In this chapter, you’ll learn:
Fashion retail is hectic. Collections come and go. Store employees receive, refill, remove and send items. Shoppers try products on and leave them in different places. Or they take items with them without paying at all. These activities are all done by humans, which means it is prone to error and will lead to inaccuracies.
Over time, these inaccuracies build up to the point that retailers can’t fully trust their stock data anymore. In fact, retailers that don’t use RFID have a stock accuracy between 65% and 75%. This means that you don't know what one-third of their inventory exactly is - or if it is even there. As we will learn, this level of inaccurate stock data leads to products simply not being there in the store for the shopper to buy missed sales. As this leads to lower sales. But the consequences go much further than lost sales. Low stock accuracy also leads to:
Because these pains are felt the whole retail organization, many retailers ask what the best place is to start improving their stock accuracy. Our philosophy is that the physical retail store is the best place to start with RFID. So, what are the what steps do you need to take to that 98% stock accuracy?
There are many ways to calculate the accuracy of your inventory. A statement like ‘we have an accuracy of 98%’ is very common nowadays. But what does that exactly mean? Let’s analyze what we mean by ‘stock accuracy’ and then take a close look at the existing methods to calculate stock accuracy. Finally, we will discuss the definition to calculate stock accuracy that suits the retail sector the best.
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Most retailers will first want to validate the business case for RFID, usually in a smaller amount of stores. First of all, you need to tag your items with RFID labels. While source tagging is the most cost-effective way for retailers to tag, most of the times this is still a bridge too far if you are just starting out. A good practice is to incorporate RFID tagging in existing labeling processes. Tagging happens most of the time in the DC or sometimes in the store. Either way, stores will receive items in the store with RFID labels on them. After receiving these items, it is time to count. Counting is done by store staff using a handheld reader and an app that can process the RFID data coming in. Luckily, stock takes with RFID only cost a fraction of the time compared to a manual store inventory count. In just a period of one hour, one staff member can count an average of 10.000 items.
When the count is done, you compare the result of the RFID count ('what you actually had') to the data in your stock management system, like an ERP system ('what you thought you had'). After the count, any differences are investigated. Here, it is important to know two things. First, you need to know what is missing: which products and from which category. Secondly, you want to understand why certain items are missing, so you can take appropriate actions to prevent it from happening again. When the investigation is done, the result is an approved difference list. This list is then fed back to your ERP system. So your ERP system now has the latest, accurate stock data with products that are actually there. It is good to know that RFID not replaces your current ERP system; it only sends the system better data. And because your ERP system now works with better data, it will automatically follow up by sending better shipments to your stores. Repeat this process for a couple of weeks, and you will hit your first milestone: increasing the store's stock accuracy to over 98%.
A weekly store count is still the most common way to keep your stock levels accurate. But more and more retailers are looking at RFID to enhance other store processes as well. Besides stock counting, there are two common in-store processes in which RFID can be of help:
Receiving incoming shipments with RFID. Receiving incoming shipments with RFID has two big benefits. First of all, it is a huge operational efficiency driver. Store staff doesn't need to check the shipments' contents visually; they can scan the boxes in a matter of seconds. This not only saves a considerable amount of time but also serves as an extra check. Secondly, verifying incoming shipments increases stock accuracy right at the start, as you don't need to wait for the next cycle count to know what was in the shipment. Wel/niet tijdens het tellen? Using RFID at the point of sale. A weekly store count boosts stock accuracy to more than 98%. But having accurate stock data is not the end goal. Stock levels based on a store count done on Monday will still be quite accurate on a Tuesday morning. But they will be less accurate on a Saturday afternoon. For a staff member looking for a pair of jeans in a certain size, it can be pretty frustrating to see that this product should be available, but was actually sold some days ago. Using RFID at your point of sale can increase your stock accuracy daily, again boosting your efficiency.
Implementing RFID in other processes aside, it all falls short unless one condition is met. RFID needs to be embraced by your stores. For RFID to work, you need to improve specific processes in the store. Store staff need to be trained on these new processes on how to execute them And these processes need to be trained and followed by store staff. So if the process:
…then you can never fully realize the full potential of RFID. Creating support for RFID is critical for retailers who are starting with RFID, as well as retailers well underway in their RFID journey. As the foundation of RFID's success is determined in the store, every new staff member needs to be onboarded in your RFID strategy. In the end, these people hold the handheld reader to count your inventory, print missing labels, and scan incoming shipments. The question to ask yourself is when introducing RFID to the stores is this: what’s in it for them? Arguably, moving from a yearly stock count to a weekly stock count can be overwhelming for stores if they are not educated about RFID or included in the implementation process. The store manager is typically the person who is the deciding factor for endorsing RFID. We see roughly two types of stores managers who are both eager to work RFID, if they know the benefits for them: generalists and sales-focused store managers. Generalists. A generalist sees the whole picture when it comes to the store processes: from receiving to selling goods, and every process in between. Often, they immediately ‘get’ RFID. But, they still need to involve their staff members. Clear expectations, guidelines and procedures for RFID are helpful for generalists, and most like to know the bigger picture as well. Sales-focused. These store managers are driven by results, their revenue and their sales numbers. Though they often see the benefits of RFID, they might need to be reminded more that an administrative task as counting stock is good for their sales (we will cover how RFID will increase sales in the next chapter). Sales-focused store managers are often competitive as well. Use this to your advantage! For example, you can introduce internal competitions on which stores has the highest accuracy, or who can count the fastest.
As a last note, a high stock accuracy, in itself, doesn't change anything. High stock accuracy won't refill you salesfloor, nor will it automatically make you sell more. Counting inventory with RFID serves as a diagnostic tool. RFID will let you see where you need to take action: optimizing your replenishment to stores, refining your refill process from stockroom to salesfloor, or even using your store's stock as a source for online channels. But with all these potential actions to take, what is the best and logical next step after improving your store's stock accuracy? Find out in chapter two: increasing your in-store product availability to boost sales.
In just a period of one hour, one staff member can count an average of 10.000 items.
How fast is an RFID count?
But with all these potential actions to take, what is the best and logical next step after improving your store's stock accuracy? Find out in chapter two: increasing your in-store product availability to boost sales.
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