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Opportunities, Challenges Await Industry In Year Ahead

Posted On: 12/25/2000

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USA - The simultaneous arrival of a new year, a new administration and an unpredictable economic outlook confront the workplace service industries with more than the usual number of questions. And the swift development of new information, communication and marketing tools promises answers to operators who determine what the questions will be.

On the plus side, U.S. employment remains strong, although some belt-tightening may offer slight relief from the very tight labor market that has been constraining industry growth. The ongoing convergence of vending, coffee service and foodservice during a time of great demand has fostered the emergence of practical approaches to meeting the diverse needs of today's and tomorrow's locations. And consumers show every sign of appreciating good service in their places of work to an unprecedented degree.

On the minus side, unsolved structural problems , primarily an endemic energy shortage, with commensurately high fuel and utility prices , present ongoing problems for operators and their clients. The industry's performance in 2001, and the performance of the U.S. economy as a whole, will depend to a considerable extent on the severity of those problems and the ability to solve them. There also is no way to predict the behavior of financial markets, either domestic or international. Most experts have not seen signs of serious underlying weakness, but some have wondered whether the extraordinarily long economic boom has not peaked.

New technology is near the top of the list of subjects provoking discussion in the vending industry. The past year has seen the arrival of a third generation of wireless vending machine monitoring systems, benefiting from engineering advances driven by the emergence of the Internet as a general-purpose wide-area network and the boom in overall demand for wireless connectivity. And the use of handheld computers to speed the capture of sales information and otherwise enhance route productivity has been proceeding steadily.

R. David Clayton of Automatic Food Service (Nashville, TN) observed that the appeal of remote reporting of vender sales information is obvious. The former National Automatic Merchandising Association chairman believes that the real value of vending machine telemetry will be obtained from a system that enables the route driver to poll the machines in a location as the truck approaches, and automatically receive a pick list that will eliminate the need for two visits to the equipment. He estimates that this function could reduce substantially the time spent at each location, perhaps by as much as a third. Such systems have been described, Clayton observed, but he has not yet seen one that is ready for immediate operational deployment.

While some operators have argued that the increasing accuracy of forecasting made possible by handheld route computers offers sufficient precision to eliminate the need for an initial walk through by the driver, Clayton is not convinced that this approach is a real productivity-booster. He observed that actual machine needs always vary slightly from the best forecasts, and drivers are compelled to make adjustments to predicted inventory at each location. This leads to a great many odd quantities of items having to be reorganized upon return to the truck, and the time saved in visiting the machines may be lost in keeping the vehicle inventory organized.

J.E. (Eddie) Hicks, Prestige Services (Clifton Park, NY) observes that much of the development of wireless monitoring systems for vending equipment has been inspired by the large soft drink companies. Viewed from a distance, the bottler's productivity needs seem similar to those of the full-line vendor, Hicks pointed out; but, on closer examination, important differences emerge.

The bottler needs to know whether or not to send a driver to a particular machine on a particular day; knowing that machine's inventory as of the previous midnight can provide that information, the former NAMA chairman explained. But the full-line vendor will have route personnel visiting the machines on a regular basis, to do much more than reload them and see whether they're working.

Thus, bottlers see productivity improvement from systems that report machine sales to a central office, Hicks said. Full-line vendors are much more likely to realize productivity gains from a system that produces a pick ticket as the vehicle approaches a location. He agrees with Clayton that such a system would be valuable and will be developed.


Clayton is a long-time advocate of handheld route computers, and is enthusiastic about their value in collecting useful sales data and making the driver's job easier. Their ability to provide item-level sales detail is transforming the way machine menus are determined and adjusted. Automatic Food Service is participating in one of the database management services, uploading day-by-day line-item sales information to it every week. "We're using the data, and we'll use it more and more; it's very enlightening," he said. In particular, the ability to pinpoint slow-selling items and to replace them with more popular selections enhances total route revenues and thus makes drivers more productive.

And productivity is essential for survival in the new millennium. Clayton noted that shifts in public preference toward larger packaging, particularly of cold beverages, are creating new logistical problems for operators. These items are harder on vehicles and on drivers too, and the situation is made worse by the increase in fuel prices that began to attract notice by mid-1999. But patrons and location managers want them, and vendors must make them available.

Hicks also is concerned about increased operating costs in general. He suggested that the much-publicized increase in fuel prices has been something of a blessing in disguise, since it gives the operator an immediately understandable starting-point when negotiating for necessary price increases.


He also takes the proliferation of bottled beverages in stride. "When you're committed to full-line vending, you're pretty much committed to being in there every day," he pointed out. This is especially true for attended locations. New machines that offer combinations of packaged cold drinks and snacks, or a wide variety of bottled beverages, trade off capacity for selectivity. Their ability to increase sales by offering more choices is valuable if they can be serviced frequently enough; and this is an excellent way to make an attendant more productive. A rather similar logic applies to route-serviced full-line accounts, he said; if the driver is going to stop the truck there every day to take care of the food machine, additional revenue that can be earned by popular machines requiring daily service makes it more profitable to make that stop.

Clayton expects the economy in his region to remain strong in 2001, although he does not envision the sort of growth experienced over the past few years.

Hicks said that his watchword for 2001 is "cautious optimism." In his area, business activity appears to have slowed, he observed; but employers are holding onto their personnel because they anticipate that things will pick up, and they are keenly aware of the difficulty of hiring qualified people. As long as this situation continues, the labor market for vending staff will remain extremely tight.

He pointed out that operators today are not simply competing with one another for capable people. The vending industry is in competition with other industries, and its benefit scale has not kept pace with those outside competitors. "As an industry, we have to take a look at this," he emphasized.

Both former NAMA chairmen have been staunch advocates of a circulating dollar coin, and they remain so. Clayton observed that, as well-merchandised and attractive as the Sacagawea coin is, its well-publicized rollout has demonstrated that it never will circulate freely unless the dollar bill is eliminated. He reported that he tries to spend a roll of them every week in everyday transactions, and he still finds clerks who say, "I've heard of these but this is the first one I've seen." The coin does have value, but it cannot be realized fully as long as the dollar note continues in production.

Hicks, who has had similar experiences while traveling, wonders where all the billion-plus "golden dollars" that have been minted are going. They are well-accepted , people are not surprised to receive them , but their novelty seems to have persuaded consumers to hoard them.