If you browse through the agenda of the RVCF Annual Fall Conference, you'll find radio frequency identification (RFID) virtually everywhere. That's because the business case for item-level RFID is so powerful for both suppliers and retailers, from maximizing operational efficiency throughout the supply chain to delivering the best possible customer experience.
Inventory accuracy and the speed of cycle counts have been at the core of that business case and with good reason. University of Arkansas researchers found that physical inventory counts were just 64 percent accurate on average. That number jumped to 95 percent after deploying item-level RFID, while labor costs dropped considerably.
Traditionally, most stores would take physical inventory counts once or twice per year, so the data being used to track inventory was six months to a year old. This is ancient in today's retail environment. RFID enables daily inventory counts that take minutes with handheld scanners. If fixed readers are installed, the process can be done automatically with a push of a button. Because standards have stabilized in recent years, technology vendors have introduced more sophisticated readers that allow their customers to take almost continuous inventory.
The Key to Omni-Channel Retailing
Accurate, up-to-date inventory data and real time visibility into that data are absolutely essential to ensuring that you have the right product for sale at the right place at the right time. Industry leaders agree that RFID is a foundational component of an omni-channel retail strategy, which provides customers with a seamless shopping experience across all shopping channels.
For example, customers often have the option to order products online and pick up at the store. If a woman orders a size 12 pink angora sweater online and is told the sweater can be picked up at a specific store, that sweater better be there when the customer stops by to pick it up an hour later. Only item-level RFID can provide the visibility and reliable data required to offer such services without increasing labor costs.
Without RFID, time and resources are wasted trying to find merchandise, which contributes to a negative customer experience. Suppose a customer asks for a certain pair of shoes. The inventory system says they're out of stock, but you eventually find them buried under a pile of sweaters in the changing room. If a product isn't available for sale, you'll be forced to mark it down, which starts to affect your bottom line. Inventory accuracy for replenishment products solves the out of stock issue.
The goal is to sell merchandise within the first few weeks at full price, especially when that merchandise can go out of style or out of season almost as quickly. Merchandise can't sell if it isn't on the sales floor. RFID can tell you if a product is selling at one store but not selling at another. This allows you to get that product into a customer's hands by moving it to the store where the product is selling.
Use Cases Go Far Beyond In-Store Inventory
Suppliers are using item-level RFID to ensure accuracy with inbound and outbound shipments. When products from overseas arrive at the warehouse, RFID answers a number of important questions. What is on the truck? What is in each of the boxes? Are these the right products? Did someone try to introduce counterfeit goods? RFID is a valuable authentication tool, especially for luxury brands that constantly have to deal with the threat of knockoffs.
For outbound shipments, if a supplier doesn't deliver the right products in the proper quantities, compliance losses can be substantial. RFID helps suppliers and retailers build stronger relationships because both sides can verify shipment accuracy using the same data based on a common language – GS1 standards. This speeds the reconciliation process and allows suppliers to be paid more quickly. When you have unique identifiers at the item level, you have more granular data that accelerates the problem-solving process.
As RFID becomes part of regular operating procedures and you get more comfortable with the technology, you learn new use cases and extract more value from your investments. Because you've already built the infrastructure and data collection processes, it's simply a matter of learning to leverage that data in different ways.
For example, one use case for RFID that is picking up steam is sample tracking. As part of the sales cycle, a brand's merchandisers will bring samples to their retail partners. The marketing team may also use these samples for photo shoots. All samples are typically stored in a room at the brand owner's facility. To make sure all of these samples are returned to the sample room, brands are using item-level RFID to track sample inventory for themselves and minimize the risk of knockoffs.
The Time Is Now
As the business case for RFID continues to grow, more and more retailers are having discussions with suppliers to find out how close they are to deploying RFID at the item level. If you're a supplier in the apparel sector and haven't received requests to begin item-level RFID tagging, you should probably expect to receive them within the next two years.
Even if you're not ready to deploy RFID or begin a pilot project, it is important to start gathering information now. We strongly encourage you to take advantage of the wealth of RFID-related information that will be available at the RVCF Annual Fall Conference:
The complimentary GS1 US RFID Adoption Workshop will offer hands-on, step-by-step guidance on what is required to successfully deploy item-level RFID, from building a business case to understanding technical considerations.
- Dr. Bill Hardgrave, Dean and Wells Fargo Professor, Harbert College of Business, Auburn University and founder of the RFID Research Center, will lead "Retailers Only" and "Suppliers Only" sessions about the current state of RFID.
- Paul Arguin, Senior Director, RFID Development, r-pac International, will lead a number of 101- and 201-level sessions designed to help retailers and suppliers build a strong informational foundation for RFID.
Register for the RVCF Annual Fall Conference here.
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