RFID – Managing Inventory from both sides

Lately, retail has been described with a few phrases such as “perfect storm,” “a crossroads,” “a tipping point.” It is an ever changing market, retail is. And now it is moving into the next exciting stage! With this new excitement comes many hours and days and months of work to make this transition smooth and effective to meet the demands of the consumer, to give them better, faster and much more engaging when it comes to the shopping experience.

In this next stage, managing the inventory is much more complex. The stores need to make many changes to be able to prioritize the convenience and consumer experience, meaning the store associates need to know exactly where those consumer items are at all times. The digital experience needs to align seamlessly with the offerings of the store, making the data and product selection the crucial part to closing the sale.

Theses retailers and their manufacturing partners that are making this move are leveraging item level radio frequency identification (RFID) to maximize their inventories and know exactly what they have in stock so they can make sure it is available to satisfy today’s demanding consumers. Through the visibility of inventory, RFID implementation helps retail companies capture the business of consumers who shop at both stores and online by providing a solid foundation to launch omni-channel innovations. As store fulfillment and click-and-pick up programs rise in popularity, inventory visibility is much more important in the supply chain. RFID gives confidence to those who touch inventory at all levels — from management level down to the store associates — and is a critical enabler of that product being located quickly and accurately for the consumer who wants it.

Let’s look the perspectives of RFID “power users” — those who have fully deployed programs that are showing real results — and see what we can learn to ensure implementation will be successful in these RFID rollouts.

From the Retailer

There has been many discussions in the press and this has been devoted to new innovations, such as dressing room smart mirrors and other Internet of Things (IoT) benefits that will truly create memorable and convenient store consumer experiences. But none of these improvements will matter if the retailer fails to match their inventory with what the consumer wants. The ability to track merchandise, not just for consumers, but for employees looking to find products, is enhanced by the real-time inventory visibility that RFID brings.

With this, RFID has been adopted and implemented by some of the world’s largest retailers to help them answer two very important questions related to inventory management — “What do I have?” and “Where is it?” According to Auburn University studies, RFID has been proven in many use cases to reduce inventory cycle count time by 96 percent and increases a retailer’s confidence in SKU-level item availability helping increase sales from 2 to 20 percent.

One RFID power user, Macy’s, has been a trail blazer in RFID implementation to support omni-channel innovations. The company made a commitment last year to RFID tag 100 percent of its merchandise with RFID by the end of 2017. As a result, all product vendors have been asked to supply merchandise already fitted with RFID tags for true source-to-store visibility.

According to a survey from the Platt Retail Institute, Macy’s has shown solid Return On Investment (ROI). Inventory markdowns have gone down. Full-price sales improved 2.6 percent. The ability to fill orders of RFID-enabled merchandise was more than 6.1 percent for non-enabled merchandise. A 2016 Kurt Salmon study noted that typically, companies with empowered inventory accuracy from RFID can improve sales by as much as 25 percent by helping many more shoppers find the specific product they want and when they want it.

From the Manufacturer

These leading manufacturers also set themselves up for success with RFID tagging, particularly when the tags are applied at the point of manufacture. These brands are leveraging the technology to improve their incoming receipt and outgoing validation processes.

Women’s outerwear brand Herman Kay — another RFID power user — is just one example of a brand owner that has bumped up their implementation of RFID technology. In only four months, Herman Kay completed their deployment of item level RFID and successfully responded to a request from their retailer partner, Macy’s, to adopt RFID.

To speed up the process of creating and applying RFID hangtags to items at their manufacturing sites, Herman Kay selected several solution providers that were members of the GS1 US Apparel and General Merchandise Initiative, a collaborative group that represents a broad cross-section of industry trading partners to develop solutions to supply chain challenges using GS1 Standards. They quickly found that human error was virtually eliminated — RFID automated product verification and picking processes that used to be a manual process For instance, garments that are blue, black and charcoal hanging in plastic bags in a warehouse can all look the same. The serialization that RFID provides can now confirm styles and colors for each order, and more importantly, each specific store location that has requested the items.

In the end, RFID helps both retailers and manufacturers improve inventory management and create seamless shopping experiences. By implementing RFID into their business processes, they essentially create a sustainable model that keeps up with the ever changing behaviors of consumers well into the future.

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