One of the most renowned names in American retailing has utilized RFID inventory intelligence to support its omni channel retailing strategy.
The retailer operates a chain of mid-to high-end department stores with multiple online brands and hundreds of locations across the U.S. With stores selling apparel, footwear, cosmetics, jewelry, home furnishings and more, billions of dollars in retail sales are rung up annually.
The company’s leaders decided to embark on an ambitious omni channel strategy to maximize the availability of its vast inventory to shoppers.
Business decision makers recognized the importance of timely, reliability inventory intelligence for this project and concentrated on improving accuracy inventory and expanding visibility.
As part of this initiative, all stores were equipped with Radio Frequency Identification (RFID) technology in order to provide accurate, real-time, item level inventory visibility for all tagged merchandise across the stores and DCs.The RFID rollout for inventory tracking began with a limited project conducted in a few stores and distribution centers, with identified benchmarks desired, Return on Investment (ROI) proof points and a collaborative partner deployment plan for the pilot.
The retailer chose products from Tyco Retail Solutions to assist in their omni channel retail strategy.
Challenge
Key challenges included: erroneous corporate stock ledger, inventory accuracy erosion, out-of-stock conditions and poor inventory visibility across locations.
In order to improve item-level inventory accuracy and resolve these issues, frequent inventory cycle counts were required.
Item-level RFID, with its rapid counting and detailed item visibility capabilities, allowed frequent cycle counts without disruption to the business.
Implementing new technology across the entire enterprise while continuing to run a multi-billion dollar business, is a sizeable challenge. The pilot project had to additionally focus on being cost-effective.
Solution
Tyco’s Inventory Visibility platform, featuring RFID technology, was selected to track inventory throughout all store locations and DCs across the enterprise. The deployment consisted of handheld RFID readers for store personnel to use in back rooms and on the sales floor for conducting inventory counts, replenishment, and store receiving.
The multi-stage implementation began with a pilot project including eight stores and two DCs for item-level tagging of replenishment goods. As a result of the successful pilot program, item-level tagging was rolled out to all store locations in the size-intensive merchandise categories of men’s furnishings and slacks, intimate apparel, denim, and women’s shoes.
With the initial deployment, the retailer tagged 30% of the company’s SKUs, representing approximately $8 billion worth of inventory.
Results
Business requirements were achieved with the lowest total cost of ownership, resulting in performance benchmarks met.
Inventory counts and transactions are now more accurate and consistent across the corporate stock ledger and perpetual inventory, providing reliable available-to-promise inventory in support of the omni channel retail initiative.Overall inventory accuracy rose to a sustained 95% in RFID- supported categories—up from pretest levels of 70 – 75%.
Efficient regular inventory counts now replace the arduous annual physical counts, allowing associates to focus on shoppers rather than tasks, and enable accurate real-time inventory visibility.
With accurate inventory insights, actual merchandise assortments are in line with shopper demand and out-of-stock conditions are greatly reduced.
Pilot stores’ sales, margin, and stock turns improved across highly replenished categories.
Item-level RFID helped the company uncover and address previously undetected sources of shrink and identify selling-floor losses in hours instead of months.
Accurate inventory visibility ensured that the right product is available at the right place, at the right time for in-store and omni channel shoppers.