With online ordering now an essential ingredient of real-world retail, accurate inventory management is becoming increasingly critical.
Quite simply, accurate, up to the minute inventory management allows retailers to understand exactly what is in stock so they can fulfil online ordering, manage click and collect, and also oversee stock on the floor, or on order.
Accommodating this trend is RFID, so let’s dive a little deeper into the role it plays in inventory management.
What is RFID?
Used widely for purposes like microchipping, tollway tags and other applications, RFID (or radio frequency identification) involves a small chip that can store lots of data.
In the case of retail, this data can be quite detailed, encapsulating product information like size, colour and a whole lot more. But the key asset of RFID is that these chips can be read from a distance, instantly, even when they are embedded in an object.
Ultimately this means RFID offers a wealth of potential when it comes to inventory management and also supply chain accuracy.
RFID and inventory management
Stock management has long been a challenge for retailers, requiring a significant investment of staff time and resources.
RFID revolutionises this concept, allowing staff to automatically stock count at any given time or employ inventory counting as part of a regular stocktake.
This information can then automatically be reconciled with the Point of Sale, ensuring staff know exactly what is on hand at any given moment.
In fact, a recent article in Forbes notes RFID increases inventory accuracy from an average of 65 per cent to more than 95 per cent.
It can also be set up to trigger automatic re-ordering when an item is running low, meaning the likelihood of a product being ‘out of stock’ is significantly reduced.
And when it comes to today’s altered retail environment, this instant information is invaluable, improving the customer experience and better-facilitating services like click and collect, and online ordering.
RFID and the supply chain
RFID doesn’t just benefit a retailer in-store, it can also be employed to minimise errors in the supply chain, which improves the retail bottom line while also better servicing the customer.
So how does this work?
When affixed at the point of manufacture, RFID tags allow retailers to track items through the supply chain. They also enable them to easily reconcile orders when they arrive in store.
According to a recent study by Auburn University in the US, this greatly reduces supply chain error.
Their research found 69 per cent of orders handled the traditional way using barcodes contained an error, but using RFID, this was reduced to just 0.01 per cent.
“These errors were revealed in picking, shipping, and receiving, resulting in inventory inaccuracies, at best, and claims (i.e. chargebacks) from the retailers to the brand owners, at worst,” the report noted.
Meanwhile, they further explained: “Brand owners and retailers who used RFID technology to optimise inventory management and reconcile product shipments were capable of achieving 99.9 per cent order accuracy”.
RFID benefits at a glance
Simple to implement and easy to use, RFID offers a wealth of benefits to retailers. It greatly improves inventory accuracy, allows for increased in-store efficiency and facilitates online ordering and click and collect, which are fast becoming non-negotiables in a post-COVID-19 world.
RFID benefits at a glance include:
- Inventory accuracy increase from an average of 63 per cent to 95 per cent
- Retail out of stocks reduced by 50 per cent
- Cycle count times cut by up to 96 per cent
- Supply chain accuracy improvement from 69 per cent to 99.9 per cent.