The success of a business is generated by the endorsement of its consumers and stakeholders. To stay endorsed, businesses must cater to their consumers’ needs and values. More than ever, consumers from numerous demographics are valuing sustainability above cost, product and location, and it’s the businesses that are recognizing and adapting to this trend that are thriving. The global pandemic has only strengthened this resolve, with 45 percent of consumers making more sustainable shopping selections in the wake of COVID-19.
The need for sustainability from consumers is present throughout the supply chain. They want to know where the products they purchase have been before they reach them, as well as confirm that they are not negatively impacting the environment. This is where radio frequency identification (RFID) can play a huge part in achieving and exceeding sustainability expectations.
In the past, RFID solutions have generally been sought after for their ability to improve inventory accuracy. Yet retailers are now also understanding their place in monitoring and improving sustainability practices using RFID’s tracking capabilities. This is especially true in the wake of the pandemic.
Turning to Sustainability During COVID-19
Among the many coronavirus-related changes the retail industry has experienced throughout the past year and a half, consumer sentiment is high on the list. Two-thirds of consumers say sustainability has become more important to them in order to limit climate change, while 88 percent think reducing pollution is not prioritized enough by the industry.
With shopper increasingly wanting more insight into the sustainability of retail supply chains, brands are now expected to provide access to this kind of information, including the product’s origin. Partially due to this demand, 65 percent of retailers expect to achieve full traceability from fiber to store by 2025 and are increasingly turning to technologies like RFID to make the lifecycle of products visible and traceable.
It is estimated that 58 percent of retailers expect to adopt RFID to achieve traceability in the next five years, with 13 percent saying they already have the technology in place. The added benefit of supply chain transparency is a company’s increased ability to ensure operational resiliency, which the pandemic has shown becomes more important during events causing global stress.
A drive toward supply chain transparency, combined with the fact that investors are increasingly prioritizing companies which quantifiably combat climate change, is causing the industry to amplify their sustainability efforts. It’s usually the case that a painful impetus is required to spur significant shifts in society that bring about lasting change. COVID-19 is supplying that pain point and driving business activity, along with investments in the direction of sustainability.
RFID Makes Just-Right Inventory Possible
The environmental and financial waste caused by overstocking was previously viewed as necessary, as it allowed retailers to meet customer needs. This “just in case” approach worked to fulfill customer orders. The widespread adoption of RFID, however, driven by the need for increased inventory accuracy, can reduce such waste by decreasing safety stocks. Inventory visibility and accuracy allow retailers to reduce their total stock-holding while still selling more, and to allocate products to stores that need them and lower safety thresholds. The latter increases digital merchandise availability and gives the product more chances to sell.
While the industry-wide challenge of inventory excess is widely known, few know the best course of action to solve it, as there are a number of reasons such excess can occur. Some key contributing factors include a lack of visibility into what is present in stores, wanting to have the right product readily available to customers and insufficient retail store processes. Luckily, RFID can—and does—help retailers achieve this goal. RFID and inventory visibility can also unlock insights from a consumer’s perspective, such as by allowing them to check a product’s provenance.
While there will likely be some return to pre-pandemic work life, many of the new practices and trends are probably here to stay. Therefore, it is up to supply chain leaders to take an active role in planning and designing for their organization’s future. COVID-19 continues to produce challenges, but the fundamentals of what it will take to compete post-pandemic have now come into practice sooner than anticipated.
In many cases, the seeds for change were sewn long before social distancing and video calls became staples in everyday life. While there is undoubtedly a bumpy road ahead for many, those supply chain organizations that are investing in interconnectivity and transparency are the ones that are best positioned to thrive in the years to come.
Jessica St. John is the chair of the RAIN RFID Alliance‘s Sustainability Workgroup and the RFID project manager at Nedap Retail. After obtaining her MBA in international business from Texas State University, Jessica began working as a project manager in the RFID space. She currently focuses on RFID deployments in North America. During her time at Nedap, she has developed an interest in leveraging RFID to help retailers meet their sustainability goals, especially around waste reduction. This led her to chairing the Sustainability Workgroup, where she collaborates with cross-industry professionals to further develop thought leadership at the intersection of RFID and sustainability.