Beyond Inventory Visibility

By Bill Hardgrave

Retailers should use RFID data to improve business processes and enable a true omnichannel shopping experience.

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Retailers that are tagging and tracking apparel items in stores are seeing that RFID does increase inventory accuracy and improve sales. But as beneficial as that is, they are not realizing the full value of RFID. And they are not taking the steps necessary to fulfill their promise to customers to provide an omnichannel anytime, anywhere shopping experience.

The problem is that retailers are not using all the RFID data they collect. To harness the power of RFID, retailers must change two things: One is a business process and the other, which may prove more difficult to address, is a way of thinking.

First, current retail data is built around the Universal Product Code. The UPC is “group”-level data, which means each stock-keeping unit is represented by one UPC. All men’s shirts brand XY, size 16/34, blue, for example, are UPC 1234567.12345. If a store has 20 of these shirts, the system shows 20 of UPC 1234567.12345 on hand. And all previous and future shipments of these shirts will have the same UPC.

Now, consider the same shirts identified with RFID EPC tags. Each tag has a unique serial number, and the system shows each shirt individually. This makes it easy to store information such as country of origin, manufacturing facility and cost in a database linked to that particular EPC. The data could reveal, for instance, that the shirts manufactured six months ago at Plant A had fewer defects than those received recently from Plant B.

Most retailers are unprepared to capitalize on the new RFID “master data.” Instead, they handle the situation by collapsing the EPC data into UPC data and lose the richness of the EPC information. Retailers must develop a software strategy for storing all the RFID data so it can be analyzed and used to develop a better understanding of—and, ultimately, improve—store processes. RFID data can also be used to enhance the customer experience by, for example, making it easier to return an item to a store.

Second, to provide complete visibility of products required by today’s omnichannel environment, all supply-chain partners must share data. Suppliers must let retailers know when and where products were manufactured and when they shipped. Retailers must tell their suppliers when products were received at distribution centers, shipped to stores, put on sales floors and sold. Traditionally, retailers do not like to share this data. But the old mentality of “us vs. them” is counterproductive in an omnichannel world. Furthermore, when suppliers get maximum value from RFID, they are more likely to comply with retailers’ requests to tag at the source.

The RFID data must be shared using a common architecture, because it would be disastrous for suppliers to have to develop a different system for each retailer. Fortunately, GS1 has already thought of this and developed the Electronic Product Code Information Services standard for sharing data with business partners (see Ken Traub’s column Supply Chain Visibility for more information). It’s now time for supply-chain participants to adopt and use EPCIS.

Bill Hardgrave is dean of Auburn University’s Harbert College of Business and founder of the RFID Lab. He will address other RFID adoption and business case issues in this column. Send your questions to Follow him on twitter at @bhardgrave.