Recently, I received a lengthy letter from an operator I have known and respected over the years who in this blog, I will call Bob. Bob took some exception to a feature article in our September issue on pre-kitting routes. He has been in the business for more than 30 years and runs a large regional operation on the East Coast.
Bob’s letter went into great detail on the scenarios that an operator faces in trying to determine how to operate routes efficiently and at the same time keep machines stocked with products that customers want. He took exception to some of the claims that technology companies have made about ways to run routes more efficiently using prekitting.
Bob also objected to the forum that trade shows and trade publications have given to technology providers in recent years. He felt that the technology companies do not have the real life experiences to understand all of the intricacies that operators face, and that many of the claims they make cannot be proven with real life examples.
I relate this exchange because I respect Bob and I believe he speaks for many others.
I pointed out that Automatic Merchandiser makes it a practice to get feedback from operators on technology for most of its articles. Similarly, most convention sessions on technology include operators who have used the technology.
Bob acknowledged that there are operators who are willing to speak candidly about their experiences with new technology, but when pressed, they don’t reveal the specific information he asks of them. Bob claims that none have been able to tell him, to his satisfaction, the full cost of additional warehouse managers when the company moves the task of loading product bins from the drivers to the warehouse.
He rattled off an extensive list of “what ifs” that could occur as a result of these changes in responsibility, to which he claims there are no clear answers.
CHANGE IS HARD
No doubt, a company that has grown to a large size faces a extensive task in changing operations. It is only natural he would want some way to understand the full investment needed and to have a realistic idea on the return that technology will bring.
Bob gave numerous questions that he claims no technology executive could answer definitively. He questions the economic justification of pre-kitting routes in the warehouse, of cashless readers and remote machine monitoring.
Bob wants assurance that technology providers cannot give him. Hence, he has no reason to consider investing in the technology.
Bob is facing the frustration that comes with change. Whether or not he should commit himself to making any changes is an individual choice that only he can make.
It is a choice that all operators face. Some will use the new tools available while others will not. In the long term, those who succeed will use technology. The industry is changing, and the future will consist of players who are able to use technology.
No one can assure any individual operator how to use technology successfully, and there are most likely operators who cannot. But based on the success some operators have reported, which Automatic Merchandiser has presented in recent years and in observing what has happened in other industries, operators who cannot use technology are not likely to succeed long term.
TECHNOLOGY ISN’T A SILVER BULLET
Technology offers new ways to do things, but it cannot control all of the factors that impact an operation’s efficiency and profitability. This is one of the challenges that technology providers face – in all industries.
And because technology providers cannot give this assurance, Bob – and I believe many others – resents it when these companies make claims based on limited field experience.
In their defense, technology providers have said all along that the systems they offer will require employees to do things differently, which presents a challenge. The most common example is removing product selection responsibility from route drivers. In a company where drivers have long been responsible for selecting products, this can be difficult.
Most technology players in our industry have openly recognized the importance of employee training, which is why most offer support in this area.
The key takeaway from my exchange with Bob is that the full extent of the changes operators have to consider can be very frustrating and intimidating. This is something that some technology providers may not fully recognize when presenting their cases.
THE STATUS QUO CAN’T CONTINUE
Bob, while upset by what some technology providers have been saying, also acknowledged that his business has been harder than ever in the last year, and there is little reason to expect conditions will change soon.
The industry cannot prosper without some serious changes in the way vendors operate, and technology provides tools to make this happen. In consideration of everything Bob expressed, it is clear that change won’t come without pain.
Consumer research has proven that vending is not viewed in the highest possible light. This is the biggest reason operators face such resistance to raising prices.
Operators need consumer product manufacturers to support the vending channel with more generous marketing, and this will not happen without better machine-level data. The data will not become available until more machines are reporting data that consumer product manufacturers can access. And this will not happen without the newer technology.
LOOK AT WHAT OUR COMPETITION HAS DONE
Consumer product manufacturers invest huge sums of money in other retail channels largely because of the scanner data these channels provide them. These other retail players – supermarkets, convenience stores and fast food chains – operate more efficiently than vending operators. They are able to do so mainly due to the technology they use.
The major retail channels years ago underwent consolidation to achieve better economies of scale. The survivors emerged stronger players and they employed technology to optimize operating efficiencies. They also used it to develop reliable sales data that consumer product manufacturers use to develop better selling products.
Vending operators need better management data to run their companies more profitably and to provide better sales data for consumer product manufacturers.
Several technology players have emerged in the last five years that have demonstrated significant “staying power” in automatic merchandising. These players – who show up year after year at trade shows – have gained important insight about vending operations. The systems they offer require investment, training and commitment.
