Top 10 CTW Takeaways

Jan. 5, 2015

Coffee is big business in today’s vending industry. That was clear by the size of the 2015 CoffeeTea&Water show that took place November 11 to 13, 2014 in Dallas, TX. The NAMA event has grown to nearly 100 exhibitors and 800 attendees, eight times the size of the first NAMA coffee event in 2007. While the core topic remains coffee and related office coffee service (OCS) products, NAMA has recognized today’s blended operator and tailored the information to include technology innovations, workforce solutions and sales strategies alongside coffee trends. It was an exciting three days with a vast amount of information, but here are 10 takeaways for you:

  1. Create a well-worded marijuana policy

Whether you are strictly an OCS operator or something more, in a state with legal medical marijuana, an employer can not just have a strict zero tolerance marijuana policy.  According to a presentation by Heather Bailey, partner in the Chicago, IL, office of SmithAmundsen LLC, on November 11, there is an obligation under the Americans with Disabilities Act (ADA) for employers to make reasonable accommodations for employees. However, using certain wording can help employers prevent lawsuits and also ensure safe working environments. First, tailor the job description with phrases like, “The employee must pass a drug test,” and, “The employee must be able to stay and be alert.” Include these in the employee handbook as well. Train managers on the signs of marijuana use – glassy eyes, moodiness, slurring words. If there is reason for concern, have the manager document the employee for suspicion of coming to work impaired, then have the employee driven to a testing facility (do not let the employee drive himself or herself). Bailey recommends operators use a testing facility to avoid violating laws about medical file confidentiality as the facility is regulated by medical personnel.

Check laws in your state, but the keys to overcoming medical marijuana is a properly worded policy, reasonable suspicion and observation, and documentation of what occurs.   

  1. Address conceal and carry

Business owners must consider both personal and other factors in crafting an appropriate policy regarding weapons. Bailey suggests first knowing what your states laws are on the concealment and carrying of weapons and then looking at the warehouse building leases and the workplaces drivers are servicing, as they might already prohibit weapons on the premises, even in the parking lot. How would allowing guns on premises affect your insurance or any workman’s compensation claims?

After deciding on a policy, it needs to be added to the employee handbook. Also, if weapons are not allowed in the truck, a sign needs to be posted in the vehicle, where the driver can see it, but it isn’t visible to the general public in order to not advertise to robbers that your route driver is actually unarmed.

With any termination or discipline action in regards to this policy and many others, it’s important to note that the action was taken because the employee violated the policy (not for what the employee did or didn’t do which could lead to discrimination claims). “Protect yourself upfront with a policy in place,” said Bailey. “Train your management about it and then operate your business as usual.”

  1. Create goals for inventory management

Managing inventory is an important way to save costs and maximize returns on your investment, but it has many moving parts. In order to create a goal and become more efficient, it is important to start looking at reports and understanding how and where you can improve. Fred Parish, president and CEO of the Profits Experts, discussed the importance of looking at a few key measurements in CTW session, “Inventory Management Leads to Profitability.” Parish recommends operators focus on the number of times inventory is turned over each year, how many days it takes to turn inventory into cash, estimated annual sales for each dollar invested in inventory and gross margin return on inventory.

Reports are essential, but there is more to the picture. “The way to ensure the maximum return is not about the numbers…it’s about brining all those people and systems together to accomplish what you want to accomplish,” said Parish. Each member of the organization needs to understand their responsibilities and be motivated to do what needs to be done.

Donnie Pemberton, president of the Pepi Companies, discussed how Pepi once used pencil and paper to do warehouse inventory, but knew there had to be a better way. The company decided what it wanted to achieve (ex: to increase warehouse turnover), set goals and then went looking for solutions. “We had to do our research. We asked questions at shows about technology in order to pick the right technology for what we were trying to accomplish,” Pemberton said.  

  1. Implement inventory and warehouse solutions

Adding technology is a key solution to better warehouse management. It allows data to be tracked in different ways. For example, when a customer receives a product, the sale can be made on a mobile device that subtracts that product from inventory, and ultimately sends a message that it needs to be reordered from the supplier. Other technologies help warehouse staff pick faster or allow managers to easily identify best sellers. There are different technologies available for different organizations so do research to select the solution appropriate for the size of the business.

