Consistent, significant vending profits can be hard to find. Often, operators suffer from low margins due to high operating costs and low revenues. After all, a recent study showed that vending operators often spend over half of their revenue on product purchasing. That doesn’t even include operating costs such as labor, vehicle, and machine maintenance. These high costs leave little room for profit, so how do you increase your vending profits? There are 2 ways: either increase your revenues or decrease your costs.
Since service costs can be so high in vending, that might be the best place to start. What if there was a way to reduce vehicle wear and tear, cut labor costs, decrease product spoilage, decrease theft, and cut training costs? Who wouldn’t jump at the opportunity to significantly decrease these costs and improve their bottom line? With a good vending management system (VMS), you can do just that. A VMS can help you save your business money through remotely monitoring your operation – granting you a greater level of control over your business and decreasing costs as a result. Here are the 5 ways a powerful VMS can save you money:
1. Lessen Vehicle Wear and Tear
According to Vending Market Watch’s 2015 Industry Report, the average route to cost an operator is roughly $60,000 each year. This $60,000 comes from driver wages, gas costs, truck repairs, and more. This route cost takes a huge chunk out of vending profits. With a VMS, operators can consolidate 1 in every 3 routes – cutting down on those significant route costs. A VMS accomplishes this by helping your drivers spend their time servicing only machines that need to be serviced.
Instead of servicing a set of machines every Tuesday, another set every Wednesday, etc., you can service machines when they need it. Instead of picking a static schedule and sticking to it, you can service machines on a dynamic schedule. With dynamic routing, a VMS will remotely monitor machines and actually recommend what machines to service that day. If a machine is low on inventory, high on cash to collect, or geographically close to other machines you plan to service, then a VMS will recommend servicing them. This will cut down on unnecessary machine visits and increase your service efficiency.
Do you have a location or two that is out of the way, but they still need to be checked to ensure it isn’t empty? Driving an hour out of your way for one or two locations costs your company time and wear and tear on the vehicle. Dynamic routing grants you the ability to remotely monitor what is going on and help you decide routes that only include machines that need serviced, allowing your drivers to service more machines that actually need serviced each day. Dynamic routing can increase service efficiency by over 100%, which allows you to cut down on hefty service costs and increase your vending profits.
2. Decrease Labor Costs
How long does it take you or your drivers to service a machine? What if you could cut that time in half? You’d be able to service more machines per route and get more out of the money you are paying your drivers. Plus, your vending profits would increase. For example, A VMS can save 10 to 15 minutes per machine service through prekitting.
Since a VMS is remotely monitoring your machine, it knows exact inventory levels in your machine ahead of time. Instead of pulling up to a location, walking inside to take inventory, returning to the truck to gather product, and returning back to the machine to service it, a driver who prekits only visits a machine once. He knows exactly what product to pick for each machine. Once he pulls up to a location, he takes his prekitted tote to the machine, fills it up, and walks away. Instead of making multiple trips to the machine, he is just making one.
Prekitting is a powerful function and one of the easiest ways to save on labor cost for a vending operator. It allows each driver to reach more machines that need serviced in a single day. If you couple prekitting with dynamic routing, you can service more machines in a day, but it will only be the ones that need to be serviced.
Now, the chances are that you’ve heard of prekitting. Whether you’ve implemented it into your operation in some fashion or not, changing it seems like a big undertaking as it can alter your workflow from warehouse to each individual machine. Fortunately, even for an operation of less than 6 routes, setting up your business to prekit helps find success.
When prekitting, you need to make sure you have capable software, DEX capable machines, and working closely with your drivers. Follow this simple guide to implement prekitting into your operation smoothly. You can do all of this for one route to ensure it works for your business. After some restructuring of how things are done, you very soon see the savings start to stack, and your vending profits will jump.
3. Reduce Product Spoilage
Do you ever have whole rows of product go bad and struggle to find what actually sells outside of your best sellers? You’re not alone – spoilage is a costly issue for any food and beverage seller. According to Estimated Fresh Produce Shrink and Food Loss in U.S Supermarkets, grocery stores in the United States lose an estimated 12 billion pounds of fresh produce a year. This product spoilage is a compound problem also found in the vending industry and can cut into vending profits. Not only are you disposing of items that cost you money, effectively throwing your money away, but you are missing out on potential income that could have been gained by offering a product that is more likely to sell. A good VMS is able to give you detailed reports of how products are selling by machine, location, region, or your entire operation. This helps you optimize your machines to sell well. No longer will those stale crackers sit there wasting your limited real estate. They can make room for what you know will sell or even to try a new product. When over half of revenue goes to product already, you don’t want to see any of that go to waste.
With a VMS’s product merchandising functionality, you can see what is selling in each machine. You can also see what isn’t selling in those machines. Not only that, it can recommend products that sell well overall in your operation that aren’t in that machine. Do you have a chocolate bar that sells out in your machines? That’s likely to be recommended to fill the slot of a slow seller if you are looking to make a change and save money on products that will sell, not spoil. With product merchandising, you will decrease spoilage and increase your vending profits as a result.
4. Monitor Theft – Cash Accountability
Theft can be huge issue in vending. It has been reported that 30% of business failures are a result of internal theft. With vending, a primarily cash business, theft is nearly impossible to catch. One employee taking around $20 cash per day throughout a route could easily total $5,000 a year, and it’s not your fault. How are you to know exactly how much each driver should be collecting? You just can’t, without a VMS, that is.
A VMS can give you detailed reports on every machine. In a matter of seconds, you can see how much a machine has made in both cash and cashless sales. This, of course, also provides you with a total that each route should net you at the end of the day, so you know that if you don’t receive that much cash from a driver, something has gone awry. Furthermore, a VMS can deter theft. If your driver knows his machines are monitored, he knows he can’t steal from you without being obvious about it. With the decrease in theft, your vending profits will increase, and you’ll sleep easy at night knowing you have trustworthy employees.
5. Cut Training Costs – All-in-One Solution
Whether you are already involved with office coffee service, micro markets, and vending machines, or looking to enter one of these business lines, it can be hard to maintain all of these sections of your business. Maybe you’ve heard that revenues are growing from expanding service opportunities, and you’re trying to grow into more of these sectors. It can be intimidating to get started. It’s time consuming for you to try to curate data from all of your different sources. This is where a VMS like the one from Parlevel truly shines. Naturally, it includes all the aforementioned features and many more, but it is the only fully integrated, all-in-one solution for your operation. In addition to that, it’s easy to use. This is not made to only be used by technical experts, this was made to be accessible to all vending operators. You only need to train your employees once on one system. You only need to go to one company for any of your needs. You only need to call, email, or chat one support team for any of your needs on your VMS, cashless readers, micro markets, and office coffee services. All of Parlevel’s products are by default integrated into our VMS with no complicated setup process for you. This means that you don’t need to be some technical expert to take advantage of all of these tools.
A VMS that only requires one system to train employees is one that can keep more money in your pocket. This is all about your margins. Saving you this money allows more income to invest in technology or more product. It gives you more control of your business. It also saves you time and headaches.
Margins can be slim in vending. A VMS can help by reducing wear and tear on your vehicles, cutting labor costs via dynamic routes and prekitting, decreasing spoilage, preventing theft, and cutting training costs. This remote monitoring gives you greater control and helps you save money. Consistent, significant vending profits can be hard to find, but a VMS will help you get there.