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What Retailers Should Test for in a Proof-of-Concept

It's not just about the technology. Companies must also consider the business case, change management, the data and other issues.
By Bob Violino
Sep 26, 2016

As we discussed in our story, How to Conduct a Successful Proof-of-Concept, this important test will help you determine how best to use radio frequency identification to solve your problems. The first step for any company in any industry is to develop a business plan and form a cross-functional team.

Then, you need to conduct a test at the site where the technology will eventually be implemented and used, such as a factory, store or warehouse. That way, you can determine whether a particular RFID solution will work in that environment and address your business issues.

But what, specifically, should retailers consider when conducting a proof-of-concept (PoC)? We asked the experts who have worked with retailers worldwide to develop successful RFID deployments.

Common Shortcomings
Let's begin by discussing what you do not need to test. "The technology works, so retailers do not have to spend time trying to determine if it works," says Bill Hardgrave, the dean of Auburn University's Harbert College of Business and founder of the RFID Lab, a research institute focused on the business case and technical implementation of RFID and other emerging technologies in retail, supply chain and manufacturing. "However," Hardgrave says, "they do need to determine how it works for them and the best portfolio of technology needed to solve their problems."

But often, retailers approach a PoC by first choosing the technology and then determining what use cases it will solve. "This is backwards," Hardgrave says. "The first question asked should be: 'What are the primary problems we are trying to solve?' Then, choose the technology to solve those problems," he advises. "RFID is not plug-and-play, and one size does not fit all."

Another common mistake is not focusing on the major retail use case. "Retailers should always start with inventory accuracy as a major use case," Hardgrave says. "Sometimes, retailers get distracted by uses cases that have the most visibility, such as enhancing the customer experience in the dressing room." While the visible use cases can be important, he explains, the fundamental and foundational issue—inventory accuracy—must be solved first. The RFID Lab has proved that RFID can increase inventory accuracy from an average of 65 percent to more than 95 percent.

All other benefits of RFID come from inventory accuracy, adds Dean Frew, SML Group's CTO and senior VP of RFID solutions. "When inventory accuracy is measured with a high level of confidence, it frees up the organization to make process and technology change decisions," he states. "Most retailers really don't know what their inventory accuracy is, because it is not practical to measure frequently."

Increased inventory accuracy is the primary use case for RFID in the store, says John Richmond, Tyco Retail Solutions' director of global professional services, since it enables all other benefits. "Simply by knowing precisely what they have and where it is located, a retailer can increase on-floor availability, reduce out-of-stocks, avoid excessive markdowns and lower their inventory carrying costs," he states. "Achieving inventory accuracy also increases the precision of key upstream systems, such as merchandise planning and allocation, and it lays the foundation for secondary use cases like fitting room analytics and omnichannel fulfillment."

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