In today’s retail industry up to a third of inventory is not visible to a retailer — imagine what could be accomplished if 100 percent order accuracy could be achieved between manufacturers and retailers. Consumer demand could be met more efficiently and with greater precision, seamlessly fueling the innovative experiences that they crave.
Findings from the EPC/RFID Retail Supply Chain Data Exchange Study
From cashier-less stores to smart fitting rooms, the re-imaging of retail is happening now and accelerating quickly. However, the traditional supply chain, which has remained relatively unchanged for decades, is under tremendous strain from e-commerce demand and changing consumer behaviors. Brands incur costly chargebacks and claims from retailers when fulfillment data errors occur, which has unfortunately become commonplace. It has become clear, through research and real-world applications, that inventory management processes need item-level radio frequency identification (RFID) to create greater efficiencies, or retailers and brands will risk future obsolescence.
To find out just how foundational item-level RFID is to an efficient manufacturer-retailer relationship, the Auburn University RFID Lab teamed up with GS1 US to study order accuracy.
Researching a sample of orders sent between eight brands and five retailers, the EPC/RFID Retail Supply Chain Data Exchange Study (also called “Project Zipper”) examined the flow of information between trading partners over a one-year period, concluding last summer. The goal was to measure how accurately the partners send and receive the same number of cases, SKUs, and items per shipment. The researchers compared barcode scans at the brand owners’ distribution centers, and the barcode data at the retailers’ distribution centers to determine if the data matched, and then also compared these matches with data obtained from RFID tag scans. Additionally, these read points were compared to the advanced ship notice (ASN) data.
The results were eye-opening:
One-hundred percent order accuracy is possible with RFID. For the brand owners who use RFID to capture information and reconcile shipments, order accuracy was more than 99.9 percent. Retailer claims were completely eliminated and only one order contained an error. Looking at just the last 10 months of the study, there were zero errors, proving that 100 percent reconciliation between brand and retailer is possible.
Almost 70 percent of orders, based on legacy barcode scanning, contained errors. These errors were revealed in picking, shipping and receiving, resulting in inventory inaccuracies and chargebacks from the retailers to the brand owners. Brands and retailers generally accept these process errors and add confusion with unrecorded verbal agreements and other workarounds, which often result in additional errors.
The data shows that this is a critical time in retail where brands and retailers can take advantage of a well-tested tool like RFID to effectively eliminate errors and deliver on the omnichannel consumer promise. The lack of inventory accuracy is a preventable problem that can be solved with greater automation and visibility using RFID.
The Outlook
The EPC/RFID Retail Supply Chain Data Exchange Study confirmed that brands can save money and operate at peak performance levels if they leverage RFID to truly optimize inventory. In 2019, we anticipate brand and retailer RFID implementations will continue to evolve and have increasing relevance to help modernize the supply chain in the year ahead.
Susan Pichoff is senior director of industry engagement, apparel and general merchandise for GS1 US.
