The yellow beverage can falls into the vending machine's product delivery shaft. The customer has paid for it not with cash but with a tweet. That may have been a marketing gag for the South African beverage company Bos Brands, but it shows that digitization has now taken hold of the vending business, too. From a choice of products optimized for the machine's location via mobile payment processes to further development of the vender, new opportunities are opening up for the industry along the value chain.
An important technical basis for these changes is machine-to-machine (M2M) communication, or automated data interchange between machines or between machines and a control center. Vending operators who equip their machines with M2M solutions gain more control over them, reduce maintenance and refilling costs, and offer customers more attractive alternatives.
Old wine in new bottles?
The concept of connected vending machines is nothing new. Solutions frequently pigeonholed under a telemetry heading have been on the market for years but -- at least in Europe -- were unable to catch on. They mostly supported few vending machine models, while operators typically use vending machines from a variety of manufacturers with different industry standards such as MDB, EXE and various EVA-DTS data transfer standards. So for them, support for all of the vending machines they use is the key criterion for buying into an M2M solution.
Some solutions available in the market now fulfill this requirement. That's because M2M -- and with it the Internet of Things -- is making headway in more and more areas, from the car that relays its telemetric data to the garage for a remote diagnosis to the cow that sends the farmer an automatic text message when she is in heat. Many examples from the automotive industry and the transportation and logistics sector have also demonstrated that M2M can be used inexpensively even in complex application scenarios.
Connection as a service
The prejudice that it is too expensive was another reason why vending operators were reluctant to adopt the technology. After all, they have to equip every machine with a device that reads its status and relays the information to a server through a wireless network. They also need the IT infrastructure to process data. In the worst case, vending machine operators had to rely on individual offers by hardware, software providers and mobile network providers. They also required an IT team of their own or had to hire service providers to manage the solutions. That made solutions of this kind very expensive, so much so that it was far from clear when the uncertain costs would be recouped.
Today, providers have taken to putting together all-inclusive packages. Deutsche Telekom in conjunction with its Vendon partner Vendon, for example, offers a solution that bundles hardware, software services and connectivity. It contains a communication module that is compatible with all established vending machine standards along with cloud-based software to manage inventories and sales and coordinate callouts.
The special feature of this offer is that instead of having to invest heavily upfront in devices and IT infrastructure, users pay only a monthly fee per connected machine. That makes it easier for vending machine operators to weigh up the costs and benefits of an M2M solution. The entry threshold is lower.
Wireless data communication
The technical configuration has barely changed, however. A communication module is connected to the machine's control unit via a serial RS-232 interface and to the payment system via an MDB or EXE cable. At the same time, it communicates with a server via the wireless mobile network.
The server processes the data collected so that it can be accessed via a Web portal and a smartphone or via application programming interfaces (APIs). Vending machine operators are thereby able to keep track of all transactions in real time in their ERP (enterprise resource planning) systems. As soon as a customer orders a beverage, the software immediately registers the reduced stock of the product and the increased amount of cash in the machine. The entire flow of capital and physical goods becomes transparent. Even attempts to steal cash or merchandise by the refiller or the owner of the machine's location are immediately apparent.
More efficient refilling logistics
M2M solutions of this kind also help with the diagnosis of technical and logistics problems. If, for example, a fault in the payment module occurs, the product shaft is blocked or there is a power outage, the system alarms the maintenance personnel immediately by text message or e-mail, and if stocks of a product or an ingredient run low, the solution promptly alerts the refiller. Sales lost due to defective or empty machines are history. Today, the operator picks the replacement supply for each vending machine on the basis of the filling levels as reported. The result is more efficient refilling logistics and fewer lost sales due to outages. In the end, the customer also benefits.
Improving existing processes is only the start. Evaluating the data collected is felt to hold great potential. Using the latest all-inclusive solutions, vending machine operators can now identify the machines that generate the highest sales. Knowing the factors that lead to success provides operators with a new basis on which to make business decisions.
When and where do customers decide to buy which products? Thanks to data evaluation, operators receive sound information about customers' decision-making and consumption patterns per location. They can identify successful products sooner and make their businesses more agile. Knowledge gained can be transferred fast to other machines at other locations.
In combination with electronic displays, products prepared onsite such as coffee beverages can be added, removed and renamed, filling levels can be changed, and prices and products can be adjusted. If, for example, a product is about to reach its sell-by date, the vending operator could boost sales by means of special offers.
Social vending, mobile payment and digital signage
To make full use of the opportunities provided by connected vending machines, their integration into existing IT systems and unproblematic addition of peripherals must be ensured. That is why the latest all-inclusive solutions include interfaces to exchange all collected data with the operator's ERP system.
For concepts like social vending software, interfaces can also connect with social media platforms. Trends like mobile payment and digital signage bring digital payment devices and display into the equation that must also be remotely controllable. If they are to remain competitive and cater for their customers' exacting requirements, vending machine operators cannot afford to ignore these trends.
JÜRGEN HASE is vice-president of the M2M Competence Center at Deutsche Telekom AG. He joined Deutsche Telekom in 2011 and has been in the telecommunications industry for more than 20 years. He is also chairman of the M2M Alliance.