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The Limits To Measurement

Posted On: 3/27/2011

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Timothy R. Sanford, Vending Times, vending industry catchphrase, mantra, vending, vending business, vending machine, vending machine industry, coin machine industry, coin-op business, automated retailing, office coffee service, OCS

Longtime participants in industry educational events will have noticed that certain slogans or catchphrases (often miscalled "mantras") find favor at different times. Few are new; most summarize an important truth. For some reason, some of them rise to the top of the collective mind, remain there awhile, and then subside.

One of the currently popular ones is, "you can't control what you can't measure."

This certainly is true. Its usual application is to situations in which, say, the operator wishes to improve warehouse efficiency. The starting point will be to determine what constitutes efficiency, in numeric terms: how many people perform how many repetitions of a task in what time. With that information in hand, one can imagine changes in procedure that will decrease the manpower or the time, or increase the repetitions. Another way to look at it is that one must be able to quantify what one is doing now, in order to tell whether a different way of doing it will produce better results.

All this is clear enough, and most managers surely know it. The difficulty arises when decision-makers find it impossible to do nearly anything unless they have some sort of numeric data. Demand always gives rise to supply, of one kind or another, and this particular demand has led to an orgy of measurement.

We suspect that a good deal of this effort is misguided, and the whole phenomenon is having unexpected consequences.

For one thing, most of us have noticed that the relationships we have with the familiar large enterprises from which we buy things have changed for the worse over the past couple of decades. Many of us can remember a time when a letter asking for more information about a product would be answered promptly, courteously and intelligently, and a time when a new purchase that required some figuring out was accompanied by a comprehensive, professionally prepared and attractively illustrated instruction manual. This list could be extended.

Why do we not enjoy these amenities today? Our parents took them for granted.

The reason seems to be that managers high up in those companies began to feel pressure to improve results. Not "do a better job" -- increase sales and customer retention -- but improve results, which became narrowly defined as "showing better financials in this quarter than in the comparable prior-year period." How to do it?

Well, whatever you do must be done quickly, which rules out long-term initiatives to create more demand or bolster customer retention. But you can control what you measure, and you can measure such things as payroll costs. You observe that you have seven or eight people who spend their days drafting detailed replies to customer letters, and four or five people who are typing those letters, and half a dozen who are working with the engineers and graphic design people to prepare instruction manuals.

You note that there is no way to quantify the return on all this effort; but, if you fire half of them, you get an immediate bottom-line benefit. Nothing very quantifiable happens immediately, so next year, you fire the other half. You reassure the old fogies in your organization that modern technology has greatly reduced, even eliminated, the need for all that effort; and, besides, they ought to look at the bottom line to see the benefits.

The point, which we have made before, is that you can only keep this up for so long before two things happen: you run out of people to fire, and your customer base starts to erode, as people see less and less reason to maintain a strong emotional bond with you, and more and more reason to look for a cheaper or "cooler" alternative. Whereupon you can lament that modern customers just aren't loyal any more.

There are forces that cannot be quantified but that, over time, can be profoundly injurious. A case might be made that a good deal of the current economic malaise can be traced back to this. There also are forces that can have a very beneficial effect, over the long term; but they can't be measured, either, and no one seems to have the time to wait for them to bear fruit.

As we've observed before, our industry has structural safeguards against this sort of thing. When route drivers and supervisors encounter customers frequently, and when all of one's competitors know all of one's accounts, excellent service with a personal touch remains at a premium.

We do think it important that operators keep in mind everything their field service personnel do -- not just the measurable things. Alert operators always have known how to do this, and have valued route drivers, technicians and sales personnel who build and maintain a positive image of the company. It is worth looking for people like that, helping them perfect their skills and rewarding them beyond what "the numbers" suggest as the minimum.

It also needs to be remembered that some qualities are measurable but irrelevant. When evaluating a proposal larded with detailed numerical data, it is important to determine whether that information really has anything to do with what the provider proposes to sell. This is an important topic, but one for another day.