offline via SKU-level tracking at the machine level and online via telemetry are used to increase profits and increase efficiencies in vending operations. As more and more vendors investigate its implementation, telemetry emerges as an important tool for required data collection. Because telemetry enables operators to wirelessly collect real-time data from each machine on product movement, cash inventory and the machine’s physical condition, operators are able to make adjustments in SKUs and inventory and respond to machine malfunctions far more quickly than with manual data collection methods.
However, telemetry is not a “one size fits all” proposition. It should be used only where it makes the most economic sense. This proper targeting of telemetry became obvious to Coca-Cola Bottling Company United (CCBCU) during its recent implementation phase. CCBCU, with 30,000 plus machines over 120 routes spread across Mississippi, South Carolina, Alabama, Georgia, Louisiana and Tennessee, has deployed telemetry in three of its ten markets, totaling 8,600 machines. Despite what CCBCU describes as huge productivity improvements in terms of cases per fill, stops per day and cases per day for the driver, in its Chattanooga, Tenn., test market, David Sours, director of commercial leadership, discovered that his machines doing less than 50 cases annually were providing a negative return when the cost of the telemetry equipment and monthly charges were considered. As a result, the plan to convert all machines to telemetry changed. “Our strategy now is to cover 90 percent of our volume, so that looks like about 60 percent of our equipment,” stated Sours.
Performance dictates technology
So what does this tell us? Not all full line operators have CCBCU’s volume or have the luxury of being solely in the drinks market, but all can be smart about deploying technology to gain the best return on investment. Operators who have to contend with snack food and coffee machines need to understand how they are currently performing and then factor in how technology might improve things.
Times are tough, and most don’t have the budget to overhaul technology across their entire system. Even if operators have funding today, they might not be able to deploy the technology because of their existing infrastructure. That’s because telemetry builds on other core technology and processes. Before operators can take machines online, the core of their business needs to be healthy. And they need to have other processes and technology already in place. In short, taking machines online requires a carefully considered journey from here to there, best traveled in phases.
Phase 1: Putting The Traditional Operation In Order
Moving into technology-based forecasting and telemetry works best when operators understand the dynamics of the current operation, they’ve put the proper controls in place and they’ve documented practices and procedures regarding equipment, inventory and cash. Using vending management software (VMS) to capture this information will lay the groundwork for a more disciplined operation with good machine, inventory and truck accountability. It will establish a baseline for identifying where digital data exchange (DEX) and telemetry might pay off. Advanced systems offer a roadmap to follow in this progression.
For some, engaging in manual best practices based on recorded data for part or all of the organization may be all that is needed to secure a profitable outcome. However, it’s critical that data is accurate. Initially, this data collection is highly dependent on the motivation and capabilities of the route drivers, warehouse clerks and supervisors. Understanding the strengths and weaknesses of the team will go a long way in the transition to a technology-driven operation. Encouraging an environment that rewards accurate recording and sets penalties for inaccurate recording of truck, warehouse and machine inventories will help establish a precedent for future processes.