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Product and Topic Expert
Product and Topic Expert

Internet of Things (IOT)- Morgan Stanley estimated that by 2020, approximately 75 Billion Devices would Be Connected. (Source:BusinessInsider). These devices would go beyond PCs, Smartphones, tablets and range from alarm clocks to Air Coolers to washing machines to cars, basically, almost every machine.

The past decade saw Internet of content & Internet of people capturing the world, catapulting it into an era of accessibility and connectivity. Today the concept has been cranked notches up into the Internet of ‘Everything’ that leverages this accessibility and connectivity to efficient and productive use like the Internet of cities, Internet of governments, Internet of Electricity, Internet of Transportation, Internet of Water supply, Internet of Industrialization and so on. So, the availability of hyper-connectivity sets the stage for building utility and enterprise services around it, which otherwise stays unharnessed. These people-to-machine, people-to-people, machine-to-people and machine-to-machine connections that engage people, processes, data, and machines in a bidirectional flow of information results in enormous amount of data which needs to be stored, processed and accessed. Such IoT use cases require convergence of machine-to-machine connectivity, event stream processing, Big Data, analytics, cloud, and mobile technologies. In short, IoT is about creating a virtual planet of machines- both human and non-human that “breathe” data.

Background- Vending machines have existed for long and are retail kiosks been positioned at vantage points in airport terminals, office corridors, and stadiums, hotel lobbies selling a variety of items. They are a popular and growing type of retail franchise. There were 5,000 machines last year, which produced annual revenue of 6 billion dollars. (Source: https://www.franchisehelp.com/industry-reports/retail-industry-report/).

Traditional vending machines are glass door vending machines where in people could see the product through the glass and also comb hair :-). The problem here, though, is that they can’t differentiate between a window shopper and a serious, repeating customer and treat both of them in a similar manner. This, ultimately, boils down to the lack of engagement with the consumer.

Now, imagine you need to operate 40,000 Vending machines efficiently.  IoT enables us to envision vending machines that are Intelligent, Intuitive and Interconnected. We now see the SAP’s vision of Smart Vending.

Smart Vending Machines (SVMs) are a new breed of vending machines equipped with geo-fencing, telemetry sensors, barcode readers, NFC payment options, and personalized gigantic touchscreen (42” HD touchscreen), they also have a camera, microphone, and speakers connected to the Internet via the HANA Cloud. With this new breed of VMs, retailers can better engage their consumers and smartly so, in the following way, for example, among many other ways.

A consumer walks into an airport and is in close proximity of an SVM. Beacon proximity sensors identify the consumer and greet him with a one-on-one promotional offer on his mobile. This way, the consumer gets drawn towards the vending machine.  Now with authentication mechanisms like NFC, QR, face recognition etc., the consumer establishes identity with the VM. Then vending machine greets the user and displays the list of products to buy. Since the VM has already established the identity of the consumer, it also shows to him, additional information like his user profile, preferences, and previous product purchases, favorite products and, also, product recommendations and tailored combo offers. The interesting point, here, is that the SVM not only recommends the products based on the user preference and purchase pattern but, also, involves the social angle to make recommendations,  by matching the purchase pattern of his look-alike friends in the social networks.

The consumer can pay for the items using SAP mobile wallet payments; so no cash is needed. So there's no worry with getting bills to fit in the slot or searching for the change in the pocket.

Campaigns- Retailers need personalized campaigns to give that exclusivity to the consumer. The Vending machine has optimal resources and faculty to drive such campaigns. Not to forget, the machine also had a camera (its eyes) on its head. The machine can drive a general campaign with its eyes (camera), which, it uses, among other reasons, for facial recognition in order to see who it’s marketing to for example. Say, you have a group of people comprising of two men and a woman watching a movie trailer. The machine would recognize this and it can now drive a personalized campaign to the audience that stands in front of it.

SVM gives some offers tailored for specific consumer derived from his/her snack-buying patterns and preferences and even warns before vending a certain product based on other parameters like shopper’s age, medical record, dietary requirements or purchase history. As you interact more with the machine it learns more about you and what you like and alters its offers accordingly.

Gifting -There is, also, an option for gifting a product across the globe, where the consumers can gift their family and friends who are connected through the social networks. Users register their social media accounts into the vending machine; so the system will know who their friends are. After choosing a recipient, the vending machine sends a notification message to him , so he/she can go and collect it from the nearest networked SVM(s).

(Example scenarios could range from wishing a friend on his birthday with a small gift and play the audio through the speakers of the VM to patting a colleague who is located across the border with a small gift for a job well done to buying a snack for his 8 year old daughter who could collect the snack from the VM located in the school)

People would want to gift more than just a snack or soda, and yes; vending machines could be used for all kinds of products, including electronics, apparel and government services too and SAP has even received requests from Telco’s where they wanted to dispense phones and accessories and also from manufacturing companies where they wanted to dispense equipment to workers (e.g. drill bits)

Gaming- Short (20-30 second) social games, for friendly competition in an office space, school campus or anywhere to create excitement.

