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A Guide to RFID Analytics Software for Retail and CPG Companies

Firms that are RFID-tagging and tracking products can get more bang for their buck by analyzing all the tag-generated data to improve business processes and increase revenues.
By Jennifer Zaino
Oct 01, 2009—Retailers and consumer packaged goods companies that have deployed radio frequency identification technology to track items through the supply chain in real time are improving inventory management, reducing out-of-stocks and boosting sales. That's a significant return on investment. But there are more benefits in store for companies that take the next step and mine all that RFID data to address issues—such as ordering, merchandising and efficiencies—at the store, regional or corporate level.

RFID software that supports analytics functionality helps bring business intelligence to RFID deployments. The retail and CPG sector has gotten pretty good at understanding how RFID can address basic concerns such as inventory inaccuracy, out-of-stocks, loss and product mislocation, says Bill Hardgrave, executive director of the RFID Research Center at the University of Arkansas. "The part we're really not good at is understanding what is causing that out-of-stock," he says. "That's all under that umbrella of data analytics and business intelligence."

Retailers that have closed-loop supply chains—controlling manufacturing, distribution and store activities—have been early adopters of RFID analytics software.
As companies get smarter about how they analyze historic data, they'll be empowered to pinpoint weak spots and create predictive models on which to base proactive changes. For example, a retailer's analysis of RFID data for a couple of sluggish sales weeks might reveal that a certain hot product was never taken out of the back room and displayed on the sales floor during that period. "You have to be aware, because awareness leads to solutions," Hardgrave says. "That's the beauty of this type of real-time system. It's looking ahead, but to do that you have to be able to look back for an explanation first."

Retailers that have closed-loop supply chains—controlling manufacturing, distribution and store activities—have been early adopters of RFID analytics software. "It gives them the ability to optimize their operations based on whether, for example, they see latency on products sitting in the distribution center longer than they should be, or they can track out-of-stocks back to an error being made in the way an ASN [advanced shipping notice] was being written so [products didn't] reach the right place," says Alan Sherman, director of marketing at OATSystems, which was recently purchased by Checkpoint Systems and offers the Merchandise Visibility analytics solution.

But retailers in open-loop supply chains can also benefit from analyzing RFID data to improve procurement and distribution to stores. For instance, retailers may find that stores in certain regions sell more apparel in a specific size, so they can integrate that intelligence into their distribution models. And CPG companies can perform trend analysis on transit times, inventory levels, lost sales due to supply-chain failures, and root causes for out-of-stocks by stock-keeping units, store and day.

In addition to Checkpoint, Seeonic, Retail Solutions, Sensormatic Retail Solutions/Vue Technology and Xterprise are among the leading vendors that offer software to help companies perform real-time and historic analytics on RFID data down to the item level. The vendors declined to give prices for their solutions, saying costs vary depending on factors such as modules deployed and hardware included.

"Software is a major capital expense, but we're seeing more and more from companies that this is a great time to invest in software tools and analytics that will help us drive better store execution, create new business processes that squeeze out costs in the supply chain, or deliver better products at a cheaper price," Hardgrave says. "They're saying now is the time to do that, because years and years of research show that those companies that invest in IT in an economic downturn long term come out ahead of those companies that stopped investing."
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