Contents of Automatic Merchandiser - APR 2012

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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C O VE R ST O R Y :
S M A R T VE N D I N G
from technology. An operator begins to see diminishing returns with each new technology simply because some costs can't be eliminated. More specifi cally, think about
what percentage of an operator's costs are actually "operating" costs. Usually, product cost accounts for somewhere around half, then add
operating cost (obviously not pos- sible), the most that could be saved is 40 percent of total cost. Usually, technology can help reduce operat- ing costs by about 30 percent or so — but that means the operator is really saving just 12 percent of total cost (30 percent of the 40 percent operating expense).
USING technology to improve sales has no natural limit.
customer commissions and corpo- rate overhead. However a company may perform, typically, it is fair to say somewhere around 30 to 40 percent of total cost is operating cost. So if an operator eliminated all
In effect, all the effort of installing a VMS, DEX, telemetry, dynamic scheduling, pre-kitting, and every other operating technol- ogy will likely save the operator around 12 percent of total cost. The
industry has spent 20 years focusing on this. Don't get me wrong, I do believe this 12 percent is valuable and certainly worth the investment. My point is simply any further returns will be capped. On the other hand, using technology to improve sales has no natural limit.
Higher sales versus lower costs There is another important thing to consider. Oftentimes, the two goals of maximizing sales and minimizing costs work against each other.
Again, taking it to the extreme
for illustrative purposes, think about how often you would sched- ule a machine to be serviced if your only goal was to minimize servic- ing cost.
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32 Automatic Merchandiser VendingMarketWatch.com April 2012