Susan Lacefield has been working for supply chain publications since 1999. Before joining DC VELOCITY, she was an associate editor for Supply Chain Management Review and wrote for Logistics Management magazine. She holds a master's degree in English.
RFID finally seems to be hitting its stride. Last year, several big name companies—particularly in the retail industry—launched widescale item-level RFID tagging initiatives. For example, Macy's Inc. pledged that all 850 of its Macy's and Bloomingdale's stores would be using RFID technology by 2012.
These early initiatives are reportedly producing big benefits. According to a white paper from Motorola Solutions, "Item-Level RFID Tagging and the Intelligent Apparel Supply Chain," companies that have implemented item-level tagging programs are achieving inventory accuracy rates of between 98 and 99.99 percent and have seen sales jump anywhere from 4 to 21 percent.
With results like these, you may be wondering, Is my company ready to join the item-level RFID revolution? Here are some indicators that your company might be a good fit for the technology and is ready for the next step:
1. You have inventory accuracy issues that can't be solved with bar codes. Industry experts say there's a reason why item-level RFID has gained traction in the retail sector: RFID easily trumps bar codes when it comes to doing store inventory counts. Conducting a storewide inventory with bar codes typically requires scanning every single item, a labor-intensive task that most stores only perform once or twice a year. RFID technology allows them to obtain more accurate data with significantly less time and labor.
With a more accurate picture of its inventory in hand, a company can reduce out-of-stocks and increase sales. That's what really spurred the adoption of RFID in the retail industry and made 2011 such a big year for the technology, says Chris Warner, senior product marketing manager for Motorola Solutions, which makes RFID readers and antennas.
There are other, peripheral advantages to item-level RFID tagging, such as reduced labor, better demand forecasting, and better promotions, says Warner. But these tend to produce incremental benefits. "The biggest chunk of the ROI [return on investment] comes from reducing out-of-stocks," he says.
"I don't think anybody expected the kind of sales lift [that item-level tagging produced]," says Joe Andraski, president and CEO of the Voluntary Interindustry Commerce Solutions Association (VICS), which has a committee dedicated to studying and promoting RFID. Andraski believes that it's this sales lift that encouraged so many big-name companies like Macy's to move from the pilot stage to a major implementation so quickly.
The benefits of item-level RFID tagging aren't confined to the retail industry. The practice is also catching on in other sectors where tight control over inventories is required, says Russell Beverly, senior manager for consulting company Accenture's Retail Practice. Examples include aerospace and defense, high-priced medications, controlled substances, and alcohol, tobacco, and firearms.
2. You are tracking relatively high-priced items. While the cost of RFID tags may have dropped, they're still not free, and neither is the labor or automated equipment required to apply them. "To get a good ROI, your variable cost for tagging the item—which includes the price of the tags themselves as well as labor or gear to get your tag on an item—has to be lower than the net benefit that you are achieving," says Beverly. "Usually that's easier with a prom dress than with a can of tomatoes."
A white paper from Accenture and VICS (which Beverly co-authored), "Item-Level RFID: A Competitive Differentiator," provides a table that shows the sales lift needed for an RFID tagging effort to break even. (The white paper can be found on Accenture's website.) The table breaks the amounts down by unit margin and cost of the tag. For example, according to Accenture's calculations, a product with a $5 margin and total tagging costs of 20 cents per item would need a 4-percent sales lift to justify the cost.
It's worth noting that companies are using RFID tags to track more than just merchandise. Some are also tagging individual shipping and warehousing assets, particularly high-cost, moveable items. Companies typically lose one in four of their returnable, reusable shipping containers, such as totes, containers, or plastic pallets, says Warner. So it makes a lot of sense to tag these items for tracking purposes, he explains.
3. Your systems are coordinated and your data is synchronized. As Andraski says, before a company can implement item-level RFID, it needs to "have its act together." What he means by that is you have to make certain all your systems—such as your enterprise resource planning system and your order entry systems—are coordinated and can talk to one another.
In addition, it's important to have accurate product information. "Data synchronization is really key," says Andraski. "You need to make sure that whatever you have in your product master [data sheet], your customer has the same information in its product master in terms of weight, size, and what you're calling the product."
4. You have a lot of items that are offered in various permutations. If your products come in multiple sizes, styles, and colors, tagging individual items can make a lot of sense, according to Warner. RFID tags can make it significantly easier to find the exact item the consumer is seeking, he explains. Macy's, for example, has begun its item-level RFID implementation by focusing on products that come in many different sizes, such as women's shoes and men's slacks.
5. You have an item with a short sales window. Companies whose survival depends on selling enough snow shovels or designer coats between December and March can benefit from the real-time inventory information that RFID can provide.
