The Handleman Co., a retail category manager and product distributor based in Troy, Mich., has devoted significant time and resources over the past three years toward employing RFID technology to help improve its supply chain and in-store merchandizing services to its customers, most of which are in the media and entertainment industry (see Handleman Deploys RFID for Supply-Chain, Internal Benefits). That work is starting to pay off, and Handleman’s customers—both retailers and consumer goods manufacturers—are starting to see positive results, according to the company’s senior VP and CIO, Khaled Haram, speaking to attendees at this week’s RFID Journal LIVE! Canada 2007 conference in Toronto.
Haram described two upcoming pilot projects that will take place in select Wal-Mart stores. For the first trial, video game maker Crave Entertainment has hired Handleman to deploy and manage a two-week program to track a new product promotion—a video game made for Nintendo’s Wii system—beginning Dec. 1. Crave hopes RFID will enable it to verify that the game has arrived at test stores and been placed on the sales floor according to schedule, and that each display is consistently stocked with product. The game manufacturer expects the information to boost sales of the promoted product by up to 19 percent at the test stores.
Crave is currently working with Handleman to place EPC Gen 2 tags on cases of the new games, as well as the promotional display sent to each store, in which the items will be displayed. Handleman will work with Crave to collect case and pallet tag reads from Wal-Mart’s Retail Link extranet. The system will read the tags from the cases and display as they are received at the test stores, and as they are brought onto the sales floor.
Haram says the second pilot, a six-week project Handleman is conducting for an unnamed supplier of health and beauty products, will begin Dec. 3. “When we first met with this [health and beauty products] company,” Haram told attendees, “they said they had a 98 percent in-stock rate, which is unusually high.”
After Handleman performed store audits of the company’s products, however, it found that the percentage of its products in stock at the stores was less than 98 percent. This discrepancy was due to the company’s reliance on in-stock reporting based on the inventory on record rather than physical inventory levels. Based on this audit, the manufacturer decided to move forward with a pilot to determine if RFID could be used to help keep store shelves better stocked.
The pilot Handleman will perform for the manufacturer, Haram said, will involve a small number of high-value goods, priced at $20 to $50 apiece. To comply with Wal-Mart’s RFID initiative, the manufacturer is already putting EPC Gen 2 tags on cases of the stock-keeping units (SKUs) to be tracked in the pilot. Handleman merchandisers will add item-level tags to the products once they reach the four test stores involved in the pilot. They will then utilize a handheld interrogator to inventory the tagged items on the store shelves, three times weekly throughout the six-week pilot, to ensure the products are available to customers.
For each pilot, Handleman will monitor the stock levels of the same SKUs at four control stores, where none of the cases, promotional displays or items will be tagged. Handleman is partnering with EPCsolutions, a provider of RFID middleware, to provide the software that will be used to commission EPCs and associate them with SKUs, as well as generate out-of-stock and promotional inventory reports.