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Business case for smart refrigeration/cabinet monitoring

The use of an electronic recording device that records temperatures, would enable the proactive management of poorly performing equipment.

Permission to reprint from XLink Communications

We look into the business case for electronically monitoring fridges and similar equipment to simplify health and safety compliance within a franchise

The objective of this study was to determine if a business case exists whereby franchisees or franchise members can justify the use of Global System for Mobile Communication (GSM) devices to electronically monitor their fridges and similar equipment in order to do away with the administrative burden associated with manual processes and record keeping that are required in order to be compliant with health and safety and and/or franchisor compliance requirements.

Franchisee as a stakeholder
The franchisee is regulated via various health and safety standards which must be adhered to. Evidence of compliance needs to be presented when a franchisee is visited by an inspector and/or a quality control officer/consultant as appointed by the franchisor. Should the franchise not be compliant, then various actions may be taken by the franchisor and/or the health and safety officials.

Currently, to comply with these regulations, a franchisee has numerous checklists to ensure compliance with both regulatory and/or franchisor standards. Research has shown that franchisees normally use a manual method of recording temperatures for all fridges and/or appliances that require regulatory temperature monitoring. This can be manipulated and completed retrospectively and relies on the honesty of employees performing this role correctly with traditional thermometer type equipment.

The use of an electronic recording device that records temperatures on a frequent basis, every half hour for example, and that raises email or SMS alerts if the equipment is out of a predefined temperature range and that generates a daily compliance report for the franchisee to review as well as the compliance regulators and/or franchisor quality control (QC) consultants should improve the management of this aspect of the franchisee’s business and enable the employees to focus their efforts on delivering a quality service and an improved customer experience.

Load shedding is a major concern for all business owners and the recording of power outages and the raising of alerts to the franchisee should enable them to be pro-active. These reports of power outages may also be useful to support insurance claims. Insurance companies may also be prepared to reduce insurance premiums if they are aware of a device that proactively manages the temperature of consumable merchandise that is kept at a controlled temperature. This saving may contribute towards the cost of the devices monthly monitoring fee.

Some larger franchisors run customer relationship management (CRM), enterprise resource planning (ERP) and/or merchandising systems. If the data from the recording devices was integrated into these systems then the franchisee could pull their own reports when required and monitor the performance of the equipment on their premises. The franchisor or his appointed QC consultant would be able to remotely confirm compliance within this aspect of the business.

Ultimately should a franchisee wish to sell their franchised operation, an electronically-generated report showing the standard of the current equipment, as well as the historical compliance of audits by the regulatory authorities and franchisor, should increase the value of that franchised operation at the time of sale provided that the equipment has been properly maintained and serviced.

Franchisor as a stakeholder
The franchisor spends a significant amount of money in establishing and enhancing their brand. They rely on their franchisees to comply with regulations and the franchisor therefore spends money on consultants to audit and ensure that their QC standards are adhered to.

Most often a dissatisfied customer will contact the franchisor or health and safety regulator and register a complaint. This ultimately affects the overall brand that is being protected for the benefit of all the franchisees and negative publicity for any brand owner is to be avoided at all cost.

Often, franchisors are part of an international franchise operation and the international standards imposed by first world countries put significant pressure on the in-country licenced franchisor. Should the in-country franchisor not be seen to be ensuring compliance, they could ultimately face the risk of having their licence(s) terminated.

The franchisor may also as part of their business model stipulate certain brands of fridge or other equipment to be purchased by the franchisor. To this end it would be valuable for a franchisor to have information as to how a particular manufacturer’s equipment is performing across their franchised network. The franchisor should be able to negotiate and apply pressure on the manufacturer for poor performing equipment.

The franchisor may also be in a position to assist the franchisees by negotiating pro-active fridge/equipment maintenance service-level agreement (SLAs) based on the statistical up time performance of the entire franchised estate. The franchisor’s brand (and therefore the franchisee’s investment) is enhanced through a better quality of service which can only be delivered if the equipment being used is consistently reliable and supports the stringent requirements imposed by the health and safety regulator and/or the franchisor.

The use of an electronic recording device that records temperatures on a frequent basis, for example, every half hour, that provides the franchisor with exception reports when key equipment is operated out of a predefined temperature range and that generates a daily exception reports across their franchised estate would enable the franchisor to proactively manage poorly performing equipment and/or franchisees.

Read the full feature in Cold Link Africa January 2016 page 41.

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