Tuesday, July 27, 2010

Industrial Vending in the Age of thte Red Box


I can’t really remember when I saw my first “Red Box”; it probably wasn’t all that long ago. But over the past few months, these things have become a part of my environment. I see them everywhere – at the local Walgreen’s, in the front entry of my neighborhood grocery store and at busy convenience stores. And, last week, I noticed one along side an interstate McDonald’s.

For those of you who spent the past 5 years holed up in a hermit’s cave or incarcerated in solitary confinement, the Red Box is a refrigerator sized vending machine that dispenses rental DVD’s. What makes the machine cool is:
You can locate and reserve DVD’s over the internet
There are 5-6 of these machines within a few miles of my house. I can see which movies are available at the machine standing at the Walgreen’s a half mile from my house.

You can rent from one location and return to another
You can rent movies while traveling; basically watching movies as one hops from machine to machine across country.

Your credit card works as your id
No new cards to carry, no application for membership – immediate gratification is the watchword of the day.

What does this have to do with Industrial Vending?
First, technology like the DVD renting Red Boxes is driving technology forward – and doing so fast. Secondly, our customers are being exposed to more and more advanced vending – this isn’t “old school” candy machines. Instead we refer to internet connected, intelligent machines with the capability to track purchases and buyers.

Except in the largest of facilities it probably doesn’t pay to have crib supply attendants on duty 24 hours a day, 7 days a week. And, the success rates of “cribs” with a single shift attendant have been less than successful (especially when maintenance and other employees work other shifts).

In an age when CFO plans call for tighter controls and closely monitored spending, understanding who consumes which supplies is important and reducing theft/shrinkage is an added benefit.

Allow me to share a story to illustrate the shrinkage factor. Many years ago I held the supply contract for flashlight batteries into a fortune 100 manufacturing facility. We had just renegotiated the supply contract and changed the supplier of batteries from one industry leader to another. In mid-February, I received a call from a purchasing analyst – the new batteries were wearing out much faster than the old batteries. She had both statistical and anecdotal proof for her claims. The use of the new batteries had surged in the month of December – about 30 days following the switch. When she checked with facilities people, their only answer was the new supplier batteries weren’t as good. But here’s the kicker. When we looked into usage for the facility, we discovered battery usage peaked every December. Hmmm, could it be that when batteries didn’t come with the goodies Santa delivered, usage at the facility jumped?

Vending machines allow for consumable usage to be precisely measured. It allows for management to understand precisely which department used the product. And, based on preliminary research – these machines are affordable and easy to implement.

We are working on a study of the practice and will soon have some results for you.

3 comments:

Dinesh Kumar said...

Thanks for sharing this Informative content. Well explained. Got to learn new things from your Blog on SAP SD

Sahana said...

Thanks for sharing this Informative content. Well explained. Got to learn new things from your Blog on SAP

Sahana said...

Thanks for sharing this Informative content. Well explained. Got to learn new things from your Blog on SAP