RFID and a sustainable omnichannel

Oscar van den Broek
2 May, 22

Retailers have traditionally prioritised building efficient supply chains to meet changing customer expectations of on-demand, convenient fulfilment. However, the environmental impact of these demands, such as short product life cycles and excess stock being no longer viable or considered acceptable by consumers.  

Consumers are becoming increasingly aware of the implications of how they shop, consume, and dispose of everyday items and are making steps to change their habits in a bid to become more sustainable. With the disruption of the last two years now behind us, it is clear that shoppers are now more environmentally and socially conscious than they were pre-pandemic. This has led to a surge in awareness of both social and sustainability challenges within the retail industry, and is driving brand choice and a rise in conscious consumerism. With expectations continuously changing, these new requirements have put significant pressure on transparent fulfilment and inventory accuracy and retailers themselves to provide better visibility across the supply chain.

While Radio Frequency Identification technology (RFID) is not new, the disruption of the pandemic and growing concerns around sustainability has led to its use picking up momentum in the retail industry, with a recent study revealing that 46% of brands have focused more on RFID in response to COVID-19 challenges. The need for sustainability from consumers is now much more widespread, with shoppers needing more information on the provenance of their goods and insight of their supply chains. They want to know where the products they purchase have been and see that they are not negatively impacting the environment. This is where RFID can play a big part in achieving and surpassing sustainability expectations. 

In the past, RFID solutions have generally been purchased for their ability to improve inventory accuracy. Yet retailers are now also understanding their place in monitoring and improving sustainability practices via its tracking capabilities. 

Creating a seamless service

Supply chain visibility is more important than ever. Whether inventory is in a distribution centre, physical store or on the move, businesses cannot make fulfilment promises to their customers without an accurate view of their inventory. Having siloed or multiple inventory sources means there is often stock that meets their customer’s needs but it isn’t visible or accessible. In many cases, this can lead to the sale being lost. 

This then means that retailers resort to carrying too much safety stock. Unfortunately, this is frustrating to customers, gives away margin due to markdowns and has an unnecessary environmental impact as much of the unsold stock is sent to landfill. This environmental and financial waste caused by overstocking was previously seen as necessary, however, the “just in case’ approach may effectively fulfil customer orders but is unsustainable long term, both from a business perspective and for the environment.

The entire supply chain has been mobilised to seamlessly service rising demand while striving to keep logistics costs low and meet customer expectations. However, this focus on achieving the constant peaks in demand and managing disruption means that businesses are struggling to strike a balance between meeting consumer demand and carrying out sustainable practices. To address this, retailers need to evaluate their supply chain management in order to meet fast-growing expectations while also operating effectively and sustainably.

Going cloud-based

The best way to overcome this is by tracking every unique item’s journey through the supply chain and collect data in a cloud-based inventory repository. This enables businesses to keep track of every single item using RFID technology, from the moment it leaves the production factory to the moment the item gets shipped, sold or returned. 

Through the breakdown of inventory silos, businesses can create a single view of stock across their entire supply chain, and have items move between stores, distribution centres and e-commerce without losing sight of anything. This enables perfectly matched demand and supply anywhere and at any time.

The wide adoption of RFID is driven by the need for increased inventory accuracy, enabling it to minimise environmental and financial waste by reducing safety stocks. Inventory visibility and accuracy enables retailers to reduce their total stock holding while still selling more and allocate products to stores that need them as well as providing lower safety thresholds. Lowering safety thresholds increases digital merchandise availability and gives the product more opportunities to sell.

While the industry-wide challenge of inventory excess is widely known, few know the best course of action to address it as there are a number of reasons the excess can occur. Some of the key contributing factors include lack of visibility into what is in stores, wanting to have the right product readily available to customers and insufficient on site processes. Fortunately, RFID can and does help retailers achieve this. RFID and inventory visibility can also unlock additional insights from a consumer’s perspective, such as allowing them to check a product’s provenance.

With the last two years opening the eyes of the industry to challenges and expectations that can occur overnight, technology has now accelerated at a much faster pace. With the environment and meeting new demands at its heart, the iD Cloud Platform out-performs what retailers thought they knew about RFID, and pushes the boundaries on retail technology whilst improving sustainability and paving the way for an exciting and progressive future.

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