Small player, new tools: Success

Small vending operators have always touted the advantage of providing fast, personal service.

Big companies have enjoyed the advantages of economies of scale and having the resources to employ new technologies that improve efficiencies and deliver new customer benefits.

But what if a small company could utilize the benefits of modern vending technology in addition to providing personal service?

Such a scenario is playing out in metropolitan Boston, where Robinson Vending Corp., a 3-route operation based in Bridgewater, Mass., is using DEX technology to operate more efficiently and at the same time provide better sales information to customers. Along with the personal service that the company has always provided.

Dave Robinson, the second generation owner, believes the ability to manage line item sales is a powerful management tool.

DEX allows operators to collect accurate line item sales information from machines in a timely manner. Operators have found this data helpful in two key areas: managing machine level inventory to optimize delivery efficiency, and to track the best selling items on an individual machine basis.

Both of these advantages combine to ensure a third benefit: better customer relations.

An astute life-long student of vending

Robinson, who grew up in the business under his father, is no ordinary second generation owner of a small, family business. He has been active in state and national associations, and he has taken advantage of the education programs such as the National Automatic Merchandising Association (NAMA) executive development program.

Robinson has been able to leverage DEX technology faster than many others since he was pre-kitting his deliveries prior to using DEX.

Some might find it unusual for a 3-route operation to be pre-kitting routes. This was the method the company’s founder used from the very beginning. The difference now is the company is using the more accurate data that DEX provides. Data is now downloaded from DEX handhelds instead of manual reports.

Business conditions change

Robinson has fond memories of the late 1980s when he came aboard full time after graduating from college. The Boston area was enjoying a technology boom, and new companies were opening up and adding employees.

Having grown up in the business, Robinson learned to like it as a child, and he knew from an early age that it would be his future. “You get to see different people all the time,” he said. “You become friendly with them.”

It was around this time that Robinson’s father purchased the 2,200-square-foot warehouse condominium that it operates in today.

Robinson focused on sales while his father and his cousin Neal handled the company’s two routes.

The company at the time used a MS DOS-based system for accounts receivables and route scheduling.

Robinson got his first taste of recession in the early 1990s. This instilled in him the importance of constantly seeking new accounts. He became active in the community to improve the company’s visibility.

The company expanded to three routes when it acquired a small competitor in 2001. The acquisition offset some of the effects of the late 1990s recession.

Robinson Vending enjoyed its most prosperous year in 2003, thanks in large measure to a reviving economy, but also due to Robinson’s diligence in keeping up with new equipment, new products, overseeing the service quality and constantly working on adding new accounts.

Robinson also stayed active in the state and national associations and took advantage of educational opportunities. In 2002, he attended the NAMA executive development program at Michigan State University.

Recession challenges vending

The economy has been struggling, and Robinson isn’t counting on a recovery any time soon.

Fiscal 2009 was a tough year. Sales fell by 5 percent, which Robinson believes was better than most operators experienced. And for the first time in the company’s history, he was forced to lay off a driver.

The company’s repair technician, who filled in on the routes as needed, became a full time driver. Robinson assumed much of the machine repair work himself, along with his sales and management responsibilities.

“I’ve gotten through,” Robinson said, looking back on 2009. Recognizing that new accounts are hard to come by, he wants to make sure he is providing his existing customers the best possible service, and at the same time, serving them as profitably as he can.

Robinson knew from attending conventions that newer software systems allow for line item tracking. He realized that line item tracking would allow him to determine accurate machine fill levels, as well as identify better selling items.

Robinson had held off on investing in modern vending management software mainly on account of the cost. Colleagues had told him it didn’t make economic sense to invest in a vending management software system until he had at least five routes.

As a life-long student of vending operations, Robinson studied different software programs over the years.

This past year, he invested in a software system developed by an entrepreneur who previously worked in management software for a large regional vending operation. Being a new software provider, the company offered a very competitive package, one that Robinson felt he could afford.

New software system

Robinson feels fortunate to have hooked up with John Davies, an entrepreneur who started his software firm, Synectic Software Solutions Inc., based in Quincy, Mass., after working as the chief technology officer for Service America Group. Service America Group was a vending and technology business based on the vending operations of All Seasons Services Inc., a Boston-based, multi-regional food and vending company.

One of the unique features of Davies’ system is that the software is a full vending management system provided as a hosted application. Hence, there is less hardware and upfront software costs than some other vending management software systems.

“The VendSys vending management software from Synectic was a system that showed me where I wanted to be,” Robinson said. The reports include profit and loss by location, which Robinson views as one of the key reports.

One of the concerns some operators have about hosted systems is the need for their data to be safe from hackers. Robinson said he was assured by learning that the system has “firewall” protection.

Investing in a new software provider involves a certain amount of risk. It is impossible to know if a new business will be around to continue to serve customers. Robinson was willing to accept this risk.

Having invested consistently in new equipment over the years, Robinson has been able to utilize the DEX-based software system.

