Richard Harvey - A&R Services LLC, Monument, Colo.

By Maras, Elliot

Publication: Automatic Merchandiser

Date: Friday, December 1 2006

Richard Harvey, the Automatic Merchandiser Vending Operator of the Year, is a third generation vending operator. But that doesn't mean he does things the old fashioned way. Nor does it mean that he didn't start his company, A&R Services LLC, based in Monument, Colo., mostly on his own.

Harvey is one of the few mid-size operators in the U.S. today who can say that he has all of his routes - eight at the present time, with a ninth in development - on DEX handhelds
. More importantly, he is growing and operating profitably.

Harvey embodies the qualities that the vending industry needs to embrace in order to move to a higher level of professionalism. He believes in technology, he participates in trade associations, and he invests in his employees. In essence, he represents the industry's future.

Many veteran operators today are reluctant to invest in technology because of the cost. For Harvey, it's a non-issue.
"I've never been afraid to risk capital on technology," he said. "It's changed everything about life today."


Like many third generation operators, Harvey learned the business from the "ground up," starting out doing menial jobs as a youngster. He worked for his grandfather's operation, Automatic Merchandising in San Jose, Calif., a full-line vending, amusement machine and cigarette vending operation.

In 1993, at the age of 30, Harvey decided he wanted to have his own company. He started A&R Services in San Jose, Calif. Handheld computers were still fairly new at the time, and DEX was not something most operators were familiar with.

Harvey built his company following the same operating practices he had learned from his family's business.
It was around this time that software suppliers were introducing handhelds and equipment manufacturers were talking about DEX and MDB. Harvey paid attention to these developments, and he was convinced that the vending industry was going to change.

In 1997, Harvey was ready to make a break with the past, in two ways. On the personal side, he had a young family, and he wanted to move to a community that offered a more wholesome environment for his children. On the business side, he wanted to invest in newer vending equipment that would allow him to take advantage of advanced electronics.

After researching different markets, he sold his business in San Jose and moved to the Colorado Springs, Colo. area. He investigated opportunities to buy vending companies, but he soon realized that very few companies had modern equipment that would allow him to take advantage of new technologies. He made the critical decision to start a new business using the same name as his previous company, A&R Services.

When he went knocking on doors to find customers, one of Harvey's key selling tools was offering all new equipment. In particular, the Millennia line from Crane National Vendors gave him a more stylish line to show people.

Being up to speed on DEX technology, Harvey knew that the new equipment in 1997 was capable of supporting DEX handhelds. He knew he would be able to introduce the handhelds without having to retrofit his machines.

Harvey reasoned that it would make sense to introduce DEX when the company reached six or seven routes. It took him several years to build his business to that point, but was the major turning point for the company.

"I used to think I knew everything until I had a computer tell me what I didn't know," Harvey said. He worked with his software supplier, MEI, on introducing DEX handhelds.nHe converted one route at a time to DEX.

The first benefit DEX offered was that it forced him to reorganize his warehouse and introduce machine planograms. Together, these changes made his routes more efficient. "We've revolutionized the way we bring products into our warehouse," Harvey said.


The DEX data allowed Harvey to track which products were the most profitable. He reduced his warehouse inventory to the most profitable items, and using the planograms, he required the drivers to place the best selling items in the machines. This minimized his inventory costs and improved his sales by about 15 percent.

DEX handhelds also improved route accountability.
It took Harvey about a year to get all of his routes "DEXed."
One challenge was to convince the drivers to accept the handhelds. "The driver thinks he knows the customer the best, and in some cases he does," Harvey said. But the driver cannot know the most profitable product mix for every machine.

Once a driver "bought in" to DEX, it took two to three months for him to become proficient with it.
Because DEX has made the routes more profitable, Harvey has switched the drivers from straight salary to a combined salary and commission plan. "Every driver I have now is darn happy to be on it (DEX)," he said.
The DEX reports also give him product usage data he can show to his customers and prospective customers. "They just eat up the information," he said.

Another major advantage is the control it has given him in negotiating with suppliers. The DEX data gives him timely reports on item-level sales and profitability. He uses this information in negotiating with suppliers.
When a broker shows him a new product, he shows the broker his planogram and asks him which product he wants to replace. Harvey then tells the broker what the sales and profits are for the item he wants to replace, and tells him that the new product needs to produce superior results. If not, the broker is expected to pay him the difference.
"I have absolute knowledge of what the product margin is," Harvey said.

One product manufacturer recently took him up on his offer and tested some new items with him for a 6-month period. "They put their money where their mouth was," Harvey said.

Having now been "fully DEXed" for two years, Harvey believes he paid for his investment in DEX handhelds in one year. He now believes he could have introduced DEX when he had four routes rather than six.


Harvey's next project is to introduce wireless data transmission to his frozen food machines. He plans to have a dedicated frozen food route. He thinks that the remote reporting will allow him to "pre-kit" these machines and fill them to a par level.

He is presently testing the Cantaloupe SEED system, which integrates with his MEI Easitrax software.
Harvey doesn't think it is necessary to "pre kit" his snack and soda machines in this manner. He believes this would be advantageous only if his stops were more physically dispersed. "That's a major change in the way we do things," he said, regarding pre-kitting. "I have so little waste with our system now that I don't really need to (pre-kit)."

Harvey credits much of his enthusiasm for technology to his involvement in trade organizations. He has been a member of the Colorado Vendors Council since he moved to Colorado, and will soon become its president. He also was recently elected to the NAMA board of directors.

Harvey also recently hired a dedicated OCS salesperson and plans to launch a separate OCS company.
"The vending industry could be a lot more professional than it has been in the past," he said. "I get excited about technology helping us get there."

A & R Services, LLC
PO BOX 1299, Monument, CO 80132
800-655-VEND (8363)
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