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Issue Date: Vol. 51, No. 1, January 2011, Posted On: 1/31/2011


ALERTS AND REPORTS: Getting The Most From Wireless Networks


by Michael Merriam

As advanced technology continues to permeate the vending space, one of the most attractive (and certainly most talked-about) solutions appears to be telemetry-based remote machine monitoring. Usually conducted through a secure wireless infrastructure, telemetry solutions can provide vending operators with a host of near real-time information on the daily activity of their machines, giving them instant notification of a multitude of performance issues, along with regular updates on sales and other business metrics.

Through telemetry, extremely urgent information like mechanical malfunctions, out-of-stock alerts, and open-door conditions can be transmitted instantly to the business office, where appropriate measures can be undertaken immediately. Telemetry solutions can also offer more detailed, less time-sensitive data on the business performance of individual units, like daily sales reports and other transactional updates. These metrics give operators a clear picture of the daily -- and even hourly -- financial performance of their assets, and help provide the foundation for a smooth and efficient operation.

Yet, despite all the profound benefits telemetry offers vending operators, its penetration rate remains relatively low. For some operators, the costs of the solution can be an issue, particularly when evaluating up-to-the-minute comprehensive sales reports that are available from several providers.

For other operators, the complex nature of the technology required for telemetry can be an inhibiting factor. In addition to the requisite hardware and software components, other fixed costs, like wireless carrier subscription rates, also factor into the decision. And other soft costs, such as interoperability with legacy reporting systems, ease of use and back-end support services also are strong considerations. While vending machines themselves provide a very useful and comprehensive supply of data that is ready to be collected and analyzed, operators need to carefully assess whether a telemetry-based alerts-and-reports solution will add real value, as well as adequate return on investment, to the business.

TELEMETRY COSTS
Leveraging a robust telemetry system requires several expenditures that can include hardware and software on the vending machines, carrier services, and -- for many operators who elect to go with a more complex reporting solution -- "middleware" programs that enable data received from the field to populate existing reporting tools.

Each vending machine to be monitored is outfitted with a device known as a telemeter. This piece of hardware can most often be installed in the machine fairly quickly, with minimal disruption to the business. The telemeter captures data at the machine, including most malfunction and service-related issues, and then transmits this information to the back office. In addition to the operational alerts, the telemeter can collect financial performance data from the machine to give operators good visibility into daily business operations without incurring the expense of rolling a truck every day.

Just like cashless vending systems, telemetry solutions most often use the services of a wireless carrier like AT&T, Verizon, Sprint or T-Mobile to transport data from the machine to the back office. Most cashless payments and telemetry vendors bundle the costs of wireless service into their offerings, and use several strategies to ensure that data is continuously transported reliably and securely. For example, a bank of vending machines can be networked together to share a common antenna. If a site has a particularly poor signal, a bank of machines can also be linked to a remote site that does have wireless service, and connectivity is maintained over that path.

Once the data is sent to the back office, a few things can happen. Notifications of functional issues like coin jams or low stock conditions typically are sent to the operator by email. Some providers can deliver this information in the form of text messages, too, but the great majority of operators seems comfortable with emailed alerts.

Because the format and composition of the sales data are available as DEX (Data Exchange) output from vending machines, financial performance reporting takes a lot of manipulation on the part of the provider and the operator if it's to be very useful. Depending on the scope and sophistication of the back-office reporting system, telemetry-generated machine data must be reconfigured into a format that is compatible with the back-office information system. While this can be a relatively straightforward process for some telemetry providers, the more detailed the data, the more work is usually required on the back-end.

REAL-WORLD ROI
And this is the point at which the "rubber meets the road" for both operator and provider. What is cost-effective, and at what point does telemetry become too complicated to generate sufficient ROI to justify it?

In the life of the operator, the value of the telemetry solution really comes down to a simple equation: Will the solution save me tangible dollars in my normal operations?

The simple answer is "maybe." With alerts and other types of notifications, the value of telemetry is obvious. An operator can't make money if a machine is malfunctioning or out of stock. The ability to get these assets back online in a matter of hours translates into hard sales dollars in vending.

Yet, while the financial return from alerts is apparent, there are varying schools of thought regarding the intrinsic ROI of telemetry-based reporting. Operators agree that real-time data can have a significant impact in reducing shrinkage, yet many that we have spoken with have said that they are still hesitant to invest in this technology due to the costs involved, along with the time-consuming, frustrating and expensive proposition of integrating telemetry with legacy back-office systems.

But most importantly, operators indicate that reporting features do not directly drive down hard costs by reducing truck "rolls." Even with a reduction in potential shrinkage, many operators find the reports to be redundant to their existing processes. Crews still need to be sent out to collect cash, fill machines, and conduct routine maintenance at regular intervals. The prevailing wisdom is that those crews can -- and should -- record transactional activities.

ADDING CASHLESS PAYMENT
If telemetry-based alerts and reports do not excite a majority of vending operators, the combination of card-based payments and telemetry may provide the impetus for many operators to invest in wireless technology. Adding card-based payments to the mix gives operators a proven means to boost sales and increase revenue by enabling their customers to use cards. For higher-priced items like bottled drinks, statistics indicate that overall sales can increase as much as 15% compared to machines that only take cash.

Referring back to the previous discussion about ROI, operators can realize increased sales and profitability from deploying cashless, and they can receive near real-time-alerts -- resulting in more machine uptime to maximize the benefit of the increased sales. The wireless costs are more easily justified by the increased revenue potential of cashless than the possible reduction in shrinkage, and the critical alerts go along for the ride on the existing wireless connection.

While every vending operation is different, the primary goal is the same -- turn a profit. Technology is constantly evolving, and thus improving the possibilities for operators to invest in its deployment and realize a clear, tangible ROI. Cashless deployments are growing because operators are seeing profits increase. Telemetry alone can be a difficult ROI case to prove, but the benefits of alert reporting (which has a direct impact on sales) clearly add to the existing strong ROI case for cashless without increasing the monthly recurring expense for wireless connectivity.

Simply by adding a card-accepting bezel to a vending machine, operators can use the wireless network to help boost sales and grow profitability, receive mission-critical alerts, and -- and if they choose -- accept telemetry-based reports as well.


´╗┐MICHAEL MERRIAM is product manager of Apriva, a provider of wireless transactions and secure information solutions for business and government. Merriam oversees product development and positioning activities for Apriva Vend, a comprehensive cashless vending solution that is available to operating companies in North America.

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