Vending Operators Offer Roadmap To Ease Route And Warehouse Upgrades

Posted On: 6/30/2016

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TAGS: vending machine technology, hi-tech vending, National Automatic Merchandising Association, NAMA OneShow, Roadmap to Technology: Starting Out, Speeding Up and Scalable Solutions, Ryan Harrington, Royal Vending, Rod Nester, Smith Vending Corp., Dr. Michael Kasavana, Bradlee Whitson, K&R Vending

CHICAGO -- The challenge of upgrading a vending operation's management processes to take full advantage of today's best information technology can seem overwhelming. Three operators who overcame that challenge described their experiences during the leadoff technology seminar at the National Automatic Merchandising Association's OneShow, titled "Roadmap to Technology: Starting Out, Speeding Up and Scalable Solutions." The panelists were Ryan Harrington, Royal Vending (Portland, OR); Bradlee Whitson, K&R Vending (Bridgeton, NJ); and Rod Nester, Smith Vending Corp. (Clarinda, IA). Dr. Michael Kasavana, NAMA endowed professor emeritus at Michigan State University (East Lansing), moderated the discussion.

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PANELISTS: From left, are Michael Kasavana, Ryan Harrington, Bradlee Whitson and Rod Nester.

Harrington led off, explaining that he launched Royal Vending a decade ago. As it grew, he paid attention to the management tools that would be available when necessary for continued growth. When that day arrived, he knew that he wanted a solution that supports cashless payments, dynamic routing and route-order prekitting, as well as remote machine monitoring.

The plan he implemented called for devoting the first quarter of the year to a detailed review of his current and anticipated requirements. The second phase began in April, when he attended the NAMA OneShow to take a close look at the systems on display that would meet those needs. He chose Parlevel Systems, and that company worked closely with him through May and June to install its technology on 300 machines. "In July and August, we went online," he said.

The solution is working very well, Harrington reported. Royal Vending experienced an immediate 15% sales lift with reduced fuel and labor costs (machines are only restocked when they need restocking, and drivers know what to put in every machine before they get out of their trucks). "And support is important to us," he emphasized. "Parlevel is good about that."

Mistakes occuring when implementing a comprehensive management system upgrade can be minimized by avoiding complexity, Harrington observed. "Remember, many people will need to use the software, not just you."

And the effort was well worth it, he summed up. There have been many benefits: "Customer satisfaction is higher, and the technology helped us win new accounts. Over the past year, we've doubled our revenue," the Oregon vendor reported. "Our focus right now is on growing our micromarket business; we plan to have more than a hundred of them in the field through 2017."

Second-generation operator Brad Whitson's company, K&R Vending, began as a 10-machine route in 1978. Its most recent management system upgrade culminated five years ago; the company uses LightSpeed Automation's warehouse automation system and Cantaloupe's Seed technology, and is a member of the USConnect nationwide wireless integrated foodservice network.

"We started with 15 routes," Whitson reported. "We wanted control of our products, and of how our machines look to our customers."

The operation was adding Avanti micromarkets, so the idea of automated order picking was appealing. The LightSpeed system was implemented to attain this, initially for snack products.

"Then we added Cantaloupe's Seed Office, followed by Seed Delivery," the New Jersey operator continued. "We were now 'connected,' so we could join USConnect." The company has replaced its office workstations with cloud-based management software, so its managers can work in the field.

"At present, we have more than 250 micromarkets out," Whitson reported. "We are 60% cashless -- and we have control; we know what's happening."

Central to success is organization and a commitment by management, the speaker explained. "You have to buy into what you're doing, and into why you're doing it. You also need a strong collaborative effort with your suppliers; you don't know what you don't know!

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FULL HOUSE: NAMA OneShow registrants throng leadoff technology seminar at 2016 vending convention in Chicago's McCormick Place. The "Roadmap to Technology" featured presentations by three operators who have modernized their processes by applying the latest technology.

"Analyze how you look now and where you want to go," the speaker recommended. "Remember that you can't roll out new technology overnight. Plan; establish milestones; measure progress and celebrate your successes."

Whitson emphasized the importance of getting everyone in the company to understand what's being done and why, as well as the overall purpose of the technology, as well as its limitations. "Vending machines will still break down, so any failure is not necessarily 'the telemeter.'" he instanced. "Don't lose momentum, but budget realistically. It's expensive."

