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Two Is Better Than One: Integrating Management Software And Warehouse Automation

by Cliff Fisher
Posted On: 5/21/2012

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vending, vending machine, MEI Group, MEI Easitrax, Cliff Fisher, Lightspeed Automation, vending management systems, pick-to-light prekitting, vending warehouse automation, vending machine route, vending machine operator, vending route automation, vending machine telemetry, Black Tie Services, CC Vending

Two systems have emerged that, when integrated, have a powerful one-two punch. Vending management systems and pick-to-light prekitting systems work together to provide three benefits: profitable improvements in product planning; giant leaps in route and warehouse efficiencies; and watertight inventory control and tracking.

Here's why. vending management systems like MEI Easitrax turn machine data into intelligence that can reduce the number of routes a vending operator services by 30% or more, saving $50,000 to $100,000 per route. Integrating a pick-to-light system such as LightSpeed's solution in the warehouse applies that intelligence to the next step. The vending software accurately forecasts what products will be needed for each stop on each route, and visually presents that information to lower-salary warehouse workers so they can prekit routes. The warehouse workers simply gather products as their warehouse shelves "light up," and place those products in the appropriate bins. This allows higher-salary drivers to have exactly the inventory they need for each stop. The overall reduction in labor costs combined with the product accuracy and efficiency demonstrate that "two is better than one." By integrating a pick-to-light system, it is possible to eliminate five or more routes with slight (if any) increase in warehouse staff.

D&R Vending (Rochester, MN), for example, eliminated approximately six of its routes using such a prekitting system, and added only one part-time warehouse worker to compensate. Since driver compensation is typically between $40,000 to $60,000 annually, D&R saved an estimated $300,000 simply by implementing a pick-to-light system in the warehouse. [See Figure 1 for return on investment estimate.]

Figure 1: Return on investment integrating a pick-to-light system into a vending management system. ROI calculated from a $30K investment in a LightSpeed FastTrack prekit system.

Vending Times

It's important to note that a pick-to-light system must be integrated with a vending management system as a prerequisite, because it requires item-level data. Easitrax, for example, captures this data using handhelds at each machine and tracks it by machine, by route, by product, by category, by time of day, and more.

Black Tie Services (Baltimore), a family-owned vending operation serving the Baltimore metro and Washington, DC, beltway area, took the technology plunge in 2004 with MEI's Easitrax vending management system. The company credits the software with helping optimize its product mix to increase sales and profits dramatically. Simple reports, automatically generated, allow Black Tie to track the success of products, and to see which items have been over-ordered and which ones need to be restocked. The software also predicts when machines need to be serviced, eliminating unnecessary service calls and lost sales from "out-of-order" machines. And there is no longer any discrepancy or fluctuation in meter readings, so employee theft cannot go unnoticed.

Black Tie now is adding forecasting and prekitting capabilities in the warehouse by integrating LightSpeed's system. "We are already seeing huge savings in terms of efficiency, and look forward to even more with the pick-to-light system," said president Scott Meskin.

Black Tie is not the only one. CC Vending (Bronx, NY), an operator serving all five New York City boroughs as well as Nassau, Suffolk, West­chester and Rockland Counties in New York, Fairfield, CT, and Northern NJ; Lincoln County Vending (Fayetteville, TN), an operator serving five counties in Tennessee; and the vending operation at the U.S. Marine Corps Base Camp Lejeune (Jacksonville, NC), which serves thousands of military personnel and their families are among the dozens of vending operations integrating vending management and prekitting systems in the U.S.

"There's a natural link between these two types of systems that, when combined, produces far greater results than each one individually," said Tim Fitzgerald, IT director at CC Vending, which has been using MEI's Easitrax vending management system since 1999, and recently added LightSpeed's pick-to-light system. Of its 26 routes, CC Vending is now prekitting 11 snack and beverage routes and adding another route every 10 to 15 days. The vending operation has already eliminated five routes as a direct result. The efficiency of automatically prekitting at the warehouse based on Easitrax data has also enabled CC Vending to reduce errors and staff that had previously serviced those routes.

"It's much less expensive to hire someone to pick in the warehouse than excess drivers, and prekitting saves precious time. Now, commissioned drivers are more productive, making more money, and are enjoying greater job satisfaction," added Fitzgerald. "A happy driver is a critical element to success in this business."

