Unlike fashion, the technology industry doesn’t often look to trends and ideas from the past to define its future. But in the case of RFID, that’s exactly the phenomenon we’ve been observing over the course of the last few years. What’s old is new again, but this time around the focus is squarely on the value proposition for stores and consumers instead of the distribution centre (DC).
You’ll likely recall the famous Walmart RFID mandate, announced in 2003 with an effective date of January of 2005. Riding a serious hype wave, RFID was sure to be the next big thing in supply chain execution technology.
So why did the first wave of RFID rollout fail to deliver on its promises of perfect inventory accuracy and complete product traceability throughout the supply chain?
In short, it was a case of the juice simply not being worth the squeeze. While much is often made about the cost of RFID tags, the larger barrier to adoption was the cost of the readers themselves.
Anyone who’s lived in the world of store technology is familiar with the dreaded multiplier effect: the perfect tech layout for a single store is typically affordable, but rolling that footprint across a fleet of dozens, hundreds or thousands of stores is another matter. In the case of RFID, outfitting each store with enough reader technology was a bridge too far for all but the truest of believers.
The upshot of the readers being too expensive was simple: from a cost standpoint, RFID was only viable for the DC. But that brings us back to the juice and the squeeze metaphor.
DCs already had nearly perfect inventory accuracy. Most large enterprises were already running warehouse management systems that delivered inventory accuracy in excess of 99% (in comparison to stores, which typically ranged between 65%-85%).
In short, where there was a benefit, there was too much cost, and where the cost was manageable there simply wasn’t enough benefit. So what’s different this time for the stores? Simply put, the costs of readers have come down substantially, and the benefits for stores are even larger than before.
Let’s start with the costs. Most retailers are now rolling out RFID inventory management use cases like receiving, adjustments and cycle counting via handheld reader. These handheld readers are notably less expensive than the fixed RFID reader options of the past.
What’s more, these handheld RFID readers do double duty: they’re often Android-based devices that also are used for mobile POS, picking and packing in-store and numerous other store tasks. Effectively, the incremental cost of adding RFID readers in stores has plummeted, riding along nearly for free on the mobile device investments most retailers are making anyway.
But perhaps the more interesting aspect of the ‘what’s different?’ story has to do with the benefits. As stores continue their evolution to being the physical manifestation of the digital brand, having high levels of inventory accuracy is quickly becoming integral to delivering excellent customer experience.
For customers, looking up inventory online before driving to the store, reserving an item for pickup, ordering on the same day, curbside delivery or receiving orders shipped from the stores has become the norm. Each time a unit of inventory isn’t actually where the Order Management System (OMS) or store system expects it to be, retailers risk diminishing their customer experience.
In this case, RFID in-store is the proverbial magic bullet. Driving inventory accuracy into the high 90’s, RFID drives up a consumer’s confidence in the availability they see online, increases the probability of having an order ready for pickup inside the hour, markedly improves the ability to execute on curbside and same-day orders and improves on-time shipping on standard delivery orders from store.
In short, RFID directly leads to a materially better customer experience in the age of the digital-first shopper. And luckily, it’s arrived just in time for Walmart’s most recent RFID mandate.
Brian Kinsella is Manhattan Associates’ SVP of Product Management. In this role, he is responsible for Manhattan’s product plans across all applications and leads Manhattan’s user experience product design organization. He has more than 20 years of experience in designing, building, selling and implementing supply chain applications.
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