David Marler (LS): The number of SKUs for MicroMarkets can get out of hand pretty fast. What is the biggest challenge you face in keeping them to a manageable number?
Mark Houseknecht (CV): Well, we find that keeping all of the MicroMarkets uniformed with the SKUs that are placed in them helps us to control this issue, but it is very difficult with specific customer requests; all the available products that seem as though they will fit well. You need to make smart decisions on which items you are going to choose based on how they sell, not just in your markets but in the entire industry and really in the c-store industry and everything else and ensure that all of those are placed in your universal planogram and that it will help optimize your sales on those items.
DM (LS): As a follow up question to that, how do you handle when a customer calls up and says that, “We’ve got a couple people in the office who would love to have the new strawberry oatmeal because they want to eat it for breakfast in the morning.” How do you handle requests like that?
MH (CV): Generally, we always want to do what the customer wants. We’re looking to place as many of the requests in as possible. If we bring in an item like that, we like to place it in more than one market and possibly replace a different item in those markets in order to bring those items in. We’ve got to be able to manage the turns on that item and make sure it moves through the warehouse.
It kind of falls back to that universal planogram piece; if a certain customer requests the item, we’ll bring it in in multiple markets and make sure that we’re getting the turns. If it continues to sell well, then it’s an item that we’ll place at the rest of our markets. If it doesn’t sell well, then we’ll have to speak with the customer at that point.
DM (LS): At the 365 User [Group] this past summer, we heard Greg McCall with Five Star Food Service state that they have 50 planograms that they start from. Do you have a set number of base planograms that you start with for your markets?
MH (CV): We have one base planogram for our markets. It’s not so much of a single base planogram it’s based on how many snack racks, how many coolers they have, how many double-door coolers. So if it’s a two-snack rack market, we have a planogram for that; if it’s a one-rack market, we have a planogram for that. And then the same thing with the coolers: Do they have a single cooler, multiple single coolers, a double-door cooler? Most of our markets are roughly the same size and we have one standard planogram for that market.
DM (LS): Excellent, thank you. All right, next question. How does LightSpeed play a roll in this process?
MH (CV): LightSpeed allows us to switch our lowest selling products out immediately. One of our biggest challenges was that the driver… you know, you bring in the product that you want to switch out, you tell all the drivers that we’re switching X product for Y product and it might get done in the next few weeks. We make quick changes now in our planogram and it feeds through LightSpeed that day to be picked. This takes the changing of the products off of the drivers and allows us to only carry the products that we want and when we want them in there. We can immediately manage our SKUs in the market.
DM (LS): What are some of the biggest benefits that you get from LightSpeed that you can’t get from picking with paper?
MH (CV): We started picking with paper. The labor that would be associated with picking from paper at this point would be astronomical. When we started the pre-kit process, we started, like I said, picking from paper, but only testing a few routes just to get the process down. It was immediately clear that we would not be able to expand our pre-kit operation without LightSpeed. There were many mistakes, and the time it took was absurd. It was not going to be doable to go beyond a couple routes.
DM (LS): Obviously, you guys have grown substantially since you first put LightSpeed in. Has LightSpeed been able to grow with you as your number of markets has grown?
MH (CV): Our business has not grown as substantially as the process has grown substantially. So LightSpeed was able to grow with us through us growing our process. At the same time, yes we’re expanding our market business, which was helpful to expand the LightSpeed process as we did that. We started with the mobile version, which worked very well, but as we added more routes to the process and wanted to keep our labor costs in the warehouse under control, we found that Pick to Light was the way to go. This also kept making mistakes to a minimum while saving us on labor. The mistakes from paper were astronomical. Moved to the mobile: mistakes were much, much lower. But mistakes really came down as Pick to Light went in on our snack line.
DM (LS): There are a lot of operators of all sizes that are going to be [reading] this interview, what’s the one piece of advice you’d give to them to help them keep the number of SKUs under control?
MH (CV): We did a much better job of managing our SKUs when we planogramed all of our markets. Prior to having planograms on our markets and managing our SKUs through a planogram, and through a more universal planogram, it was very difficult to keep all that under control as drivers would place whatever they felt was necessary into the markets.
And the second piece to that is taking that process out of the driver’s hands, and moving to a process more like LightSpeed where you control the SKUs that are in the markets, and the drivers don’t have as much input into when or where a SKU is placed in the market. It really allows you to keep those SKUs down and keep your turns on your major items that you want to ensure are in the market.
DM (LS): Did you get any pushback from your drivers when you took that out of their hands and said, ‘Here. This is what you’re going to put in the market.’?
MH (CV): We felt a little bit of pushback, more on the vending side than on the market side. I think some of the drivers, as sales began to rise (and obviously our drivers are commission-based)… they started to see that the SKUs we were putting into the markets were really helping them overall, they felt much more comfortable with the process.
DM (LS): Excellent. Is there anything else that we didn’t cover that you’d like to add this…?
MH (CV): You know, LightSpeed in general has really just helped us and our process. We would not be able to get to the pre-kitting that we’re at now, and operate the way we operate now, without LightSpeed involved in this process.