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Eco-Innovation icon Eco-Innovation: Selecta

Improved Efficiency through a Connected Supply Chain

Key Environmental Performance Area:

  • Greenhouse Gas Emissions (Operations)

Launched a pilot project to deploy a telemetry solution that automatically records and wirelessly transmits data across its public vending network in France.

Reduced visits to machines significantly.

Reduced number of tours driven per day& by almost 15 percent, which means that the sales per tour increased by more than 29 percent.

Challenge

Worldwide total freight-related energy consumption is projected to grow 1.5 percent annually, rising from 40 quadrillion Btu in 2012 to 60 quadrillion Btu in 2040.i In the U.S. alone, the transportation sector is one of the largest sources of greenhouse gas emissions, representing 27 percent of total U.S. emissions.ii Companies that rely on transporting goods have the opportunity to optimize fuel consumption through various operational and process efficiencies.

Selecta is a leading vending and coffee services company in Europe with a turnover of €740 million, and approximately 4,300 employees. Founded and headquartered in Switzerland in 1957, Selecta operates a network of 150,000 vending machines in public and private locations in 12 countries across Europe. To provide a superior customer experience, Selecta is constantly focusing on improving the efficiency of the distribution network that service its vending machines. KKR invested in Selecta through its Special Situations fund in 2014.

Response

In 2016, Selecta launched a pilot project to deploy a telemetry solution that automatically records and wirelessly transmits data across its public vending network in France. Among other functions, telemetry allows Selecta to remotely monitor inventory in each vending machine in real time, and provides connectivity for its cashless solution.

Prior to the introduction of telemetry in the pilot project, refilling the vending machines required manual on-site review of vending machine inventory and restocking based on the availability of the required products in the delivery van. With telemetry, Selecta aims to optimize the merchandising of the vending machines, with the following benefits:

  1. Visits to machines are reduced and product availability is improved. Refill visits are planned on a daily basis based on real-time stock levels and predictive forecasts of consumption. This reduces visits to machines by up to 30 percent and minimizes product stock-outs when compared to fixed-interval visits.
  2. With this stock information, vans carry exactly the products required for the machines to be serviced on a specific day. This pre-kitting, or end-to-end optimization of the delivery and restocking process, triggers various additional benefits:
    • Reduced fuel consumption: Van loads are reduced by as much as 50 percent because in the past refiller vans had to carry significant amounts of safety stock. This allows Selecta to reduce van size, lower fuel consumption and NWC.
    • Increased productivity and safety: Up to 50 percent of refill activities such as walking forth and back to the machine to check inventory are either completely eliminated or moved from the field to the safer warehouse environment. This increases employee productivity, such as the number of machines filled per van per day, and improves worker health and safety.
  3. Downtime is reduced. Data from the vending machine informs the technical team of issues in real time, thus reducing downtime and false alarms, which trigger up to 20 percent of technician callouts.

Resultsiii

As a result of the dynamic planning implemented in the pilot project, visits to machines were reduced significantly. While sales were up approximately 10 percent over the previous year, YoY, the number of tours driven per day was reduced by almost 15 percent, which means that the sales per tour increased by more than 29 percent.

Selecta joined KKR’s green program in 2017 and is communicating results for the first time.


i U.S. Energy Information Administration. International Energy Outlook 2016. May 2016. Web. 7 August 2017.

ii U.S. Environmental Protection Agency. "Fast Facts on Transportation Greenhouse Gas Emissions." Web. 7 August 2017.

iii Self-reported portfolio company data is not calculated, reviewed or independently verified by KKR or KKR Capstone. For more information regarding the results methodology for companies evaluating their own data, please see the methodology section. There is no guarantee that any GSP-related avoided costs or added efficiencies will positively impact the portfolio company’s valuation or performance.

Unless otherwise noted, portfolio company data represents 2016 results, published in October 2017. These case studies may contain forward looking statements including descriptions of planned projects and projected results and savings. These statements are subject to the risk that the projects will not develop as planned or at all or that projected results and savings are not realized.