Stock visibility using RFID

Eliminate “black boxes”

Total stock visibility enables agile order fulfillment in an omnichannel world

By Tom Vieweger

August 1 2018

Customers expect their desired items to be available anytime and anywhere – no matter if they browse in a physical store or online. With so many shopping choices, retailers have to offer multiple options – such as ship-to-home, ship-to-store, ship-from-store, click-and-collect, and a range of return choices – to compete. Having said that, there is a huge challenge to keep this promise if you do not know where your inventory sits across your enterprise.

The answer to this complexity of sales channels is to create “total stock visibility”. This blog post takes a closer look into this concept and gives an overview of best practices from the retail industry.

The degree of chaos increases exponentially during the journey of merchandise from source to sale.

Eliminate “black boxes”

Retailers already do a lot in order to achieve high process reliability and stock accuracy in their distribution centres, while the stock accuracy (on item-level) in retail stores is very often only around 60 – 70%. That means that most retail stores are actually a “black box” in terms of stock visibility. This is especially painful as:

  • There is no one cause: These “black boxes” are caused by a whole range of factors such as unregistered theft, poor process compliance and high staff fluctuation, which all add up in stock inaccuracies.
  • The biggest sales potential is in the stores: Typically, the majority of the stock is located in the stores and only a minor part is the distribution centre. That means that the store is the place where the conversion needs to happen.
  • This limits retail ambitions: Moving forward, brands and retailers are planning to give their stores a much more central position in their unified commerce strategy (e.g. through the introduction of ship-from-store and click-and-collect), but due to a lack of stock visibility, this often requires a lot of workarounds such as high safety stocks or separate DC-to-store shipments.

Best practice: Use RFID to shed light on the biggest ‘black box’ first

Considering the above, we always recommend eliminating the biggest “black box” first and start shedding light on the store’s stocks by using RFID and applying regular stock counts. Thereby, the stock accuracy will quickly and easily be raised to 98+%. However, this is not the end of the journey. Once all merchandise is tagged with RFID labels, it is an easy step to move downstream in your supply chain. Especially, the optimization of the distribution process by applying RFID read-points (e.g. for inbound and for packing verification) will enable a more detailed view of the flow of goods.

Agile order fulfilment needs total stock visibility

In order to not disappoint the customers and fulfil orders in a flexible way, retailers increasingly open their traditional supply chains. That means, new shipments do not necessarily just arrive from a distribution centre anymore – new stock can also come from an e-commerce warehouse, nearby stores or any other stock source.

Best practice: An EPCIS repository enables end-to-end inventory tracking

Achieving total stock visibility across multiple channels is the foundation to route and orchestrate orders, wherever they come from or they need to be delivered to. An EPCIS repository, holding all read events from various RFID read-points along the whole supply chain, is an easy and efficient solution to aggregate stock information from all possible locations. As a result, it creates total stock visibility, which is consequently the basis to fulfil customer orders in the most agile way.

Conclusion

While intuitively, it might sound logical to first introduce RFID in logistics before introducing the technology in the stores, I learned from numerous RFID roll-outs that in fact, the stores are the perfect starting point. The main reason is that the effect of poor stock accuracy on store-level is incredibly high. It leads to out-of-stock situations and limits retailers from introducing agile order, pick-up and return services to their customers. After the stores, I do see the warehouse as the logical next step to achieve total stock visibility.

In the end, it is about finding the right path to move forward with RFID to actually increase sales. Here, an EPCIS repository provides total stock visibility, allowing shoppers to determine if an item is available or can easily be ordered – anytime and anywhere.

Tom Vieweger
Business Developer
Tom Vieweger