Operating vending machines is a significant task, and they are highly valuable company assets.
The company operates 12,000 Full Service Vending machines on the market and is having problems operating them profitably.
The company wants to align its vending organization with market reality. At the same time, they maximize profitable growth through vending opportunities. Furthermore, they want to develop the organizational capabilities of their vending operation. This will enable them to expand their brand product offer in their vending machines while strengthening equipment control to improve asset utilization.
An effective Full Service Vending business’
Operating vending machines is not an easy business due to the high capital investment, and the size of the revenue drop is not always sufficient to justify the investment. However, doing it right can make it a very profitable business. Effective Full Service Vending business values include developing cultures and habits, brand loyalty, and profit.
- Develop cultures and habits: The opportunity is to create and develop cultures and habits in away-from-home market segments that drive continual consumption. Consequently, habits are converted into home market segments.
- Brand loyalty: Operating and doing business with a high number of vendors that are “own company shops” and are not visible to the trade generates competitive advantages, resulting in higher brand loyalty. Generally, it is difficult for competitors to understand and estimate the size of a B2B business. The consumer will leverage the positive brand experience through vending purchases for home consumption.
- Profit: Doing it right, every customer in service can produce significant profits! Full Service Vending is not doing business as usual and requires superior planning due to low revenues and high service requirements per vendor.
Full Service Vending is about managing multiple vendors with low $dollar drop sizes. To justify the low revenues per vendor, a proactive service system must be designed and developed – making every vendor in service profitable.
A master plan guided the process
We developed a transformational master plan to make the Full Service Vending business profitable.
Modules and Content.
- Implementation of standards for minimum efficiency and effectiveness
- Introduce Business Planning for all individual vending operations
- Underperformance calls for immediate action to get performance in line
- Regular information on low performing equipment
- Optimize profitable system growth through improved assets utilization
- Monthly performance review to secure delivery of the business plan
The results were outstanding
Through first-year changes, the full-service vending business is now profitable on a persistent basis. These changes resulted in a 10% increase in vending volume throughput, a 4% increase in the average vending price, and an 18% reduction in operations costs (employees and FSV delivery vans).
Management and key employees were provided with a training program to understand the key planning focuses. This enabled them to facilitate revenue and profit growth for their vending business. The training program was the key to developing organizational capabilities in the full-service vending business.