NOT FOR EVERYONE
For all its many benefits, RFID doesn't make sense for everybody. "If bar codes are working well today and you can't point to a clear problem, then RFID's probably not a good option for you," Beverly says. "The cost of the tags is still not to the point where you should retire all bar-code infrastructure and processes just to go with something new. Bar codes still work extremely well for a wide variety of things."
For example, the pharmaceutical industry had been pushing hard for companies to adopt RFID to fulfill chain of custody requirements. But some industry players have backed off from RFID after realizing there are still ways to get more from their existing technology and data management systems, says Beverly. Many companies in the industry now see RFID as something for the long term.
This also applies when it comes to the business case for the technology. While there are undeniable benefits to implementing RFID in your distribution operations—reducing chargebacks, boosting inventory accuracy, and cutting invoice and payment cycle times, to name a few—that's not what's driving current implementations, according to Beverly.
"The knee-jerk reaction is to assume you can get benefits from it in a lot of different areas," Beverly says. "And while that's true, it's hard to add up all those incremental benefits versus using bar codes today. If you can just simplify and focus on one or maybe two benefits at most, that makes it much easier to figure out where and how to use it."
States across the Southeast woke up today to find that the immediate weather impacts from Hurricane Helene are done, but the impacts to people, businesses, and the supply chain continue to be a major headache, according to Everstream Analytics.
The primary problem is the collection of massive power outages caused by the storm’s punishing winds and rainfall, now affecting some 2 million customers across the Southeast region of the U.S.
One organization working to rush help to affected regions since the storm hit Florida’s western coast on Thursday night is the American Logistics Aid Network (ALAN). As it does after most serious storms, the group continues to marshal donated resources from supply chain service providers in order to store, stage, and deliver help where it’s needed.
Support for recovery efforts is coming from a massive injection of federal aid, since the White House declared states of emergency last week for Alabama, Florida, Georgia, North Carolina, and South Carolina. Affected states are also supporting the rush of materials to needed zones by suspending transportation requirement such as certain licensing agreements, fuel taxes, weight restrictions, and hours of service caps, ALAN said.
E-commerce activity remains robust, but a growing number of consumers are reintegrating physical stores into their shopping journeys in 2024, emphasizing the need for retailers to focus on omnichannel business strategies. That’s according to an e-commerce study from Ryder System, Inc., released this week.
Ryder surveyed more than 1,300 consumers for its 2024 E-Commerce Consumer Study and found that 61% of consumers shop in-store “because they enjoy the experience,” a 21% increase compared to results from Ryder’s 2023 survey on the same subject. The current survey also found that 35% shop in-store because they don’t want to wait for online orders in the mail (up 4% from last year), and 15% say they shop in-store to avoid package theft (up 8% from last year).
“Retail and e-commerce continue to evolve,” Jeff Wolpov, Ryder’s senior vice president of e-commerce, said in a statement announcing the survey’s findings. “The emergence of e-commerce and growth of omnichannel fulfillment, particularly over the past four years, has altered consumer expectations and behavior dramatically and will continue to do so as time and technology allow.
“This latest study demonstrates that, while consumers maintain a robust
appetite for e-commerce, they are simultaneously embracing in-person shopping, presenting an impetus for merchants to refine their omnichannel strategies.”
Other findings include:
• Apparel and cosmetics shoppers show growing attraction to buying in-store. When purchasing apparel and cosmetics, shoppers are more inclined to make purchases in a physical location than they were last year, according to Ryder. Forty-one percent of shoppers who buy cosmetics said they prefer to do so either in a brand’s physical retail location or a department/convenience store (+9%). As for apparel shoppers, 54% said they prefer to buy clothing in those same brick-and-mortar locations (+9%).
• More customers prefer returning online purchases in physical stores. Fifty-five percent of shoppers (+15%) now say they would rather return online purchases in-store–the first time since early 2020 the preference to Buy Online Return In-Store (BORIS) has outweighed returning via mail, according to the survey. Forty percent of shoppers said they often make additional purchases when picking up or returning online purchases in-store (+2%).
• Consumers are extremely reliant on mobile devices when shopping in-store. This year’s survey reveals that 77% of consumers search for items on their mobile devices while in a store, Ryder said. Sixty-nine percent said they compare prices with items in nearby stores, 58% check availability at other stores, 31% want to learn more about a product, and 17% want to see other items frequently purchased with a product they’re considering.
Ryder said the findings also underscore the importance of investing in technology solutions that allow companies to provide customers with flexible purchasing options.
“Omnichannel strength is not a fad; it is a strategic necessity for e-commerce and retail businesses to stay competitive and achieve sustainable success in 2024 and beyond,” Wolpov also said. “The findings from this year’s study underscore what we know our customers are experiencing, which is the positive impact of integrating supply chain technology solutions across their sales channels, enabling them to provide their customers with flexible, convenient options to personalize their experience and heighten customer satisfaction.”
