Normally, at a convention a panelist session consists of a moderator and a panel of experts on the discussion subject.

However, in preparing for this Vend Buzz segment on DEX and its capabilities, we received one response to our invitation that was so complete, so comprehensive and yet so easily understood that it serves as the entire panel for this period.

Formerly Audit Systems Company, inOne Technology responded with a dissertation on “2004 DEX Technology Analysis:”

2004 DEX Technology Analysis

inOne Management Report for Vending Operators

Audit Systems Company (now inOne) compiled this analysis in cooperation with the National Automatic Merchandisers Association (NAMA). It is provided as our “collective best” understanding of the origin, the nature and the benefit of DEX data utilization.

DEX Design and Status

DEX or DEX\UCS stands for Data Exchange\Uniform Communications Standard. Within the vending industry, it defines the transfer of information\data between a Hand Held Computer (HHC) or Data Collector and the electronic vending machine.

The Food Marketing Institute, along with the major food retailers, defined the original DEX framework in the mid 70s. Their objective was to standardize the transfer of product information between a supermarket’s computer and the delivery driver’s HHC. Coca-Cola, recognized the benefit of faster back door check-ins using the DEX concept and quickly merged it into their HHC software. As Coca-Cola moved more into electronic vending, they also realized that if their vending machines had DEX capabilities their cash reconciliation could be both simplified and much more efficient. In the early 80s Coca-Cola began specifying basic cash DEX data capabilities in new vending equipment.

About 1986, NAMA’s Vending Technology Standards Committee created the DEX Data Transfer Standard (DTS). This set the baseline for information to be collected in a vending machine and how that information would be retrieved. At that time, the DEX protocol was incorporated as an integral part of the DTS. Thus, a DEX standard was established, but continues to evolve, with both vending machine and product manufacturers employing variations that fit their individual objectives, just as the mass-food retailers still do for their purposes.

In the early 90’s, recognizing the need for plug-n-play DEX upgrade technology and uniform DEX data access, ASC began mapping the vending DEX universe. Today the top 4 vending software providers rely on ASC’s DEX decoding library and field technician training to facilitate their DEX processing technologies. In 2000, ASC wrote the guidelines for the newly adopted Edition 6 of the international DEX DTS standard, at the invitation of NAMA and the European Vending Association (EVA).

DEX Utilization Impact

Every operator’s challenge is to optimize income and profits while controlling operating costs. DEX utilization plays an essential part in overcoming this challenge. The industry has generally concluded that DEX utilization technologies, which include wireless, will reinvent the vending business. The following ROI analysis of DEX utilization supports that conclusion.

DEX Cash Control Impact

Many vending operations average a 5% variance between cash expected (meters and/or product sold) to cash actually accounted for. With DEX CASH-audit operators are reducing that variance to less than 2%. By applying tamper-proof DEX Cash Control, the average operator should recover 3% more cash. Some DEX operators commonly report reducing cash variances to 1% and less. DEX CASH provides exactly the amount of bills in the acceptor and the coins dropped to the collection box. Driver change fund reconciliation is improved because the coin replenished to the coin-mech’s tubes by the driver is reconciled to the actual coin-mech’s activity. With DEX Cash Audit, drivers no longer have reason to remove money from a machine, except through the normal collection process. DEX Cash Audit challenges the notion that average cash shrinkage of a $1.00 per machine service is acceptable. Of course, if cash variances are already maintainable at 1.5% or less, DEX provides a more accurate accountability process.

DEX Column Control Impact By plugging into a machine, the HHC literally “counts the machine down” and builds the fill order\pick-list by matching each column’s DEX turns to the correct product or group. DEX “machine count downs” and meter reading capture lowers driver aptitude requirements.

DEX column sales data users report average service time savings of 2 minutes per can\bottle, 3 minutes per snack and 1 minute per cup-drink machine,,,, therefore reducing total machine service time by at least an hour per route day! A time savings of this magnitude could be used to service more machines, shorten the route day, or improve customer relations. Knowing what’s really selling supports the confidence to reduce truck and warehouse inventories, while sales increase.

DEX Route Retrofit & Certification Cost

Within the vending universe, about 46% of existing machines are DEX-capable. Assuming 85 machines per route, 40 machines will be DEX-capable, 45 will not. INONE provides a patented kit to upgrade non-DEX-capable machines to full DEX-status. Non DEX-capable snack, can and bottle machines need both column and DEX CASH capability, so their DEX upgrade kits average $170 each. Non DEX-capable Cold Food, Hot & Cold Cup machine upgrade kits average $125 each. Full DEX certification and retrofit averages $7,200 per route, assuming 85 machines and 54% (45) are non-DEX-capable.

Typically DEX utilization is deployed in 2 phases: DEX-CASH then DEX-Column.

DEX Cash ROI

For the Route ROI analysis, we add inOne’s Pocket Probe handheld average cost at $450 to the per route DEX cost of $7,200, plus $500 for the technician’s setup labor, which totals $8,150 per route. Now, let’s use NAMA’s average route’s annual sales of $350,000. With those numbers, a route ROI would be ($350k sales X 3% more cash = $10,500), (10,500 – 8,150 = $2,350 or 28% ROI). $2,350 increased profit first year!

