Analyses show that as much as 50% of retail chains have problems with obtaining an unambiguous view of their stock levels. Due to deficiencies in the product range, losses defined as ‘lost sales’ are estimated at 60% for shoppers in brick and mortar shops and almost 70% for online shoppers. GS1 Poland has prepared a report on global trends in the clothing industry, in which it describes the most effective RFID implementations in Poland and worldwide.
Among Polish clothing brands, GS1 conducted a survey on RFID implementation (based on telephone interviews and in-depth surveys among 200 market participants conducted between November 2018 and March 2019). The results of this survey became the starting point for the creation of the report “RFID in the clothing industry in Poland and worldwide”.
In the report, we tried to answer the questions about what technologies transform retail trade and what benefits the management boards of the largest companies expect and in what areas of their activity they are sought for. The purpose of our publication is also to indicate the place for RFID and illustrate the benefits of this technology,” comments Elżbieta Hałas from the Management Board of GS1 Poland.
Technology to improve stock-taking
“The results of the survey show that for most companies the main incentive to use RFID is to reduce the time spent and/or improve the quality of stock-taking,” reads the report.
Incentives for involvement in the RFID project
|Improvement of the time or quality of stock-taking||38%|
|Improvement of product availability on the shelf and related sales growth||31%|
|Improvement of logistics and POS processes (acceptance, release, picking, sales)||15%|
|Full traceability of resources in the supply chain||8%|
|Automation of processes and data exchange (collection and exchange of information on receipt, shipment)||8%|
This is in line with global trends where the key motivator and benefit for RFID implementation by companies in the improvement of ‘inventory accuracy’. By this, it means the conformity of the actual stock with the declared stock. This, in turn, enables the real-time communication of inventory status to customers and leads to improved customer service.
“To meet customer requirements, companies need to look for new solutions that will allow them to adapt to the market. The reliability of inventory and the speed of many processes are the basic conditions that must be met in order to grow in the omnichannel world. RFID is the technology that allows us to meet these requirements, but also opens up many opportunities for further development,” says Jonasz Borowski, project leader at Decathlon.
Most common problems with RFID implementation
In recent years, companies have increasingly pointed to other important factors driving them to implement RFID. According to the report “Transforming Modern Retail”, for 28% of companies are the processes of ensuring a high level of customer experience, while for 27% of companies this is the possibility to improve the use of personalised marketing. 24% of respondents also pointed to an increase in operating profits and a reduction in shelf shortages.
Representatives of companies that took part in the GS1 survey, however, paid attention to the issues of adapting WMS and ERP systems to support the new way of product identification. Some of the companies were still about to implement such systems, while others have already implemented pilot RFID projects. The information obtained from them allows building a list of potential reasons why these projects have not been fully implemented. As we read in the report, the most frequently quoted reasons were:
– problems with finding the right tag to identify a product range,
– selecting antenna coverage for an effective reading of all tags,
– no product labelling at the time of arrival at the warehouse,
– lack of verification by independent experts of assumptions of projects prepared by third-party suppliers,
– the actual determination of the financial costs, e.g. to adapt the company’s infrastructure to the requirements of RFID technology.
RFID is good not only for unknown stock levels
In addition to inventory management, the companies have also identified other potential areas of RFID application. These include but are not limited to:
– the logistic processes associated with the receipt or release of goods from the warehouse or shop,
– the possibility of monitoring the movement of products in the supply chain in terms of their additional protection against counterfeiting,
– return management and support of the sales management process.
As it results from the conducted research, the need to improve stock-taking processes may result mainly from the fact that the vast majority of the surveyed companies carry out the stock-taking only in annual cycles. This is a major obstacle to the actual implementation of the omnichannel sales model, for which RFID is one of the technological foundations, according to the authors of the report.
The report prepared by the Institute of Logistics and Warehousing on behalf of GS1 Poland includes, among others:
– analysis of development and technological trends present in the clothing industry,
– discussion on seeking the benefits of RFID implementation,
– characteristics of the technology, its potential and capabilities, together with the identification of the most interesting solutions available on the market,
– discussion of analysed implementation projects from Poland and abroad, with particular emphasis on achieved benefits and good practices.
The report on RFID can be downloaded from the GS1 website.