How RFID Can Help You Get Omnichannel Ready

Retail omnichannel processes have been put to the test in recent years. Convenience options such as buy online, pick up in store (BOPIS) and ship from store put additional pressure on overburdened store processes and personnel, resulting in missed orders and unhappy shoppers. 

As retailers evaluate RFID to improve their omnichannel readiness, what factors should they consider? 

Step One: Look at the Root Cause

The root cause of poor omnichannel execution is inaccurate inventory. Retailers that don’t have confidence in their system of record end up carrying extra inventory and adding extra labor to fulfill orders. Although a few retailers have taken an “every item, every store” approach to RFID inventory accuracy, chain-wide deployments are not a requirement for omnichannel readiness, as discussed below.

Fixing the Root Cause – Recommendations

Start with Key Merchandise Categories

Retailers with a high percentage of replenishment items or complex SKUs (such as denim, with some stocking 400+ variations of women’s jeans) should consider RFID inventory accuracy for those categories first. They’re densely merchandised, similar in appearance, generally the most difficult to locate in store and drive the sales of other items. For instance, if denim and basics are tagged with RFID, stores can increase the availability of those items while simultaneously reducing safety stock. It’s a quick financial win that can help drive RFID inventory management for other items. 

Start with Flagship Stores

Many retail distribution centers are located far from major population centers. Flagship stores in major metropolitan areas are closer to customers and can handle higher volumes. These stores are ideal for piloting sense-and-respond inventory management and ship-from-store capabilities before rolling out RFID across the entire chain. 

Integrate RFID Inventory Data with the System of Record

RFID data continually validates physical inventory in store, making a retailer’s system of record (generally an ERP, merchandising or dedicated inventory system) more accurate. Some retailers have multiple inventory systems, often inherited from acquired divisions or brands, and use RFID data to inform all of them. 

Step Two: Receiving an Order and Fulfilling it Efficiently

Stores may not be properly staffed for order fulfillment. Allocating store labor for omnichannel operations is a task usually set by the corporate office. Labor hours are generally allocated to omnichannel based on the assumption that inventory is in the store and that associates can locate it. Without accurate inventory management, these two assumptions are generally wrong. We hear from retailers that picking and packing a single omnichannel order in store can take an average of 30-45 minutes, considering that some orders may have to be bounced to another store. Omnichannel order flow is highly variable, with a single marketing promotion capable of doubling or tripling order volume. 

Beyond this, temporary help may not be so helpful. While hiring temps to fulfill omnichannel orders can keep experienced associates in front of customers, they’re generally less vested in the business and more likely to give up an item search if it takes too long. There’s a difference between a new hire and a seasoned associate who knows where every product is located and understands the cryptic abbreviations most inventory systems use to describe merchandise. For example, new hires may have difficulty locating a MNS SLMSTRJN DKRNS 32/34 (Men’s slim straight dark rinse W32 L34) in the store without assistance. 

Fulfilling Orders – Recommendations:

Reduce Manual Processes and Fulfillment Errors in Store

The fewer steps to fulfill a customer order the better. Being able to scan the barcode from a customer order, locate items in store with an RFID-enabled handheld and validate physical items against the packing slip using an RFID table is an example of automating a fulfillment process with fewer steps and minimal training. 

Ensure Stores Have the Correct Inventory in the First Place

A consistent source of inventory errors in store is incorrect shipments from the DC. Verifying outbound orders from DC to store using an ASN validation process with RFID shipping tables or tunnels ensures that stores don’t have to handle inventory reconciliation on their end. RFID-enabled inbound receiving in store can verify that the ASN matches the physical contents of the shipment, but it’s not a requirement if the retailer validates and shrink wraps outgoing deliveries at the DC. 

Leverage Compliance for Consistent Order Quality from Store to Store

Omnichannel execution by thousands of store associates across hundreds of stores requires consistency and discipline, which breaks down quickly when added to other customer-facing tasks. Compliance processes at the associate level and dashboards at the store manager level can help ensure orders are fulfilled quickly and accurately. For example, compliance processes can alert a manager when a new employee cancels a customer order after having difficulty locating items in the store.

Retailers are increasingly using handheld devices for cycle counting, item location and order fulfillment, so RFID compliance tools can help ensure process compliance and data integrity across the retail chain.

An omnichannel strategy requires commitment from the highest levels, store operations discipline and enabling tools. RFID inventory accuracy, process automation and compliance are the key to consistent, ongoing omnichannel execution. 

Phil Morrow is Senior Director of Product Management at Checkpoint Systems

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