Dude, where's my stock?
Radio frequency identification (RFID) gives you complete stock visibility, from supply chain to sales floor.
BT has been at the forefront of RFID in retail for some years, with its specialist capability unit, BT Supply Chain Solutions, playing a major part in some of the most high profile rollouts, such as Marks and Spencer – the largest RFID deployment of its kind in Europe, if not globally. Now, as interest in the technology is growing again, James Stafford of Avery Dennison, BT’s RFID partner in the UK retail sector, reveals the benefits retailers can get from knowing exactly what stock they have – and where it is.
In a world where anything less than instant is considered too slow, you can’t afford to test your customers’ patience. In the past they may have come back another day, but recent research shows that customers will walk out if they can’t find what they want. And the way many retailers currently check stock levels is contributing to these lost sales.
James says: "If your stocking level for each item is only two and your accuracy in all of those hundreds of garments you have is out by 2-10 per cent, as it often is, then the stock of the two items you thought you had could actually be zero.
"And because it's zero it never sells. The stock replenishment system relies on sales through the till point, and so you never reorder. This is the fundamental business problem that RFID is solving."
Why is RFID back in fashion?
Like everything else, the technology underpinning RFID has made it smaller and cheaper. Readers are more mobile, tags lighter and more flexible – making RFID much cheaper and more attractive to implement.
"When people first started talking about RFID in the early trials," James says, "there was this concept that you would have great big portals at every stage of the supply chain and you'd put merchandise through these portals at each stage and record the movement of the garments – as they came into the distribution centre, on the lorry, off the lorry, into the store, back of store, front of store. It was all labour- and capital-intensive, and intimidating."
"But instead of having a lot of fixed RFID equipment, you can get the main benefits of retail RFID with just one or two handheld scanners. You can use the same equipment to check stock on the sales floor, in the back room of the store and when it comes in."
Keith Sherry, general manager, BT Supply Chain Solutions, who chairs a number of industry sector working parties on behalf of GS1/EPCglobal to set global standards says: "At the same time, the standards – pioneered by GS1/EPCglobal – have been locked down and agreed and the technology works reliably.
"The adoption rate of RFID is increasing dramatically, and its adoption in retail apparel is one of the leading sectors. I think, increasingly, retailers who don't adopt it will find it harder and harder to compete in what is already a very challenging market sector, not helped by the current economic environment."
Availability is driving sales
James has spent a lot of time comparing stock reports with actual stock levels at item level. He's found that a typical retailer's stock system is:
- 50% completely accurate
- 35% numerically inaccurate
- 15% ghost stock (stock not on sales floor, sometimes in the backroom)
"The really critical stuff," he says, "is where the system says there are two on display and actually there are none. If you think you have three and instead have four, you're not losing any sales. But you're definitely losing sales if you have no stock of a certain item and think you have two."
By implementing RFID, you can increase sales by 5-10 per cent, through improved stock accuracy and availability. But with an accurate stock picture at the centre, RFID can also help deliver cost reductions, reduced safety stock and fewer markdowns. The actual mix of benefits will depend on your set-up and business aims.
Who's using it?
James highlighted the experience of a number of retailers and brands, which have seen sales increases and other benefits from successful RFID trials and roll-outs.
Gerry Weber stores are rolling out RFID using sewn – in tags for both stock control and to prevent retail theft. Overhead scanners at the doorways will sound an alert if un-sold merchandise leaves the store.
The new generation of handheld readers offer nearly 100 per cent accuracy and can read up to 4,000 garments an hour (or as much as 10,000 in a warehouse setting).
How do I know it'll work for me?
The proof of the pudding is in the eating, of course, and because of this BT Supply Chain Solutions and Avery Dennison are working together to offer a low cost RFID trial. This will show you how RFID works and enables you to quantify the sales uplift and cost savings achieved by using RFID to drive replenishment.
BT Supply Chain Solutions and Avery Dennison have implemented a number of high profile RFID projects and, working together with you, can help:
- run a stock accuracy analysis
- outline the business case
- identify trial departments
- select the best technology
- confirm success criteria
- implement and run a pilot scheme
- analyse the results
- develop the business case
For a fixed fee of £30k, the trial solution equips three stores for three months with a handheld reader and up to 100,000 tags. You'll get basic central reporting and be able to compare the actual results with a control group of stores.
At the end of it all you'll see exactly how well RFID performed in terms of sales and cost savings – and be able to write a business case for deployment.
BT in RFID
Intelligent labels record improvement for leading high street retailer
A key challenge for many companies is having the right stock available to customers when they want it. A leading high street retailer needed a solution capable of integrating with its existing applications to improve and monitor its in-store stock management, ensuring product availability, in the right size, at the right time, in the right store.
Through collaboration with BT Supply Chain Solutions, this organisation has tagged more than 300 million items of clothing in 20 departments, including men's suits and women's lingerie, with RFID labels.
This has involved clothing from over 30 suppliers with 400 factories in 20 countries. The solution included:
- creation and maintenance of a database of the retailer's global suppliers
- intelligent RFID labels from Avery Dennison
- sourcing and provision of mobile RFID readers
- management of high levels of data to produce real-time business intelligence
- management of technology and vendor partners
- integration into existing business systems.
What is RFID?
Radio Frequency Identification is a data-carrying, automatic identification technology. Data relating to an item is stored on an RFID tag attached to the item. Unlike a bar code, the RFID tag carries data in a small computer chip, and communicates wirelessly with an RFID reader.
The chips are completely passive, contain no battery and only communicate in the presence of a specific type of RFID reader
Each tag contains a unique identification number that is then linked to additional product data on a secure database. RFID tags and tickets can therefore identify each individual item. RFID tickets allow you to:
- read the RFID tag without line of sight
- read multiple items hanging on a rack very quickly
- read multiple items in a box without opening the packaging
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