Most of his machines were DEX capable before he introduced the DEX handhelds. For those machines not reporting DEX, he used retrofit kits to give them DEX reporting capability. He only has a few machines that cannot be retrofitted. For these venders, he has the driver input the column sales information manually at the machine.

DEX handhelds, he believes, allow him to get a better handle on what’s selling. They also make it easier for someone to fill in for a driver if the driver is off for any reason.

DEX brings benefits

Robinson has introduced the DEX handhelds to two of his three routes, and he claims he has been able to offer customers better service. He also believes his efficiencies have improved.

The routes managed by DEX handhelds are returning to the warehouse with 4 to 5 percent inventory. This marks an improvement; prior to DEX, they usually returned with 10 percent inventory.

When Robinson first introduced handhelds, he visited all of his accounts on the route and explained that he was using modern technology to offer better service.

Like other operators who have used line item reports, Robinson has found it a great customer relations tool. When customers request products that don’t sell, he’s able to show them credible reports verifying the need to change to alternative products.

“The line item detail is just a huge marketing tool,” Robinson said.

Line item reporting helps track profitability

Line item reporting has many benefits. One that Robinson sees as especially important is product profitability. With manufacturers raising prices frequently, keeping track of product profits has become more difficult.

Tracking item profitability is possible without DEX reporting, Robinson noted, but it is much harder.

Another key benefit has been determining the right machine fill levels on a per location basis.

Line item sales reports also allow him to measure customer response to new products faster.

DEX improves planograms

DEX offers a good management tool since it allows an operator to enforce his planograms on the routes.

“Everything’s where it should be according to the handheld,” Robinson said.

Robinson was using a planogram prior to introducing DEX handhelds, but that planogram only covered about half the items in the snack machine. With a manual accounting system, it was too tedious to track product sales daily. Hence, he allowed drivers to select half of the snack items for their locations.

DEX, by contrast, gives Robinson more control over what gets pulled from the warehouse. DEX-based reports generate a pick list for the drivers based on daily machine sales.

The daily reports also allow Robinson to know when buying habits are changing. It is always hard to know exactly when seasonal shifts are occurring, such as when chocolate sales start to drop off in the early summer.

“It has made me concentrate on different items,” he said regarding the sales reports.

Robinson has been converting his routes to DEX one at a time. He started with his least efficient driver.

Where many operators first use DEX handhelds to improve cash accountability, this wasn’t a concern for Robinson.

He is fortunate to have drivers he can trust with cash.

Nevertheless, he is able to tie cash collected to line item sales reports as well as to the DEX cash meter readings.

Where many operators only use DEX to manage their snack and cold drink machines, Robinson has used it on his hot beverage machines as well. As hot drink selections have increased, he wants to know that the best selling products are in the machine.

“If you’re not selling almond amaretto, get it out and try something else,” Robinson said.

In accounts with a lot of Portuguese employees,

Robinson was able to learn quickly that certain retail coffee brands were not selling well.

The hot beverage segment has suffered the most in recent years, which Robinson attributes to competition from other retail outlets.

The only segment where Robinson doesn’t see installing DEX is in his carousel food machines. He said the carousel food machines can’t report item level sales. He does use DEX in his glassfront food machines.

DEX positions the company for long-term growth

DEX has better positioned the company for long-term growth. “He (Robinson) will be able to grow and still give the same detailed attention to this larger business as he does now to his current business,” Davies, the software supplier, said

One of the myths about handhelds and technology is that the driver’s job becomes less demanding. Both Robinson and Davies agree that it takes someone who can understand what the system is trying to achieve and how it works, as well as being diligent in following the process and making accurate data inputs where required.

Scott DeMolles, Robinson’s second driver to begin using DEX handhelds, agreed that learning how to use it takes time. DeMolles recognizes the system’s ability to determine the right fill level for every machine, and he understands why this is important.

By filling to the right par level, the company doesn’t waste time removing product and returning it to the warehouse and sending it out again, DeMolles said. He also recognizes that additional product handling runs the risk of damaging the product.

Robinson said it takes a driver two weeks to get used to a DEX handheld. At first, the handheld slows the driver down since he’s not used to it. After two weeks, the driver is doing his job faster without sacrificing customer service.

Handhelds also change the role of management. “There is a shift in labor practices in tandem with technology,” Davies said. “Part of the implementation of technology is restructuring your labor to match.”

Davies’ system offers remote machine monitoring. This requires additional hardware, which Robinson hopes to introduce at some time in the future. Once he converts his third route to DEX, he will look at further efficiencies through remote machine monitoring.

Quality remains paramount

In the meantime, Robinson continues to face many challenges.

Massachusetts has some of the most restrictive nutrition requirements for schools. While Robinson doesn’t service many secondary schools, the attention paid to nutrition and obesity has made many customers interested in healthier products. Hence, he offers the NAMA Fit Pick program.

Robinson hopes to grow the business to five routes. This size will allow him to continue to be a hands-on owner, which he considers important. He believes there will always be a place for small operators.