Latest on RFID from University of Arkansas

After attending the RFID seminar at the University of Arkansas, I realized we still have a long way to go. I knew that going into it, but I had hoped for some new revelations. The process of RFID inventory tracking can play a key role in ensuring inventory accuracy in the demand chain. And as we all know, more accurate inventory counts can lead to more accurate inventory levels or "right stocking" your inventory investment.

Some key takeaways from the meeting are that apparel is ripe for RFID. Dillard's is doing some pilots with their jean category suppliers that are providing great results. This category doesn't have the overwhelming problems that exist for categories that use metals or liquids in packaging for their products. Canned soups and sodas probably won't happen anytime soon at the item level and it is difficult at the case or pallet level too.

However, the potential value proposition for RFID is enormous if we can get past the challenges. Some of the value points floating around were the following:

• Analyze and Fix Chain Inadequacies
• Repair Problems Early in Cycle
• Real Time Visibility
• Enable Exception Management
• Addl. Transparency throughout Supply Chain by
  - Tracking Merchandise
  - Reducing Shrinkage
  - Processing Claims Easier
  - Providing Targeted Recall Measures
  - Improving Global Piracy Protection
• Improve Efficiency in Supply Chain
  - Improve Decision Making
  - Reduce Time to Receive Goods
  - Optimize Inventory Management
  - Decrease Warehouse Costs
  - Automatic Monitoring
  - Allow Event Driven Notifications
• Full EPC Inventory Management Systems
  - Integrate with business process is key
  - Deliver excellent customer service
  - Location management
• Improved Speed to shelf
  - Precise execution on promotions
  - Accurate data (33% increase in promotion sales)
  - Reduce OOS
  - Increase sales

So why should a supplier invest in RFID? Try these benefits and see if there is a big enough ROI for you to make the investment.

• Enhance sales via information prompting
• Improvement in execution
• Customer Satisfaction which leads to brand loyalty
• Increased Supply Chain visibility of inventory provides enhanced execution
• Supply Chain and sales floor visibility in real time
• Improved level of execution
• Decreased sales floor OOS (out-of-stocks)
• Efficient inventory levels
• Recall and claims process
• Decreased expenses
• Decreased shrink
• Decreased out of date products (fresh inventory)

Someone also mentioned that OOS (out-of-stocks) account for 2% lost sales in the retail industry. I actually thought it was more. But if you multiply the 2% by the total retail sales from Q42006 through Q32007 of $3,884,752,000,000 or $3.9 trillion * (total retail sales less e-commerce sales) that accounts for $77,695,000,000 or $77 billion dollars in lost sales for those 4 quarters. That sounds like a pretty large benefit to me if you can see that in your demand chain. This is where an integrated Demand Signal Repository, like Velocity (www.retailvelocity.com), could help you get the real-time visibility that you need to insure you "right stock" every shelf.

* http://www.census.gov/mrts/www/data/html/07Q3.html