RFID: a Digital Twin to create better supply chain visibility?

Written by Tom Vieweger, RFID specialist at Nedap Retail

May 31 2022

There is a lot of talk about "digital twins" these days – but what is that actually? Do we clone people and transfer them to the Metaverse? No, that would go too far. Personally, I like IBM's definition, which says that "a digital twin is a virtual representation of an object or system that spans its lifecycle, is updated from real-time data, and uses simulation, machine learning, and reasoning to help decision-making." As such, translated into ‘retail perspective’, digital twins can give a real-time view of what's happening in a retailer's estate, like product flows and inventory positions. So let us look a bit deeper into the matter and see where this can help retailers get better insights from their supply chains. 

Examples of digital twins 

Although we speak of digital twins for just a few years now, the concept certainly dates back to the first digital technology projects. A good example is NASA's space exploration mission of the 1960s when each voyaging spacecraft was exactly replicated in an earthbound version. Other practical examples are: 

RFID is (just) the carrier 

These days, product labels in the apparel, sports, and footwear industry can go beyond just sharing washing temperatures or cleaning instructions – they can be enriched with a (unique) digital identity, either via a QR code or on a chip. If products carry a unique identity, you can consider this a digital replica of a physical object. So, for example, you could simply say that the product has its own digital passport. 

A unique digital identifier has to be attached to an individual item to connect the physical with the digital world. If the digital identity is stored in an RFID chip, it is possible to track and trace products seamlessly. If an article is equipped with an RFID tag, it's easy to register it along its way through the supply chain. RFID read-points gather data from the physical world and send it to (cloud-based) systems, where they are processed and used for additional data analysis. 

From a wider perspective, physical things can be equipped with an additional sensor that generates even more data. These sensors can produce data, e.g., about temperature, humidity, or pressure. So anyone looking at the digital twin can now see crucial information about how the physical thing is doing out there in the real world. This data can then be relayed to a processing system and applied to the digital copy. 

What's in for retail 

On the item level, stock visibility is a key driver to a retailer's success yet remains a top challenge. Still, stock information remains in silos, sometimes just in emails or spreadsheets. Digital twins help retailers identify stock shortages and demand curves in seconds. Based on these insights, they can replenish products, readjust placements of products, and create targeted ads to minimize waste. 

With the growing number of supply chain partners, regions, and sales channels, it becomes critical for retailers to create a "single point of truth." Unique identity should ideally be an EPC so that it's possible to use the EPCIS standard. EPCIS (the Electronic Product Code Information Service) enables a standard to create and share visibility on stock positions in the supply chain or a value network. Global standards and open formats enable the partners to share provenance and transparency information with each other easily and securely 

Advanced supply chain insights 

By definition, “supply chain management” means the cooperation between suppliers, customers, and other partners. As such, sharing data and insights among those partners is crucial to operating efficiently and the foundation to build trust. Tracking stock movements and status changes in real-time is especially important within complex supply chain structures, where products are regularly shipped and transferred between partners, warehouses, distribution centres, and stores. Cloud-hosted data from each product's digital twin can share real-time data on its provenance, material contents, and journey through the supply chain. As a result, it is possible to create visibility of where products come from, where they are and where they need to go (ideally efficiently and sustainably).  

More examples of advanced supply chain insights: 

Digital twins enable new levels of visibility 

While RFID is by no means new, the disruption of the supply chains throughout the pandemic and the rise in sustainability demands have led to its use picking up momentum in the retail space. Recent studies reveal that the RFID adoption in retail has strongly grown in response to COVID-19. The reason is, that data-driven brands and retailers need actionable insights to ensure products are always available to shoppers.  

Product labels with a unique identity – or a digital twin – have the potential to become the new normal with a variety of related benefits such as carbon accounting, supply chain transparency, and customer interaction. Digital identities, RFID technology, and an EPCIS repository are creating true and comprehensive stock visibility enabling demand-driven allocations, provenance insights, predictive replenishment, and stock transfers to the location where products are really needed. 

Do you want to learn more about how you can benefit from RFID and digital identification?
Read our Whitepaper
Read the whitepaper
Making Merchandise Digitally Available Across All Channels

Just recently, I wanted to buy new shoes, and this time, contrary to a long tradition, my first way did not lead me into a store, but I picked up my mobile phone.  When it......

Read more
Tom Vieweger
RFID business expert
Tom Vieweger