Retail AI pioneer, HIVERY [https://www.hivery.com], (headquartered in Sydney, Australia) and JR East Water Business (headquartered in Tokyo, Japan), a subsidiary of East Japan Railway Company, have agreed to rollout HIVERY Enhance [https://www.hivery.com/products/enhance] – an AI-driven vending machine optimization solution, to 6,000 vending machines across East Japan Railway’s train stations.
Validated results from numerous PoCs (proof of concepts) increased sales by 5.27％[1]overall, up to a maximum of over 50%, as well as simultaneously reducing replenishment trips and improving operational productivity.
| [1] ※ Compared to vending machines not leveraging HIVERY Enhance during the same period. |
HIVERY and JR East Water Business have been collaborating since 2017, leveraging HIVERY’s latest AI technology to optimize product assortment and column space for individual vending machines in Japan. During the winter of 2019, the results of HIVERY Enhance showed an overall increase in sales volume by 5.27%, up to a maximum of over 50%. Furthermore, given labor storages due to a declining population, there has been growing pressure to improve operational productivity within the Japanese vending industry. HIVERY Enhance enabled JR East Water Business to streamline operations and reduce replenishment trips by automatically recommending the optimal product assortment and quantity for their vending machines. Based on this success, JR East Water Business has agreed to rollout HIVERY Enhance across 6,000 vending machines on their train stations for East Japan Railway – a first in Japan.
Until now, product assortment selection had been decided by individual operators (drivers) who are responsible for replenishing the vending machines at their designated locations. Given those decisions have been based on the operator’s accumulated experience and intuition over many years, it has been an ongoing challenge to transfer that knowledge to new operators and maintain a level of quality. HIVERY Enhance leverages the power of AI and JR East Water Business’ point of sales (POS) data, to automatically determine which products need to be stocked in which vending machine, as well as the optimal timing to swap products for individual machines. This enables any operator to efficiently make the right product assortment choices that will lead to a profitable outcome.
HIVERY Enhance helps to:
- Select products that are likely to sell well – By analyzing the vast amount of sales data from the full fleet of vending machines, it identifies patterns in the sales data and identifies products that are likely to sell well in any particular location.
- Optimize product assortment – By understanding the demand for individual products and the effects of cannibalization of demand between products in each location, it can determine which products should be inserted and which should be taken out, to lead to the optimal outcome.
- Reduce replenishment trips – From the demand forecasts of products in any location, it can calculate the number of days before each product is likely to go out of stock and recommend the optimal quantity and column allocation to maximize the time between replenishment trips, thereby reducing labor costs.
- Optimizing a group of vending machines – Rather than only focusing on individual vending machines, it can also assess a group of banked vending machines in the same area at the same time, and optimize the products for the entire area as if it were one large vending machine.
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By ingesting vast arrays of data and incorporating intricate operational rules as well as physical and business constraints into its algorithm, HIVERY Enhance can instantaneously provide executable recommendations for the optimal product assortment and column configurations for both an individual as well as a group of vending machines. Furthermore, by leveraging weather data, it can respond to changes in seasonal patterns and suggest the optimal time to insert hot and cold products, while taking into account the effects of cannibalization for the product mix at each location, thereby providing the optimal product assortment at any given time.
Voice of the customer
In March 2018, HIVERY invited JR East Water Business’s Vending Division team to its Sydney headquarters to meet with one of HIVERY’s first customers, Coca-Cola Amatil, to exchange ideas and share their experience and best practice for implementing cutting edge technology for their respective vending businesses.
“We believe the combination of the rich human experience of our operators cultivated over many years and the utilization of big data is our greatest strength. With HIVERY Enhance, we can realize that vision and aim to establish a new platform for our vending machine operations that will help us recover from the impact of this year’s pandemic, as well as improve worker productivity which has been an issue for us for many years.” ~ Yuta Higashino, Manager at JR East Water Business
Moving into category management: the $US900[2] billion opportunity.
HIVERY Enhance is just the beginning. HIVERY has released its new offering – HIVERY Curate [https://www.hivery.com/products/curate] – The world’s first truly hyper-local category management solution, helping companies like Coca-Cola and Walmart transform category management. HIVERY Curate delivers store-level recommendations with sophisticated self-learning AI algorithms that discover buying patterns at each store and make product assortment and space recommendations from this, resulting in a 10X return on investment to date.
