The recent holiday selling season put retail omni-channel processes to the test. Convenience options such as “buy online, pick up in store” and “ship from store” put additional pressure on overburdened store processes and store personnel, resulting in missed orders and unhappy shoppers.
As retailers evaluate RFID to improve their omni-channel readiness, what factors should they consider?
Step One: Look at the Root Cause
The root cause of poor omni-channel execution is inaccurate inventory. Retailers that don’t have confidence in their system of record end up carrying extra inventory and adding extra labor to fulfill orders. Although a few retailers have taken an “every item, every store” approach to RFID inventory accuracy, chain wide deployments are not a requirement for omni-channel readiness, as discussed in the recommendations below.
Fixing the Root Cause – Recommendations:
a) Start with Key Merchandise Categories
Retailers with a high percentage of replenishment items or complex SKUs (such as denim – we know of retailers who have over 400 variations of women’s jeans) should consider RFID inventory accuracy for those categories first. These categories are densely merchandised, similar in appearance, generally the most difficult to locate in store, and drive the sales of other items. For instance, if denim and basics are tagged with RFID, stores can increase the availability of those items while simultaneously reducing safety stock. It’s a quick financial win that can help drive RFID inventory management for other items.
b) Start with Flagship Stores
Many retail DCs are located far from major population centers. Flagship stores in major metropolitan areas are closer to customers and can handle higher volumes. These stores are ideal for piloting sense-and-respond inventory management and ship from store capabilities before rolling out RFID across the entire chain.
c) Integrate RFID Inventory Data with the System of Record
RFID data continually validates physical inventory in store, making a retailer’s system of record (generally an ERP, WMS, merchandising or dedicated inventory system) more accurate. Some retailers have multiple inventory systems (often inherited from acquired divisions or brands) and use RFID data to inform all of them rather than taking time to integrate disparate systems.
Step Two: What it Takes to Receive an Order and Fulfill it Efficiently
Stores May Not Be Properly Staffed for Order Fulfillment: Allocating store labor for omni-channel operations is a task usually set by the corporate office. Corporate generally allocates labor hours to omni-channel based on the assumptions that inventory is in the store, and that store associates will be able to locate it. Without accurate inventory management, these two assumptions are generally wrong. We hear from retailers that picking and packing a single omni-channel order in store can take an average of 30-45 minutes to do manually considering that orders may have to be bounced to another store. And omni-channel order flow is highly variable – a single marketing promotion can double or triple order volume.
Temporary Help May Not Be So Helpful: Hiring temporary help to fulfill omni-channel orders can keep experienced sales associates in front of customers. However, a temporary hire is less vested in the business, and more likely to give up the search for a missing item and cancel the order if the search takes too long. There’s a difference between a new hire and a seasoned associate who “knows the store” and where every product is located, as well as understands the cryptic abbreviations most inventory systems use to describe merchandise. For example, new hires may have difficulty locating a MNS SLMSTRJN DKRNS 32/34 (Mens Slim Straight Dark Rinse W32 L34) in the store without assistance.
Fulfilling Orders – Recommendations:
a) Reduce Manual Processes and Fulfillment Errors in Store
The fewer steps to fulfill a customer order the better. Being able to scan the barcode from a customer order, locate items within the store with an RFID-enabled handheld and validate physical items against the packing slip using an RFID table is an example of automating a fulfillment process with fewer steps and minimal training.
b) Ensure Stores Have the Correct Inventory in the First Place
A consistent source of inventory errors in-store is incorrect shipments from the DC. Verifying outbound orders from DC to store using an ASN validation process with RFID shipping tables or portals ensures that stores don’t have to handle inventory reconciliation on their end. RFID-enabled inbound receiving in store can verify that the ASN matches the physical contents of the shipment, but it’s not a requirement if the retailer validates and shrink wraps outgoing deliveries at the DC.
c) Leverage Compliance to Provide Consistent Order Quality from Store to Store
Omni-channel execution by thousands of store associates across hundreds of stores requires consistency and discipline, which breaks down quickly when added to other customer-facing tasks. Compliance processes at the associate level and compliance dashboards at the store manager level can help ensure customer orders are fulfilled quickly and accurately. For example, compliance processes can alert a manager when a new employee cancels a customer order when they have difficulty locating items that are in the store. Retailers are increasingly using handheld devices for cycle counting, item location and order fulfillment, so RFID compliance tools can help ensure process compliance and data integrity across the retail chain.
An omni-channel strategy requires commitment from the highest levels, store operations discipline and enabling tools. RFID inventory accuracy, process automation and compliance are the key to consistent, ongoing omni-channel execution.
Phil Morrow is Senior Director of Enterprise RFID Solutions at Checkpoint Systems. He has responsibility for the OAT Foundation Suite enterprise RFID platform and has provided business process consulting for numerous RFID retail and supply chain deployments in North America and Europe.