April 03, 2018 Industry news
Taken from our latest report Measuring the Impact of RFID in Retailing, we evaluate why 10 leading retailers started their RFID journeys.
Radio Frequency Identification (RFID) is a technology that provides retailers with a lot of opportunity. By enabling companies to quickly and efficiently identify items in their supply chain on a mass scale, its applications are seemingly endless.
In the early days of retail adoption, the University of Arkansas identified 60 possible use cases for Apparel retail alone. And since RFID adoption has increased, companies are coming up with new and innovative ways of applying the technology. But too much choice can also be an obstacle to implementation. With so many avenues for RFID, the challenge for many retailers can be pinpointing a business case and knowing where to start.
Apparel RFID possible use cases - Collected business use cases*
| Outbound automation | Inbound quality | Country specific care labels and placement |
| Inbound and outbound audit processes | Outbound quality | Inventory tracking within DC |
| Electronic proof of delivery | FTZ and first sale | Product recall |
| Right tag on product | Track returns | Counterfeit tracking |
| Supply chain data quality | Tracking through processing areas | PI accuracy |
| Could eliminate audits and manual inventory | Drive accurate costing | Shelf replenishment |
| Smart inspect | Vendor pack accuracy | Dormant inventory reduction |
| Country of origin | Case pack accuracy | Reduce shrink |
| FTZ (Free Trade) | Source validation | Shopper item interest vs purchase |
| Trade agreements | Shipping validation | Density and space planning |
| Traceability through supply chain | Plan-o-gram compliance | Multi-channel inventory management |
| Track defectives & recalls | EAS consolidation | Inventory tracking |
| Pick/pack speed | Reduce cycle count time | Security and shrink reduction |
| Pick/pack accuracy | Receiving accuracy | Shrink due to employees |
| Detail of available data | Eliminate physical inventory counts | Accurate export documentations |
| Item level data | Carton accuracy | Store to store transfers |
| Claims accuracy | 3rd party consolidation efficiency | Potential to eliminate claims |
| Speed and accuracy | Increased store PI accuracy | Brand visibility in store |
| Country specific shipping documentation |
*Source: Waller, Cromhout et al, “An Empirical Study of Potential Uses of RFID in the Apparel Retail Supply Chain”, 2011, University of Arkansas.
While there is a competitive advantage in being a first mover, second movers also benefit by utilising their learnings. Taken from our latest report Measuring the Impact of RFID, in partnership with the ECR Shrink and On Shelf Availability Community and authored by Professor Adrian Beck, we interviewed 10 retailers to understand the business context for RFID.
Driving sales
For most respondents, the primary goal for RFID adoption was to improve stock visibility to manage the issue of inventory accuracy. Prior to implementing RFID stock accuracy of the 10 retailers ranged between 65 – 75%.
By having better stock visibility companies could make better merchandising decisions, reducing out of stocks and more closely aligning replenishment with demand patterns. This would ultimately lead to improved profitability and sales delivering the ROI of the project.
Optimising stock holding
Having increased stock visibility can also reduce the amount of stock held in the business. When merchandise decisions are based on accurate up-to-date data, replenishment can be much leaner. This reduces the impact on capital outlay and staff productivity. A better stock position throughout the season also means less stock to clear at the end of season, resulting in fewer markdowns.
Enabling Omnichannel
Managing inventory is not a new issue for retailers, but dwindling margins and omnichannel processes are driving a need for inventory knowledge at a granular level.
The ability to utilise stock across multiple channels while providing a seamless customer experience is reliant on having accurate stock visibility. As one retailer put it “there was an acceptance in the business that stock accuracy was crucial to the development of the business, based on the desire to move into Omnichannel – pick from store, intelligent stock distribution, accuracy in buying, accuracy in stock levels and a seamless view to both customers and staff of stock”.
Driving innovation and efficiencies
While change and innovation isn’t new to retail, the pace of change in modern retailing was another reason to invest in RFID. Some respondents considered the adoption of RFID itself a source of competitive advantage with one retailer commenting “it is usually best not to be the first, but you must not be the last to adopt!”.
With the growing trend for big data, other retailers are looking at RFID to provide better data around the visibility and movement of product within their business.
The business context
While the research uncovered different reasons to invest in RFID, most had the same core driver; to maintain a competitive edge and improve customer experience in a way that’s efficient and profitable.
Read the full findings of the research
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