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AUTOMATIC MERCHANDISER EDITORIAL ADVISORY BOARD Anant Agrawal Cantaloupe Systems Brad Ellis Crane Co. Carl Moser Cardinal Canteen Food Service Chuck Reed Crane Payment Innovations (CPI) Elyssa Allahyar-Steiner Avanti Markets Inc. Jeff Whitacre Food Express Jim Carbone The Classic Group/Chicago Coffees & Teas Jodi Glimpse Camelback Vending Joe Hessling 365 Retail Markets Lee Hartnett Commercial Coffee Service/ Food Systems Inc. Michael Miller Mondelez International Paresh Patel PayRange Paul Schlossberg D/FW Consulting Sandy Thornton VendEdge The New Business Model You don't know what you don't know. THE vast majority of operators are now using VMS. o you prefer knowledge or wisdom? Are you a facts-driven decision maker or intui- tive? I think there's room for both in the vending, micro market and offce coffee service industry, but until recently operators have been using more wisdom to run their businesses. And now is the time to embrace knowledge. Decisions made on data In this issue you'll fnd the State of the Vend- ing Industry Report on page 22. In the report I talk about the new busi- ness model emerging in the industry. Specifcally, it's the shift in how opera- tors are utilizing technol- ogy. Instead of being an investment only the large operators or cutting-edge operators are making, it has begun moving into the mainstream. The majority of operators, regardless of number of routes or annual revenues, are using technol- ogy to more cost-effectively manage their businesses. Size and numbers While there are many types of reporting and technology that assist operators in bet- ter business management, I prefer to focus on the use of a vending management system (VMS) as its purpose is very clear — to produce reports that can be used to analyze the business and make actionable decisions on the data collected at the point of sale. On a national level, 54 per- cent of operators report using a VMS. Drilling down, no matter how you slice the data, extra large, large, medium, and many small operators are using VMS. When looking at route size, 42.1 percent of operators with between 1 and 5 routes are using a VMS. The percentage goes up to 74.2 percent for 5 to 20 routes, 91.7 percent for 20 to 40 routes and fnally 100 percent for 40 or more routes. When slicing the operations by the revenue reported, the numbers follow a similar pat- tern. For operators making less than a million in annual sales, only 25.5 percent are using a VMS (interestingly, this might prove a need for VMS more than the other numbers). For those making between $1 million and $5 million, 72 percent are using a VMS. From $5 million to $10 million that number increases to 83.4 percent and fnally for those making over $10 million it's 96.2 percent using a VMS. Quite recently I was talking with a tech- nology provider who said there is currently enough operator business out there to be sus- taining a number of VMS providers, including most of the original suppliers as well as several newer entrants. The biggest hurdle to VMS is fnding the time, determining the schedule, benchmarking data, cleaning it up and even hiring the right staff to analyze it and make decisions. It's a moving target that is not the same for every operation. Dedicating resources to analyzing data isn't the only challenge. Some systems don't inte- grate well, making it near impossible to look at one system and see all the information. That is something vending technology providers are working on. Must remain a goal Still, it's not time to wait. It is important to make time for data. You don't know what you don't know. Who are your top 25 customers? Can you market to customers like them in your area? Who are your bottom 25? If you change the products at their machines, does it make a difference? When should you cut your losses on those locations? I'm not arguing that we should exclusively use data to make decisions, either. Wisdom plays a large role in success. But just like two heads are better than one, using both knowledge and wisdom should produce the best results. D 8 Automatic Merchandiser VendingMarketWatch.com June/July 2016 E D I T O R ' S N O T E B Y E M I L Y R E F E R M A T