At CC Vending, there are no longer extra cases of any product, so there are fewer opportunities for theft. The addition of a pick-to-light prekitting system also allows the company to efficiently manage product categories, reduce waste, and lower the cost of goods. According to Fitzgerald, CC Vending no longer has "rolling warehouses," and drivers don't make product decisions any more; management does. "I can buy today and sell tomorrow, for increased profitability, and the amount of money collected by machine has increased," he said.

Lincoln County Vending has been benefitting from MEI's Easitrax vending management system for nine years across all of its routes (800 machines). When the operation integrated LightSpeed's Pick-to- Light system, it saw amazing results almost immediately.

"The integration was done in just a weekend, so by Monday morning we were working on all cylinders with both systems seamlessly communicating with each other. Within a month, the systems yielded quantifiable benefits," said Dan Holt, owner of Lincoln County Vending. According to Holt, the technology integration provided three substantial advantages. Route efficiency increased, because drivers can complete more runs in less time. The volume delivered per route also increased; and so did productivity, as drivers' workdays were reduced from 12 to eight hours.

U.S. Marine Corps Base Camp Lejeune also experienced a significant return on investment when it integrated the two systems. Camp Lejeune's vending operation had included seven snack routes with 16 stops per route. The new technology has enabled the operation to cut down to five routes averaging 28 stops per route, while machine collections have increased by $32 a stop.

"We have eliminated truck inventories and reduced the warehouse inventory significantly, freeing up over $200,000 in cash that had been tied up in inventory costs," said Charlie Hoopes of the Camp Lejeune operation.

Vending management and pick-to-light prekitting systems make an effective team, but only the experts can help you bring them together quickly and efficiently. Here's how.

Step One: Implement or upgrade to an advanced vending management system that is built to enable seamless integration with external systems. This becomes your system of record, or the repository for all transaction data. Everything that happens in the field, on the trucks, and at the warehouse is recorded and funneled through the VMS. Using mathematical algorithms, the VMS puts all of that raw data to work by turning it into information which will help everyone do their jobs more efficiently.

For example, using handhelds or other tools, the system captures what money came in, what change was given and what products were sold, when, and at what machine. It then shows that data in aggregate across an entire population of equipment so you can determine your over-short. The software looks at the actual performance (whether the information is reconciled for one machine, a route, the company) in comparison to over-short threshold objectives -- ultimately aiming to achieve zero variance.

Step Two: Select and integrate a light pick system that will accurately "read" the data provided by the VMS to establish the prekit menu. With over 100 FastTrack and New Mobile iPad2 wireless installations across the U.S., LightSpeed continues to lead the industry in innovative system solutions. Combined, the resulting benefits continue to be impressive with every new integration of the two systems at vending operations -- big and small -- across the country.

"Any vending company that is not embracing these two technologies, integrated as a unit, will not last. It's happening already. There is a tremendous amount of consolidation going on in this business and it's attributed to these types of developing technologies," concluded CC Vending's Fitzgerald.

Lincoln County Vending's Holt agrees. "It's really common sense. If you're not distributing your product this way within the next five years, you're going to have a tough time competing."

Two is better than one, especially if you have the support of a team that can smoothly guide you through implementation. In a business that used to have little need for or little experience with technology implementations, it's all a bit overwhelming. Some hand-holding to get through this technology labyrinth is OK, even smart. Ignoring the innovation that's right under your nose, however, is not. Competitors are already hot on your heels.

photos | Off The Shelf

Under control of compatible vending management software, the LightSpeed Automation "pick to light" system receives detailed location-specific route orders and directs warehouse personnel to the shelf and bin position of each required product. The quantity of each item is displayed, and the picker signals completion of the task by pressing a button before moving on to the next position.

MEI, vending machine, pick to light

A left, merchandise in easy-access trays in CC Vending's warehouse; at center is a similar arrangement using the product's cases at Full Service Vending's facilities. At right is a closeup of the quantity display -- this one specifies 86 cans of Pepsi-Cola -- and the picking-completed button.

MEI, vending machine, pick to light

At left, a Quality Vending materials handling specialist makes up an order; in right photo, the completed order awaits pickup in the warehouse. Note barcoded labels on the totes; they are generated by the LightSpeed system, and may be used to identify a machine's collection-bag after the driver has restocked it. The labels are the only paper used in the process.

About the Author
CLIFF FISHER is national sales manager of MEI Easitrax, a leading vending management solution. He is an information technology expert with more than 20 years' experience in aligning people, processes and technology with business efficiencies and profitability objectives.