DEX Column ROI

For this phase we must add a vending HHC at an average cost of $2,800 to the $8,150 from above, totaling $10,950. The route ROI is now: ($350k sales X 10% avg. sales increase = $35,000). $35,000 X 20% net profit margin = $7,000 plus $10,500 from cash control = 17,500. Result: $17,500 – 10,950 = 6,550 or 59% ROI. A more aggressive ROI could be argued, based on the premise that when sales increase while costs decrease, a route’s net profit nearly doubles! The “peace of mind” that comes from tamper-proof cash reconciliation and highly improved inventory control is difficult to quantify, but certainly also has value.

Few machines record ACTIVITY\ERROR codes, but when available, they may include coin\bill jams, door opening, temperature variances and compressor activity. For the most part, manufacturers’ error codes are undocumented and inconsistent, and are generally ignored by the vending technology providers. However, the newer MDB (Multi-Drop Bus) machines do provide reasonably consistent error reporting. Activity\Error reporting is an important DEX function because a large portion of the wireless vending benefit relies heavily on the timely reporting of activity and errors.

Cautions

Where can DEX utilization fail? The technology can fail primarily at the same point all route automation is subject to failure … with the driver. When a driver is directed by the system to refill a column with 10 Lays BBQ Chips but he puts in 8, and doesn’t record that change, the technology fails. Without motivated drivers and focused route supervision, even paper-based systems fail expectations. Successful column level DEX relies on managed product rotation and plan-a-gram adoption. Deployment requires top-down commitment and consistent ongoing maintenance to be truly effective.

What is Wireless Vending?

Wireless is to Vending what pre-order is to Pepsi and Coke. Knowing today what your customers need tomorrow dramatically increases a route’s service capacity. When adopted, pre-order selling enabled Pepsi’s and Coke’s routes to nearly double the stops per day.

Wirelessly Harvesting a machine’s spiral turns to the warehouse is used to produce pre-orders fill orders by matching the spiral turn to the product assigned to the spiral. Using fill orders in the warehouse eliminates the driver’s picking time, trip back to the truck and reduces truck capacity. If fill orders are not pre-packed in the warehouse they are used by the driver to pick from the truck before entering the location. Dynamic Scheduling (DS) can be employed to determine tomorrow’s machine service schedules based on product depletion targets, which can eliminate needless services. DS overrides the static service schedule if a machine does not qualify for service, based on its depletion target. Cold Beverage service depletion targets are around 50% , and 30% for snack.

4 Types of Remote Monitoring

Remote Cellular: Usually 1 machine in a bank\cluster of machines has as a master cellular transmitter and monitoring device, which gathers the DEX data from its host, and from any “slave” machine within a about 1000 yard radius. There are usually charges per call, which occur about once per 24 hours. The national wireless carriers are just beginning to include “small packet data switching” within their business models. Cellular is cost effective where locations are unusually remote from the every-day base route line. Usually some monthly service fees are involved.

Remote Local Land Line: Very similar to Cellular, but requires a local phone line access by the master . If Location’s FAX line is available, the master can usually transmit the readings to a device mounted between the fax machine and the telephone wall jack. Phone charges are possible here also, but less than cellular. Location permission is sometimes a barrier. Monthly service fees here, too.

Remote Wide Area Network: Here the master is a transmitter, like a home based wireless phone, but it transmits about 3-10 miles, depending on topography. It constantly searches for other slaves and masters for the sole purpose of relaying data. If there is no local internet connection, the master will pass its accumulated reading to the next master between it and the vending operator’s warehouse. The warehouse has a 15 to 25ft. antennae. Thus far, this is the least expensive remote option.

NOTE: Each of the above remote options support CASHLESS vending.

Curbside Wireless Vending

Harvests DEX spiral turn data to a truck based receiver when the truck is within Location proximity. Some have truck-based picking ticket printers and\or feed the DEX to the driver’s HHC. Like Remote options, curbside polling eliminates the trip back to the truck. It doesn’t support warehouse fill-orders or Dynamic Scheduling without intensive forecasting technology. Curbside polling is typically ideal for daily, unpredictable, machines. It does not usually require monthly fees be paid to maintain each machine “within the network”, therefore the least expensive polling option.

Summary

Clearly the potential savings and positive sales effects are worth every operator’s consideration, regardless of the DEX utilization method. During the next 3 years, it will become more common to hear of vending operators maintaining sales volume with 30% fewer routes, Operators using HHCs can immediately begin DEX CASH Audit, and COLUMN control with a little pre-planning. Those not on HHCs might consider them, or begin with CASH audit using just a DEX data gathering device like InONE’s one- button Pocket-Probe for around $450.

The largest vending operation in the USA has over 150,000 machines reporting DEX data. Those who do nothing with DEX must consider how to compete against guaranteed commission accuracy and no-sellout satisfaction warranties.

Copyright June 2002, Audit Systems Company (now inOne Technology LLC),Timonium, MD 21093. Used with permission.

www.inOneTechnology.com
Phone: (800) 558-8727
Fax: (262) 703-4404