There are other options to maximize profits in the warehouse as well. Tara Burnaman, director of procurement with DS Services of America, talked about searching for suppliers in the same region in order to cut down on shipping costs. Operators might be able to have a driver end a route near a supplier so the driver can bring the product back with him or her on the way back to the warehouse. Negotiate price based on this, said Burnaman. Also, get to know the full range of offerings from each supplier to better maximize one order. “This process is not a one-time event, it is an on-going part of running your business,” explained Burnaman. 

  1. Define a route on your own terms

During a panel discussion Wednesday, November 12 entitled “Optimizing Route Profitability,” operators revealed different metrics to determine the number of stops and even the vehicle used for their routes. Jeff Deitchler, general manager, Prairie Fire Coffee Roasters will sign a large OCS customer, then fill in an OCS route with other locations between the branch and that large account. Joe Benti, vice president, national operations for Canteen Refreshment Services often determines routes based on equipment needs and how often service is required rather than proximity to the branch location.

All operators used a combination of delivery and service schedules, frequency of equipment maintenance, workplace size and distance from the branch location to determine how strategic a location was for its OCS service and how to build a route. The less strategic a location, the more operators might increase price, reduce service options or offer the customer direct-ship service.

  1. Hire route drivers for personality

Hiring the right people, especially a route driver, is essential to provide good service and increase same location sales. Operators felt certain personality traits were most important in drivers. Larry Deagon, vice president of Gourmet Coffee Services said he likes to bring someone in who understands that they will be customer focused. It’s important because the driver’s service is the basis for the company – location relationship.

The driver should have a high energy level and be persistent, explains Benti. “If you can find a person with the right attitude, you can teach them the business,” he said. There is also the capacity to train drivers on how to sell. Deitchler considers all of his route delivery people to be company salespeople as well. He teaches them to offer seasonal products, line extensions and listen for what the location might want.

  1. Use “other” products to gain revenue from OCS accounts

Another way to optimize route profitability that goes hand in hand with the drivers’ ability to sell and listen is gaining revenue from an account for more than just coffee. For the panelists, this is a major growth area for an OCS location. “Coffee is still our main product, but allied products is what is key to profitability. It’s a good 30 to 40 percent of the business,” said Deagon. His company offers medical supplies, candy in reception, janitorial supplies and many other non-coffee products. This allows more revenue from a single account.

Besides training the driver, Deitchler uses email blasts, flyers, leave-behinds and many other methods to advertise products, including non-coffee items, to locations thereby increasing same store sales.

  1. Use resurgence of bean-to-cup machines to maximize profits

Bean-to-cup equipment — machines that offer whole beans in a hopper atop the brewer, then grind the coffee before brewing — have long been a part of the OCS landscape. Lately, however, with the popularity of single-cup and specialty coffee roasters, they are receiving even more attention. Bean-to-cup brewers offer fresh brew-by-the cup options with a wider selection of coffees. The price for the product is generally lower than single-cup cartridges as well. On the 2015 CTW trade show floor companies were offering countertop bean-to-cup machines with high definition touchscreens, national branding, milk cooler options and even vacuum extraction. Both the inside and outside of these units are being upgraded to give a better user experience and more customizable hot beverages.

  1. Look for ADA compliance in brewers

Also on the tradeshow floor were many brewers highlighted as meeting the Americans with Disabilities Act (ADA) requirements for control heights. At least one hot beverage vending machine had a reconfigured counter to be accessible and many touchscreen controlled brewers on display offered an option where the screen could be controlled by buttons near the base of the machine. ADA compliance was the new buzzword for brewing and hot beverage equipment standards at this year’s CTW event.

    10. Remember coffee is a valuable perk

Keynote presenter Dan Cox, a 33-year veteran of the coffee industry and current owner and president of Coffee Enterprises, had some overarching statements about coffee. In American culture, coffee is a perk. It is replacing soda among today’s youth – or at least coffee-based drinks are. It’s an amenity employees use to evaluate a company – what kind of coffee do they serve? National brand? Specialty, third-wave freshly ground? Employees in certain areas are demanding an emphasis on coffee and OCS ancillary products. However, there are other areas where employees feel that even “bad” coffee is still better than no coffee at all. The final takeaway is that OCS is a great business to be in.


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Heather Bailey

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National Automatic Merchandising Association (NAMA)

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