Automatic Merchandiser

OCT 2014

Automatic Merchandiser serves the business management, marketing, technology and product information needs of its readers including vending operators, coffee service operators, product brokers, and product and equipment distributors in print.

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Although this list of variances from vending may sound overwhelm- ing to a new micro market operator, they are essentially the same func- tions we provide in vending adjusted for the specifcs and expanded prod- uct and sales opportunities provided by micro markets. So the central question becomes: with all of these differences between micro markets and vending, can we effectively operate the two within a combined operation and without signifcant organizational changes to our vending business or must we assign separate resources due to the core differences in the businesses? Organization evolution Before we can answer this question, let's discuss how organizations evolve in general. Normally, one or two indi- viduals decide to start a business. Initially the founders do everything necessary in an attempt to develop a positive proft line and understand the needs of the business as it grows. Personnel are added and an "organi- zation" develops when the business grows to a point where different func- tional tasks become sizeable enough in terms of time requirements such that they would be more effcient through specifc resource allocation and focus. This "size and effciency" approach was the rationale the frst time a vend operator divided opera- tional assignments between feld ser- vice, warehouse and route personnel. Each function was time consuming enough to justify focus of commit- ted personnel or other specifc com- pany resources. By focusing time and skills on a consistent set of tasks, the assigned personnel became much more effective in task performance and effcient in their time utilization. When new businesses are added to an existing company as is nor- mally the case with micro markets being added to an existing vending operation, a similar approach is often taken where existing personnel and resources are used to initially support the new business while the breadth of the opportunity and scope of micro market-specifc functions are better understood. As an operator's micro market business expands, however, the assignment to each business of specialized resources needs to occur to develop a "focused and effcient" organization for both. Basic micro market variations As functional variations lead to organizational changes, looking at where micro market operations vary from traditional vending is an effective approach to understand- ing necessary resource and organi- zational adjustments. There are three driving opera- tional factors associated with micro markets that will add new functions to a traditional vending operation: • Managing the expanded micro market product set. • Handling the data input and main- tenance necessary to support the micro market software systems. • Capitalizing on the ability of micro markets to effectively mar- ket directly to the consumer. Handling the increased micro market product variety is the most immediate and apparent functional change from vending. To frame the size of variety change at micro mar- kets, in recent vending and micro market tests we ran within our frm, item-level data indicated that the num- ber of different snack items sold each week at micro market locations was more than twice the number of items sold through snack machines. Further, individual micro markets sold an aver- age of 59 different beverage products, compared with most vending instal- lations where a single stack vendor offers 8 to 10 beverage varieties. The wider variety of micro mar- ket products necessitates immediate changes to both route and ware- house systems to physically handle the broader product line. From the very frst micro market installation, product orders need to be pre-picked at the warehouse and loaded, ready ding be managed separately? ABOVE ten installations benefts begin to become signifcant. Transaction data analysis October 2014 VendingMarketWatch.com Automatic Merchandiser 27 M I C R O M A R K E T S O U T L O O K

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