Roberto Priolo speaks to Apex Supply Chain Technologies, whose point-of-work vending machines have conquered the US. Now the company is entering the European market, confident it can change the way supply chains are managed in the Old Continent too.
Vending machines must be one of the cleverest inventions in our recent history. They have transformed the way supply chains for many of our favourite snacks and beverages work – and the way in which these products are consumed. It was just a matter of time before somebody found new uses for them.
For instance, what if we positioned a set of machines by a production line in a manufacturing facility, or in a hospital, dispensing commonly used equipment and connected to a cloud-based supply chain IT system to ensure reliable replenishment and easy access to spare parts and tools for workers?
Apex Supply Chain Technologies, an Ohio-based company that with a portfolio of point-of-work vending machines has done just this. The organisation, founded by Kent Savage in 2006, has experienced extraordinary growth in the States over the past five years: it now holds a 60% to 70% market share across the pond.
In June 2011, Apex Supply Chain Technologies crossed the Atlantic, and opened its European headquarters in Worcester. It is looking to apply in the Old Continent the same winning formula it used in North America. Steve Dobson, director of business development, says: “Our successful approach provides a win-win outcome and entails distributors providing machines for customers in return for gaining a bigger share of their spend on consumables. The advantage for the customer is that the usage of items is greatly reduced often by 35% or more, and for the distributor that they lock in the customer, lock out the competition and gain a wider range of products. Apex also helps distributors to drive their brand by branding the machines in the distributors’ logo and colours.”
Founder and CEO Kent Savage adds: “We found that the capital budgeting process for manufacturers tends to favour production investments over production support investment. It is difficult for many manufacturers to get capital funds to support the technology they need in order to improve. The model we use allows suppliers to make capital investment and provide our technology as part of their offering, lowering the barrier preventing manufacturers from acquiring innovating technologies.”
This marketing model has already paid off: the company has installed over 10,000 machines this year. With 160 of Europe’s largest companies already using Apex’s technology in their facilities in the States, Apex Supply Chain Technologies is now confident about having a strong customer base to build on as it enters the European market, both in terms of end users and large distributors.
Head in the clouds?
According to Dobson, using the cloud gives Apex a distinct competitive advantage over its peers, who still work with older PC-based technology. He adds: “It’s a fantastic management tool. All reordering is automatic, as the cloud sends a message to distributors or buyers anywhere when replenishing becomes necessary. All you needed is a device to get onto the internet, wherever you are, and you will be able to track what the usage is for each person, machine or cost centre.
Savage comments: “The cloud allows us to increase visibility throughout the supply chain, linking information at all levels and automating processes and inventory.”
Apex’s machines bring the tools to the point of use. A line operator won’t have to travel to the parts store, thereby losing time and focus. By swiping their cards in the machines, they have immediate access to what they need, be it a pair of goggles, a drill or gloves. Besides the time savings, these solutions provide management with a valuable means of knowing who is using what at any given time. Reports are also available, to help see where stock is going: data can be segregated, for example, to profile and compare usage between groups to realise where best practice is.
Inventory levels can be reduced by 50%, consumption by 15 to 50% and increase stock turns up into the 30s. The low cost also makes the Edge 5000 vending machines particularly appealing, together with the quick installation and the fact that there is no need to purchase software. To put it like Dobson, these devices are a simple connect and go internet appliance.
Dobson adds: “There is a low monthly management data and support fee and it’s per machine and not per user, which gives you the full support of a UK-based team. The Edge 5000 has proven to be robust with thousands of hours of maintenance-free operation.”
From its recently-opened Worcester offices, Apex supports the European market. “It would make sense to open other offices outside the UK and the US if we feel it’s necessary, but we are establishing our European base first,” Dobson comments.
In the second quarter of 2012, the company will introduce its newest technology, Megastore. A larger point of use vending machine that will be completely pre-configurable depending on customer specifications: Megastore can change if more space or extra storage for larger items is needed, for example. It will be able to detect even the lightest items, even screws, being taken and then put back into place.
Savage says: “Megastore allows a wide range of items to be dispensed in a very compact way. It makes restocking fast and efficient, delivering greater value than ever before. We have made the space smart.”
To make the most of the use of the vending machines, Dobson stresses, companies need to understand what they want to achieve from the implementation. “What are their objectives? For many it’s the easiness to have items available at the point of work, but also the ability to cut usage. Many companies find it difficult to keep track of their inventory. They need to identify what they want to achieve from the machines. Is it cutting down on the usage of items, driving down costs or having the ability to measure their supply chain operation on consumables and tools?” he explains.
The advantages for users are endless, and Apex is now selling its way into more sectors than just manufacturing, such as healthcare.
Savage concludes: “We have spent over €10m in R&D over the last two years, and we’ll keep to invest heavily in taking our technology forward.”