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Oscar van den Broek, Managing Director at Nedap Retail discusses the role of RFID in the retail supply chain and its use case towards sustainability.
Retailers have historically prioritised building efficient supply chains to meet increasing customer expectations of on-demand, convenient fulfillment. However, the environmental impact of these demands such as short product life cycles and excess stock is no longer viable or accepted by consumers.
Consumers are becoming increasingly aware of the far-reaching implications of how they shop, consume, and dispose of everyday items and are making steps to rectify their habits in a bid to become more sustainable. As we emerge from the COVID-19 pandemic, it is clear that shoppers have become more environmentally and socially conscious. This has led to a surge in awareness of both social and sustainability issues within the retail industry, and is driving brand choice and a rise in conscious consumerism. With expectations changing, these new requirements have put significant pressure on transparent fulfillment and inventory accuracy and retailers themselves to provide visibility across the supply chain.
While Radio Frequency Identification technology (RFID) is by no means new, the disruption of the pandemic and growing concerns around the sustainability of operations has led to its use picking up momentum in the retail space, with a recent study revealing that 46% of brands have focused more on RFID in response to the challenges faced during COVID-19. The need for sustainability from consumers is now much more prevalent, with shoppers seeking a greater awareness of the provenance of their goods and insight of their supply chains. They want to know where the products they purchase have been before they reach them and get confirmation that they are not negatively impacting the environment. This is where RFID can play a huge part in achieving and exceeding sustainability expectations.
In the past, RFID solutions have generally been sought after for their ability to improve inventory accuracy. Yet retailers are now also understanding their place in monitoring and improving sustainability practices using RFID’s tracking capabilities.
The Problem
Supply chain visibility is more important than ever. Whether inventory is in a distribution center, a physical store or on the move, businesses cannot make fulfillment promises to their customers without an accurate view of their inventory. Having silos of inventory or multiple inventory sources means that they often have stock that meets their customer’s needs and timing, but they just can’t see or access it. Because of this, in many cases the sale is then lost.
To counter this, retailers resort to carrying too much safety stock. Unfortunately, this leads to aggravated customers, giving away margin due to markdowns and an unnecessary environmental impact as much of the unsold stock is sent to landfill. This environmental and financial waste caused by overstocking was previously seen as necessary as it allowed retailers to meet customer needs. However, the “just in case’ approach may effectively fulfill customer orders but is unsustainable in the long run, both from a business perspective and for the environment.
The entire supply chain has been mobilised to seamlessly service rising demand while striving to keep logistics costs down and meet customer expectations. However, this focus on meeting the constant peaks in demand and managing disruption means that businesses are struggling to strike a balance between meeting consumer demand and ensuring they are carrying out sustainable practices. To strike a balance, retailers need to evaluate their supply chain management in order to meet fast-growing expectations among consumers while also operating effectively and sustainably.
The Solution
The best way to solve this is by tracking every unique item’s movement throughout the supply chain and collecting data in a cloud-based inventory repository. Whether it’s in-store, a distribution center or through loss prevention efforts. This enables businesses to keep track of every single item using RFID technology, from the moment it leaves the production factory to the exact moment the item gets shipped, sold or returned.
Through the breakdown of inventory silos, businesses can create a single view of stock across their entire supply chain, and have items move between stores, distribution centers and e-commerce without losing sight of a single item. This enables perfectly matched demand and supply anywhere and at any time.
The wide adoption of RFID is driven by the need for increased inventory accuracy, ensuring it can minimise environmental and financial waste by reducing safety stocks. Inventory visibility and accuracy allows retailers to lessen their total stock holding while still selling more, allocate products to stores which need them and lower safety thresholds. Lowering safety thresholds increases digital merchandise availability and gives the product more chances to sell.
While the industry-wide challenge of inventory excess is widely known, few know the best course of action to solve it as there are a number of reasons the excess can occur. Some of the key contributing factors include lack of visibility into what is present in stores, wanting to have the right product readily available to customers and insufficient retail store processes. Luckily, RFID can and does help retailers achieve this. RFID and inventory visibility can also unlock additional insights from a consumer’s perspective, such as allowing them to check a product’s provenance.
The Platform
Perfect inventory visibility, zero waste and no losses: With that vision in mind, Nedap developed the iD Cloud platform, an integrated suite of SaaS solutions, purposefully built for RFID technology. Nedap’s iD Cloud Platform’s foundation is an EPCIS repository, which is based on industry Standards. This makes the iD Cloud integration layer between existing IT systems such as ERP, POS, WMS, OMS and RFID technology. With this in place, there is no need to replace or change existing IT infrastructure, add any new infrastructure or change current systems.
iD Cloud is the only scalable enterprise platform that gathers all EPC inventory data into one place to create perfect inventory visibility with the use of RFID technology. The iD Cloud also provides a single, real-time view of a businesses inventory, which allows brands to scale their businesses, increase sales and boost customer happiness without waste and losses or a large environmental impact.
As the largest and fastest growing platform in the industry, the iD Cloud platform continues to evolve, based on input from Nedap’s active global user community. This is what makes the platform unique, since retailers and brands, together with Nedap, decide what the roadmap looks like for the platform. The multi-tenant foundation of iD Cloud enables Nedap to quickly scale the platform and capacity to any size, location or need. That’s why Nedap developed four specialised solutions on top of the iD Cloud platform that allow customers to extend use cases and easily scale with their needs and ambitions. Whether businesses would like to start in their stores, DCs or through Loss Prevention efforts.
With the past 18 months opening the eyes of the industry to challenges and expectations that can occur overnight, technology has now progressed at a faster pace. With the environment and new demands at its heart, the iD Cloud Platform out-performs what retailers thought they knew about RFID, and pushes the boundaries on retail technology whilst improving sustainability and paving the way for an exciting and progressive future.
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