03 Mar The Sweet Spot: How to increase sales & reduce waste by simply optimizing your product mix
The Vending Sweet Spot: Finding that PERFECT Product Mix
Every operator’s dream is to have machines with only one product left in the spindle or row when the driver comes to service. It means Debbie in Accounting found her favorite brand of trail mix and Joe in Receiving enjoyed his afternoon soda, both not having to worry about an empty slot. But most important, it means the operator knew the right number of the right product was the right machine; the perfect product mix.
It’s the secret sauce in vending. Sell just the right amount, but not enough for the machine to look empty. Sales are high, shrinkage is low, and drivers are busy keeping the machines full. But how do you get to this zen state of vending? What does it take to find the right product mix?
Know Your Customer
It all starts with knowing your customers at a client’s location. When you first sign on a new client, the best way to find out what the customers want is to take a simple survey. Find out what they like. Are they partial to particular types of chips? Do they like fresh items? Are healthy snacks high on their list?
You probably won’t be able to offer them everything on the survey, but it gives you a good idea of what they like and how popular that item is. These surveys help you order product and begin to set the machines up. Remember, you probably won’t get the mix right the first time, but that’s okay. Just be ready to be flexible as sales roll in.
Location, Location, Location
Another key factor in optimization is putting the right number of machines in the right location. While you probably won’t get to pick the locations, you can decide how many soda and snack machines will go in the location. But your client may decide that ‘out of the way break room’ is a part of the deal. So be ready to factor that into your planning.
Consistency is the key to sustainable sales and the best way to achieve it is with a planogram or a standard product layout. From spreadsheets to vending management solutions, keeping track of and seeing what product goes where helps not only in your planning, but with customers who typically are creatures of habit. Move those Cheetos and you probably will disrupt their day.
It’s All In the Pre-Kit
Before pre-kitting came along, most drivers had to load the truck with whatever product they thought might be moving. That usually meant more product on the truck than might be necessary. It also resulted in potential shrinkage when drivers had to get rid of stale product.
Not long ago, pre-kitting was introduced to the industry. Now operators can load tote boxes with smaller amounts of product, destined for specific locations. So how does pre-kitting factor into getting the right product mix?
Using a management solution with sales data and pre-kitting, an operator can tell exactly how well products are moving in the machines. Couple that with near real-time information from the machines and drivers can know exactly what to take to the location.
It’s All About the Data
If there’s one lesson operators can learn from the world’s largest retailer, it’s how important the data is in operations. Wal-Mart began years ago collecting data on its products, customers, and locations. In fact, there are studies surrounding “beer and baby diapers” theory that many attribute to Wally World.
But even though the story may not be entirely true, it does drive home a valuable lesson regarding data analytics. According to the article, “Companies can now think through how and what people buy and layout stores more efficiently. They can offer coupons on items bought together, and have extra stock when demand is going to increase.”
Wal-Mart and other major retailers invest millions in data warehouses and the experts to explore them. With just some simple reports and tools a vending operator can learn about what and when customers are buying particular products. Add a little common sense and an operator can discover what is working and what is not.
Let’s go back to that first setup. After a few months, it would probably be a good time to look at the sales figures in the machines to see how products are moving. While it’s important to satisfy the customer, things can change. Debbie in Accounting may have switched to healthy snacks. People move around, join, or leave the company.
Looking at the data, you probably see products that either need changes to the par level or could be moved to another location. In some cases where products are selling out every time between servicing, it might be a good idea to add another spindle or slot.
That’s the beauty of leveraging a vending management solution (VMS). You get to experiment with product quantity and placement by leveraging the data and pre-kitting. But while it might be tempting to move products like pieces on a chessboard, remember that your customers are looking for consistency. They don’t like hunting for products every time they stop by for a snack.
Keeping Up With the Trends
Sometimes product demand changes based on the season or some event. Think about students on campus during finals week. Who doesn’t pull an all-nighter cramming for that test the next morning? That’s when a machine empty of energy drinks results in not only missed sales, but some unhappy customers.
Some people watch the Super Bowl just for the commercials. Knowing what products will be promoted can give you an edge with your sales. That funny chip commercial during the big game could lead to an uptick in chip sales the next week. Check out the commercials ahead of time, looking for products you might sell.
Another way is to watch the social media feeds for promotions. To help you out, we’ve started a Snack Vendors Twitter list you can subscribe to or bookmark that will be kept updated with more vendors.
To get ready for those periods, sometimes you have to alert your suppliers to make sure you have adequate product ahead of the competition. It’s the same strategy big retailers use to meet their customer’s demand.
Looking To the Future
Planograms or standard product layouts provided operators with more control of their vending operations, creating consistency based on experience. Pre-kitting has helped by reducing inventory to what is needed, instead of guessing. Real-time telemetry has given operators more visibility into actual sales, further optimizing routes.
But this is just the beginning. Layering demographic data onto your coverage map can offer more visibility into the needs of your customers. As big data continues to grow in the business world, having the ability to add these additional dimensions to the data can help give you better business intelligence and insight.
The Value of Automation
Vending used to be about operator experience and spreadsheets. Those years of driving the routes and getting to know your customers could not be matched. Spreadsheets came along and that experience could be captured. But it took a lot of work to really keep up with the numbers. Even worse was when you lost one of your experienced drivers.
Today, with vending management solutions, the data is captured for you automatically. The right reports on that data are built from the years of experience of operators. New tools for analyzing that information can help spot trends and exceptions.