Physical Counting

The Role of Physical Counting in a Retail World Dominated by RFID

In the dynamic world of retail, inventory management stands as a linchpin for success. The ability to efficiently track, manage, and optimize inventory can mean the difference between profitability and losses. With advancements in technology, particularly the adoption of Radio-Frequency Identification (RFID), retailers have experienced a revolution in inventory management that moves away from physical counting.

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The Role of Physical Counting in a Retail World Dominated by RFID

The Transition from Physical Counting to RFID

The transition from traditional physical counting to RFID hasn't completely rendered manual counting obsolete. What are the reasons behind counting inventory with RFID, and why are retailers still using physical counts?

Before the era of RFID, retailers primarily relied on manual physical counting to keep tabs on their inventory. This labor-intensive process involved employees manually scanning barcodes, noting down item quantities, and reconciling these counts with their digital records. Needless to say, it was time-consuming, prone to errors, and often required shutting down stores during the counting process.

The need for a more efficient, accurate, and real-time inventory management system led to the introduction of RFID technology. RFID technology utilizes small tags equipped with microchips and antennas. These tags can store unique identification information and transmit it to RFID readers when activated by radio waves. When attached to garments, these RFID tags enable automatic and instantaneous tracking, without the need for manual barcode scanning.

How RFID Counting differs from Physical Counting

RFID counting operates on a relatively simple principle: items are tagged with RFID labels, and store staff use RFID handheld readers to count. When an item with an RFID tag passes within the reader's range, it transmits its unique identifier to the reader. This information is then relayed to the RFID inventory management system, in our case iD Cloud Store, updating the digital inventory in real time.

Most retailers check their RFID counts against the stock files in their ERP system. This way, they’ll have a view of ‘what should be there’ (according to the ERP system) and what’s actually there (the RFID count).

Reasons Retailers Still Perform Physical Counts

Despite the undeniable benefits of RFID technology, retailers still find value in conducting periodic physical counts. Here are three compelling reasons why:

Investigate Differences

While RFID technology is highly accurate, there may still be instances where discrepancies arise between the data collected by RFID systems and the information from the ERP system. These discrepancies can result from various factors, such as tag malfunctions, environmental interference, or theft.

But it can also be the other way around: an RFID count shows more items in the store than should’ve been there, according to the ERP. These differences happen because of shipments that are in the store but aren’t booked yet in the ERP system, or because of click-and-collect orders that are out of the ERP system because the customer already paid for it, but still is located in the store.

In such cases, physical checks allow retailers to identify and rectify issues promptly, preventing further losses or inaccuracies in inventory records.

Financial Compliance

Retailers operate in various industries, each subject to its own set of regulations and compliance standards. Accurate inventory records are often essential to meet these requirements.

In some cases, RFID counts might not meet these financial compliance standards. Physical counts provide retailers with the means to ensure compliance with these regulations. They offer a tangible and auditable record of inventory levels, which can be crucial for both internal accounting practices and regulatory audits. This is why most retailers with RFID still have a yearly physical count.

Quality Control

Beyond inventory tracking and compliance, retailers are also responsible for maintaining the quality of their products. While RFID technology can provide data on item quantities, it may not always detect the condition of the items. Physical inspections play a vital role in assessing the quality of products.

Is Physical Counting still useful in Retail?

In the ever-evolving landscape of retail inventory management, RFID technology has undoubtedly brought significant advancements. Its ability to provide real-time tracking, automation, and accuracy has revolutionized how retailers manage their inventory. However, physical counting remains essential for investigating discrepancies, meeting accounting and regulatory compliance requirements, and ensuring quality control.