Not just allowing you to play games, the machine endorses the notion of gamification too; as the consumers buy products, they go through various levels (e.g. buying snacks on special days or at specific time may earn them more points and cross levels to claim gift; another example would be from a customer where they wanted to educate their employees on their company, its policies and processes by having interactive games)

Watch movie trailers- As a part of their promotions, a retailer could partner with a movie studio to offer an exclusive trailer on the gigantic touch screen and could vend surprise gifts while showcasing the trailer and also make the trailer available for download; so people using the machine could view it later.

Feedback- Using the capability of the camera and the speaker, the end user could provide his feedback about his overall vending machine experience.

Personalization-The machine being cloud connected to other vending machines, owned by the same company, the user can customize the machine with different themes, background colors, currency and language; so each time, the user logs on to any (other) machine, owned by the same company, it would remember the personalization settings and display accordingly in the appropriate language (a machine in the Middle East showing Arab while the one in Spain in Spanish and the so on).

Additionally, the machine would be able to determine demographic characteristics of the user such as age group, gender, parental status, marital status etc. and display appropriate content based on the context.

Lastly, during the machine idle timings, machine’s touchscreen can also be used to display advertisements (as a digital signage)

So, here we see, how the SVM is talking to and engaging/interacting with the consumer directly/indirectly and intelligently and intuitively, with the touch panel being the medium between the end user and retailer. But a stronger connection with the consumer and improved consumer engagement is just the beginning.

Smart Vending powered by SAP HANA provides brands access to real-time dashboards, forward-looking analytics, real-time behavior capture and also including real time sales and maintenance information, providing visibility across the fleet of vending machines and at each individual machine. With this, companies can drive demand based pricing, predictive product mixture and customized product mixture by location.

Efficient Operations- Smart Vending Machine's don’t only do a better job of engaging with users, they also make sure they are appropriately stocked (Machine-initiated inventory replenishment) and serviced

Real-time demand based Replenishment- The basic issue with the traditional way of operating a large fleet of vending machines is that they operate the vending machine business defensively that is the operator has no insight into the inventory levels of a particular machine; so either on a current replenishment visit, the machine is out of stock, meaning the operator has lost days of sales or the machine hasn’t sold anything, thus it’s a waste of time and money.

With smart vending in place, the replenishment process across supply chain is going to be real-time. The moment a machine identifies a specific product’s inventories are going down or out of stock it tries to identify the nearby truck carrying extra stocks and informs the truck driver about the need for replenishment. Based on the real time analytics, the system also predicts the product stock-out patterns and informs the distributor about the same.

The system also makes smart inventory decisions based on the data it has collected from this machine(s), owned by this company, as well as data from outside sources including social data. For instance, just because it's low on specific soda doesn't mean the system will place orders for more sodas e.g. What if it is going to be raining in the following days. It also takes into consideration other factors, such as popularity, when setting inventory levels, so the right amount of each snack is delivered to the truck for delivery each day.

Predictive maintenance & Servicing- When the machine identifies an ill health situation like fluctuation in temperatures, problem with compressors, hydraulic levels, motors and spirals etc., it, does not only, raise an alert notification but also informs right service technician in the nearby location and assigns a service workflow. The system automatically prioritizes the service requests for the service engineers. A broken machine installed in a stadium with a soccer match on that night might have priority over some random office building. With that, we can reduce the downtime from couple of days to couple of hours.

Conclusions- I really liked the way blogger Andrew Shriner summarized this concept in his HANA blog and here is the excerpt

"Based on the SAP HANA real-time data platform, SAP’s Smart Vending solution provides brands with the opportunity to engage with their customers in highly personalized ways. Consumers can identify themselves with their smartphones, build profiles, connect to their friends, play social games, and receive promotions and offers tailored specifically to them—transforming the vending machine into an immersive retail experience, leading to a new breed of kiosks that sell food & beverages, electronics and other non-food items.

Smart Vending’s predictive analytics capabilities power deep, actionable insights that increase sales by optimizing the product mix for each machine based on a host of dynamic factors such as hyper-local preferences, temperature, and even new product promotions. Furthermore, predictive maintenance and mobile workforce automation makes replenishment and service runs more efficient by forecasting machine downtime and automatically generating service and replenishment tickets

We are envisioning much broader than just connecting vending machine. It is also about connecting other trade assets like coffee machine, glass door refrigerators, coolers, chillers, and digital signage and derive business value.

The notion of ‘Connected’ Retail is a concept broader than connecting vending machines and coolers to automate operations. It encompasses the end-to-end idea of “Synchronized Retail” enabled by IoT that bridges the silos of data across channels (in store, online, mobile etc.) to create a real-time enterprise.

SAP embarked upon this journey with the vision of building a smart solution for the connected assets like vending machines, coolers and others and is ready to hit the market with its first version. SAP has seen interests with retailers and Telco’s for early adoption... Stay “connected” for more information.

Disclaimer : This blog stating possible future developments, directions, and functionality of products and/or platforms, are all subject to change and may be changed by SAP at any time for any reason without notice.The information in this blog is not a commitment, promise, or legal obligation to deliver any solution, code, or functionality .

All forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from expectations. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates, and they should not be relied upon in making purchasing decisions.