Looking ahead, Whitson said, the company plans to become even more mobile by introducing iPhones. "And we want one management information system for vending and micromarkets." K&R is a member of the Unified Strategies Group operator purchasing cooperative, and strives to get the greatest possible benefit from efficient use of the USG order center.

"The rate of change today is staggering," Whitson summed up. "Before that, it seems as though the industry spent 20 years moving from brown machines to black ones. But we've taken off now."

Rod Nester explained that Smith Vending Corp. began as a Tom's distributorship; he joined the company in 1988 and ultimately purchased it. Smith Vending presently services about 1,000 vending machines and runs one dedicated office coffee service route, and has recently placed nine micromarkets. In today's market, he noted, "You need to be a member of a buying group, or else a Canteen franchisee, if you can."

In considering how to build the business, Nester saw the need for process improvements that would be attainable with technology. After a year of studying the subject, he installed DEX automated data capture and retrieval systems on his machines in 2008. In 2009, he installed Crane's Streamware system and, with automated data collection in place, revised the company's planograms. Late in 2012, the company added a branch and had all its equipment delivering DEX data within 30 days. It subsequently installed LightSpeed's order-picking system.

Nester recalled that he chose Stream­ware after considerable study, and used InOne's retrofittable DEX "boxes" to equip his machines for data capture and transmission. "Streamware predicted that it would take me 18 months to recover the cost," he reported. "Actually, it took nine -- and the whole project was paid for in 30 months. We did all the studying we could do, and we took advantage of the resources that NAMA offers."

Like all complex projects, this one had its ups and downs, Nester said. "We did have our failures; for example, we didn't get all our team members on board." Along the way, the company was able to reduce the number of machines it had out, and consolidate its routes from six to five. "In the process, we eliminated all our carousel food machines because they made it hard to account for product. And we worked with the bottlers to reduce the number of cold-drink venders in the field.

"In the first year, we replaced all of our drivers," the industry veteran continued. "They just didn't get it; they felt like they were no longer in control."

The process also enabled Smith Vending to reduce the number of stock-keeping units in its inventory and implement cashless payment options on half of its machines. Also in 2012, the operation began placing Avanti micromarkets. "In most of those accounts, it was a transition from vending, but we have some new accounts, too," Nester explained. "It's here to stay." Additionally, the company made the transition to cloud network hosting rather than upgrade its in-house servers. "This has reduced our IT expense," he said.

In short, Nester advised, when planning a technology upgrade "set goals, consider options, develop teams -- and get everyone on board. Deal with negative feedback."

Kasavana invited questions from the OneShow seminar audience. The first was for Nester. "You say you had 100% driver turnover in 12 months. Why?" the audience member asked.

"Well: we were looking at a 63% product cost, but we didn't tell them that we needed their help," the Iowa vendor replied. "We told them that we were going to reduce hours. And the dishonest ones quit when we put the Streamware system in. I should have worked harder to get buy-in from the drivers."

Another seminar participant asked, "When I think about prekitting route orders, I worry about depriving a driver's ability to meet a request for an item that's on the truck." The panelists replied that the ability to make on-the-spot transactions like that has its appeal, but they prefer to shift to a requisition process in order to improve control.

Another audience member asked whether any of the panelists are using Apple Pay, or one of the Android payment systems, or the new EMV cards. Their consensus was that mobile payments are very likely to become important, but to date, none of them has had much opportunity to get involved with EMV chip cards.

"Does LightSpeed integrate readily with the Streamware vending management system?" another participant wanted to know. "Yes, it does," Nester assured him. "It was one of the easiest integrations we did -- one of the simplest and one of the best."

This exchange prompted another question from the audience: "What is LightSpeed, anyway?" Nester explained that it is a system for picking merchandise in a warehouse, using either of two options to guide the stock-pickers to the precise shelf location of each item in a route order. The original LightSpeed implementation used a light at each shelf location to speed the stock-picker to the next item on the list -- thus "LightSpeed"; the other option is to equip the stock pickers with wireless tablets that display the items required, and shows their shelf locations. "In either case, the LightSpeed system leads the picker to the product and says how many are needed," he summarized.

The final question was: "Would you do it the same say if you did it again?" All the panelists agreed that they would choose the same software; some noted that, if they were getting started today, they would start with a cloud-based implementation.

Kasavana concluded by reminding the audience that NAMA offers a series of "white papers" on technology subjects at its website ( Other resources, including a monthly technology newsletter, can be found there, too.