Duchon Signs: Self-service leaders talk solutions to pricing, supply chain crisis

Self-service businesses, dealing with the highest inflation rate to hit the U.S. in nearly 40 years and the ongoing supply chain crisis, are facing a perfect storm few experts saw coming.

Self-service leaders talk solutions to pricing, supply chain crisis The supply chain problem has caused delays in products reaching suppliers, which means less choices for consumers. Photo: iStock

Jan. 17, 2022 | by Kevin Damask — Editor, Digital Signage Today

Self-service businesses, dealing with the highest inflation rate to hit the U.S. in nearly 40 years and the ongoing supply chain crisis, are facing a perfect storm few experts saw coming.

While it’s led to plenty of hand-wringing and stressful moments, it’s pushed industry leaders to come up with creative solutions. Four self-service insiders presented their views on the inflation and supply issue at the Self-Service Innovation Summit in Hollywood, Florida, Dec. 14-16.

The session, “How to Successfully Navigate Pricing and Supply Chain Issues in Today’s Self-Service Landscape,” was hosted by Kiosk Marketplace and Vending Times Editor Elliot Maras. The panel included Kemal Arin, founder of Showtime Pictures, a photography concessions provider, Andrew Kartiganer, owner, Professional Vending Services, a South Florida convenience services operation, Lynn Saladini, chief relationship officer, Ath Power Consulting, a market research firm, and Zack Stein, co-founder, CEO, Supply Caddy, which primarily supplies packaging to QSR and fast-food restaurants.

Showtime Pictures provides photos to visitors on cruise ships, at spectator events and amusement parks. Similar to many industries, the COVID-19 pandemic altered Arin’s business, perhaps forever.

“The supply chain problems, along with the pandemic, just broke everything,” Arin said. “We just couldn’t flow (our products) through. Right around the beginning of the pandemic we started to change the way we take the picture and the way we deliver it to the customer.”

A pivot to self service

Showtime Pictures pivoted by installing self-service kiosks powered by facial recognition software.

Professional Vending Services helps keep vending machines across the U.S. stocked with soda, snacks, coffee and other products.

“It’s been very difficult for us in the last year and a half, although it seems to be getting a little better; supply has been an issue,” Kartiganer said. “Some days you can get your beverage, some days you can’t. Sometimes Coca-Cola has their labor problems and has to cut back on deliveries. We buy a little extra, but it’s hard because everything is dated; you can only go so far ahead on your sales.”

Arin said a paper shortage has affected Showtime Pictures, since paper is used to print photos. But the company turned a negative into a positive. Delays in receiving supplies pushed the company to automate its services.

“I hate to say this, but the pandemic revolutionized our industry,” Arin said.

For Kartiganer, the silver lining in the supply shortage has been a cutdown on waste. He doesn’t have to worry as much about replacing outdated products. The negative aspect, however, is that his machines are stocked with less varieties of flavors. In addition, the labor shortage, billed as the “Great Resignation,” has meant less drivers on the road delivering products.

“Some of these suppliers have labor problems and don’t have the drivers so you might not get two-time per week delivery where you used to,” Kartiganer said. “Then, on the first delivery, if your product doesn’t come in, you’re stuck (waiting) for it until the next Monday. That’s been the biggest problem. You have a tough time getting stuff in cans, but you can get it in a bottle.”

From the supplier side, Stein said Supply Caddy must purchase materials several months in advance.

“The packaging hasn’t changed but the time to get the packaging to the customer, even though we’re getting more units into a container, is still taking long enough,” Stein said.

Arin sympathized with Stein, saying the supply chain backlog has “forced us to change the product we service to the customer. We don’t print the pictures; we have to automate it and deliver digital products now.”

Negotiations bring mixed results

In terms of pricing, Kartiganer said some companies will negotiate, but there’s not a lot of leeway with mega brands such as Coke and Pepsi.

Based on her company’s research, Saladini found that pricing negotiations have turned into the “wild, wild West.”

“I’ve heard stories, specifically from the building industry, where folks need Sherwin Williams. Sherwin Williams has paint. They have paint formulations; they have everything they need to put into a bucket. They don’t have the buckets. They don’t have the containers, so folks are going to Home Depot, relabeling buckets for Sherwin Williams and bringing their own buckets to Sherwin Williams and formulating the paints,” Saladini said. “We’ve seen a lot of things going on, from bartering and trading among companies who have the cash flow and the warehousing space to retain a lot more product than some of the smaller companies.”

Maras asked the panel if a task force was formed to remedy the pricing and supply chain conundrum, what would the makeup be? Stein said the QSR market is very fragmented so a solution or software service that streamlines supply ordering across the industry would be beneficial.

Ath Power Consulting found that building strong relationships with clients and eliminating bottlenecks within organizations can improve procedures as well.

“There’s just nothing that connects the universe of shipping, receiving and requests,” Saladini said.

Trucking regulations, bottlenecks

Arin said there are ways to improve shipping and receiving to get products to consumers faster. He believes trucking regulations in California, along with more than 180 cargo vessels sitting along ports in Los Angeles and San Francisco waiting to dock and unload goods, are two of the biggest problems in the supply chain issue.

“There’s a huge bottleneck — it’s not even at the manufacturer level anymore — the supply chain problem is us here. It’s how you bring everything in,” Arin said. “There’s a problem within the union of the port authority at Long Beach. The crane drivers, they only work six hours a day. I was reading that they have to have seven people operating a crane, while in the Port of Miami, three people can operate a crane. There’s a huge problem there.”

The issues caused by the supply chain clearly continue to challenge self-service providers as much as other industries. The panel indicated they are still in the early stages of identifying solutions.

Vending

KEVIN DAMASK

Kevin Damask is the editor of Digital Signage Today. He has more than 15 years of journalism experience, having covered local news for a variety of print and online publications.