Why ‘Inventory Accuracy’ Is Not an Oxymoron

By Michael Kaufmann

Supply chains should be viewed holistically to leverage data-infrastructure advances that enable an ecosystem of item- and shipping-specific information across all touchpoints.

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Inventory accuracy has long been the Holy Grail for supply chain executives. The ever-changing landscape of products, the ebbs and flows of consumer demand, and rapidly shifting consumer behaviors make accuracy especially difficult to achieve. The COVID-19 pandemic put additional stress on supply chains that were suddenly overwhelmed by the massive increase in direct-to-consumer logistics.

Predictions made in a 2013 DHL report titled “Big Data in Logistics” are now proving true. The report proclaimed, “The logistics sector is ideally placed to benefit from the technological and methodological advancements of big data” and predicted “huge untapped potential for improving operational efficiency and customer experience and creating useful new business models.”

The pace of transformation in logistics to an RFID-enabled data-based model is proceeding at a rapid pace. The ability to create a digital ID, carry it through the supply chain, capture all transactions along the way, and take action against that data has now become a reality. Intelligent identification solutions exist to optimize item-level data captured at the beginning of a product’s journey, enabling full inventory visibility and accuracy, as well as enhanced routing speed for all partners along the supply chain. With product-level data, supply chain executives are empowered to analyze and make intelligent real-time decisions with the ebbs and flows of demand.

That’s good news for the drive to achieve greater accuracy. Supply chain professionals need to understand the promise of identity solutions and the key benefits they offer—including, but certainly not limited to, accuracy. The first step for supply chain leaders across an enterprise is to recognize that the supply chain is not a set of standalone “links.” On the contrary, supply chains should be viewed holistically to leverage advances in data infrastructure that enable a total ecosystem of item- and shipping-specific information across each touchpoint of a supply chain.

RFID on the Road to Accuracy
Among the many advantages of assigning digital identities to products is speed—and the key to speed is accuracy. Think of it this way: the utilization of item data throughout the supply chain enables speed with accuracy. Consider a logistics scenario with an RFID-enabled intelligent label applied at an item’s source. As the product begins its journey, the data captured and carried in that label enables shipment verification; when the intelligently labelled products arrive at a facility or warehouse, the recipient can quickly confirm that what was received is precisely what was expected.

The data contained in the intelligent labels also allows outbound verification to the next stop in the supply chain. In turn, the same label gives the receiver the inbound verification it needs to move the items directly into inventory, with data that assures its accuracy. At the end of the supply chain, the retailer has confidence that it can show the customer exactly what is available.

Shipping errors pose another logistics challenge that can be addressed through accurate data. Currently, up to 4 percent of shipping errors are due to misrouted items that must be returned to a warehouse for rerouting. Legacy operations that rely on separate processes, with the six to eight touchpoints through which a product moves, increase the chance of such errors occurring. Therefore, there is an operational benefit to routing solutions that are based on item- or parcel-level data to allow cross-docking optimization within the supply chain that enables greater speed accuracy. Put simply, velocity increases as accuracy improves.

Accuracy Impacts Sustainability
Sustainability goals continue to grow as an essential area of focus, driven by consumers, regulations and cost—not necessarily in that order. The supply chain, as an industry, is being pressured to improve sustainability. With regard to consumers, a research study from Deloitte found that “concerned consumers are adopting a raft of different measures to shop and live more sustainably.” One of the most prominent lifestyle changes is “shopping for brands with environmentally sustainable values.” In fact, more than a third of consumers surveyed indicated that they value ethical practices in the products and services they buy.

The data captured and carried in intelligent labels provide real-world efficiency solutions for achieving sustainability in logistics. One area in which supply chains can address carbon emissions is in the transport of goods, and one of the factors that deters sustainability is trucks not being loaded to their full capacity, meaning more vehicles are on the roads than is necessary.

Here again, accuracy enabled by RFID-encoded intelligent labels is key to fully loading trucks. Our own studies have shown that up to 14 percent more volume can be loaded into a truck if a company utilizes key, accurate data that considers the size and weight of parcels, creates the most efficient delivery route, and takes other variables into account, such as perishability. Clearly, the role of accuracy in such sustainability initiatives has the potential to lower costs as well.

The importance of accurate data in logistics will only increase over time. Deploying RFID-based intelligent label solutions at an item’s source will enable accuracy through all the touchpoints along a supply chain and beyond. With a data-enabled logistics ecosystem in place, inventory accuracy is indeed truly achievable.

Michael Kaufmann is the director of market development and logistics at  Avery Dennison. The company recently launched its  atma.io connected product cloud platform, which provides unique digital IDs to physical objects for end-to-end tracking from source to customer, and even beyond, to take part in the circular economy.