The vending machine was invented in the first century C.E. by Heron of Alexandria to dispense holy water. Temple goers had a penchant for taking extra dips of the blessing, so Heron created a coin based system that poured only as much holy water as was due.
The early mechanics were very similar to today’s system, but the vending machine was not seen again until many centuries later, in the 1880s, when it was resurrected for postcards and paper by Percival Everett . Since then, vending machines have been a staple of movie theaters, gas stations, corporate offices, and dorm room basements.
Now, the vending machine finds itself in an era of digitalization. When Amazon or Instacart drops off Doritos on doorsteps before you can scrounge up an old wrinkled dollar bill, and cash and coins have disappeared for credit cards and mobile payments, what is the use of vending machines?
The challenge for the Coca-Cola Company, with millions of vending machines worldwide, is how to rethink the old technology for a new world.
The Digitalization of Supply Chains
In the TOM beer game simulation, we experienced how difficult it is to manage a supply chain with limited information. Among the challenges were unpredictable or unknown customer demand, stunted information flows, independent decision making, bullwhip effects, and general panic. In the real world, with firms managing multiple products and players, the task becomes significantly more complex. To address these challenges, effective supply chains integrate operations and information flows using digital platforms.
With the digitalization of supply chains, companies are faster, more flexible, more customized, and more accurate . A key trend is “The Internet of Things.” The “Things” are products embedded with computers and connected to the internet. These devices offer beneficial monitoring, control, optimization, and autonomy to the firm .
The rewards to the company and to the consumer are plentiful. Customers receive a more convenient, quick, and customized experience. Firms can expect a 4.1% increase in efficiency gains and a 2.9% increase in revenue annually . To stay competitive, the question is not if but how will companies digitize their supply chains by making use of smart, connected devices.
Coca Cola’s Smart Vending Machines
Coca-Cola has an answer, and you guessed it: smart vending machines. Over the next couple years, the company is deploying a vast network of smart machines across the U.S. and New Zealand. The devices provide data on stock levels, customer behavior, and machine conditions. As a result, Coca-Cola is better at managing inventory, forecasting demand, and performing machine maintenance. The smart machines control temperature, keep a history of past transactions, and allow for dynamic pricing.
- Running low on Cokes in Tuscaloosa? Coca-Cola receives a low inventory warning which prompts restocking orders. Shipping and transport are optimized to get to the neediest machines using the most efficient route.
- Not selling enough Powerade in Tallahassee? Coca-Cola drops prices to move older items off the shelf. It deploys promotional videos and ads on the vending machine screens to catch the attention of the thirsty passerby.
- A machine in Talladega is breaking down? Signals are sent back to Coca-Cola when a machine is in need of repair so the team can fix or replace it.
Not only is Coca-Cola reaping the benefits, but the smart vending machines are also good for vendors and customers. Vendors get access to the supply chain information through an online portal. The portal shares new product updates, customer targeting research, pricing suggestions, and shelf optimization recommendations. Customers get convenience, reliability, and availability. Touch screens allow for easier ordering. Customers can pay with their mobile phone. Coca-Cola even offers a program called “My Coke Rewards” that provides loyalty points .
In the medium term, Coca-Cola is working on a next generation features powered by artificial intelligence. A chatbot will be installed in the machine, acting as both an order management service and customer support. It will send customer feedback and preferences back to Coca-Cola. Customers will be able to order ahead and then pick up the item from their chosen location. There are plans for facial recognition software that tracks the customer expression, age, and gender to give the company more consumer insights for customized product recommendations and targeted ads .
To Coca-Cola, I say go forth with proper controls. As we enter the Industry 4.0 era, artificial intelligence and facial recognition technology will become commonplace but they require good control systems. Chatbots can easily be annoying to customers. Privacy issues need to be address seriously. Cyber security will be critical. No doubt a temple visitor back in the day tried to hack the first vending machine for some extra coins and holy water.
Should Coca-Cola move forward with A.I. chatbots and facial recognition? Will its vending machines stand the test of time or falter in the digital era?
(Word Count: 795)
 Segrave, Kerry. (2012). Vending Machines: An American Social History. Jefferson: McFarland & Company.
 Alicke, K., Rexhausen, D. and Seyfert, A. (2017). Supply Chain 4.0 in consumer goods. McKinsey&Company, April.
 Porter, M. and Heppelmann, J. (2014). How Smart, Connected Products Are Transforming Competition. Harvard Business Review, November.
 Schrauf, S. and Berttram, P. (2016). Industry 4.0: How digitization makes the supply chain more efficient, agile, and customer-focused I. PWC.
 Cokesolutions.com. (2017). FLO.CokeSolutions.com Is the Ultimate Resource for Full Line Operators. [online] Available at: https://www.cokesolutions.com/vending/articles/flocokesolutionscom-is-the-ultimate-resource-for-full-line-operators [Accessed 15 Nov. 2017].
 Yates, N. (2017). Vending machines are getting smarter with machine learning and facial recognition. [online] VentureBeat. Available at: https://venturebeat.com/2017/10/21/vending-machines-are-getting-smarter-with-machine-learning-and-facial-recognition/ [Accessed 15 Nov. 2017].