Transportation industry veteran Anne Reinke will become president & CEO of trade group the Intermodal Association of North America (IANA) at the end of the year, stepping into the position from her previous post leading third party logistics (3PL) trade group the Transportation Intermediaries Association (TIA), both organizations said today.
Meanwhile, TIA today announced that insider Christopher Burroughs would fill Reinke’s shoes as president & CEO. Burroughs has been with TIA for 13 years, most recently as its vice president of Government Affairs for the past six years, during which time he oversaw all legislative and regulatory efforts before Congress and the federal agencies.
Before her four years leading TIA, Reinke spent two years as Deputy Assistant Secretary with the U.S. Department of Transportation and 16 years with CSX Corporation.
National nonprofit Wreaths Across America (WAA) kicked off its 2024 season this week with a call for volunteers. The group, which honors U.S. military veterans through a range of civic outreach programs, is seeking trucking companies and professional drivers to help deliver wreaths to cemeteries across the country for its annual wreath-laying ceremony, December 14.
“Wreaths Across America relies on the transportation industry to move the mission. The Honor Fleet, composed of dedicated carriers, professional drivers, and other transportation partners, guarantees the delivery of millions of sponsored veterans’ wreaths to their destination each year,” Courtney George, WAA’s director of trucking and industry relations, said in a statement Tuesday. “Transportation partners benefit from driver retention and recruitment, employee engagement, positive brand exposure, and the opportunity to give back to their community’s veterans and military families.”
WAA delivers wreaths to more than 4,500 locations nationwide, and as of this week had added more than 20 loads to be delivered this season. The wreaths are donated by sponsors from across the country, delivered by truckers, and laid at the graves of veterans by WAA volunteers.
Wreaths Across America
Transportation companies interested in joining the Honor Fleet can visit the WAA website to find an open lane or contact the WAA transportation team at trucking@wreathsacrossamerica.org for more information.
Krish Nathan is the Americas CEO for SDI Element Logic, a provider of turnkey automation solutions and sortation systems. Nathan joined SDI Industries in 2000 and honed his project management and engineering expertise in developing and delivering complex material handling solutions. In 2014, he was appointed CEO, and in 2022, he led the search for a strategic partner that could expand SDI’s capabilities. This culminated in the acquisition of SDI by Element Logic, with SDI becoming the Americas branch of the company.
A native of the U.K., Nathan received his bachelor’s degree in manufacturing engineering from Coventry University and has studied executive leadership at Cranfield University.
Q: How would you describe the current state of the supply chain industry?
A: We see the supply chain industry as very dynamic and exciting, both from a growth perspective and from an innovation perspective. The pandemic hangover is still impacting decisions to nearshore, and that has resulted in a spike in business for us in both the USA and Mexico. Adding new technology to our portfolio has been a significant contributor to our continued expansion.
Q: Distributors were making huge tech investments during the pandemic simply to keep up with soaring consumer demand. How have things changed since then?
A: The consumer demand for e-commerce certainly appears to have cooled since the pandemic high, but our clients continue to see steady growth. Growth, combined with low unemployment and high labor costs, continues to make automation a good investment for many companies.
Q: Robotics are still in high demand for material handling applications. What are some of the benefits of these systems?
A: As an organization, we are investing heavily in software that will allow Element Logic to offer solutions for robotic picking that are hardware-agnostic. We have had success deploying unit picking for order fulfillment solutions and unit placing of items onto tray-based sorters.
From a benefit point of view, we’ve seen the consistency of a given operation improve. For example, the placement accuracy of a product onto a tray is far higher from a robotic arm than from a person. In order fulfillment applications, two of the biggest benefits are reliability and hours of operation. The robots don't call in sick, and they are happy to work 22 hours a day!
Q: SDI Element Logic offers a wide range of automated solutions, including automated storage and sortation equipment. What criteria should distributors use to determine what type of system is right for them?
A: There are a significant number of factors to consider when thinking about automation. In my experience, automation pays for itself in three key ways: It saves space, it increases the efficiency of labor, and it improves accuracy. So evaluating which of these will be [most] beneficial and quantifying the associated savings will lead to a “right sized” investment in technology.
Another important factor to consider is product mix. With a small SKU (stock-keeping unit) base, often automation doesn’t make sense. And with a huge SKU base, there will be products that don’t lend themselves to automation.
With any significant investment, you need to partner with an organization that has deep experience with the technologies that are being considered and … in-depth knowledge of the process that is being automated.
Q: How can a goods-to-person system reduce the amount of labor needed to fill orders?
A: In most order picking operations, there is a considerable amount of walking between pick faces to find the SKUs associated with a given order or set of orders. Goods-to-person eliminates the walking and allows the operator to just pick. I have seen studies that [show] that 75% of the time [required] to assemble an order in a manual picking environment is walking or “non-picking” time. So eliminating walking will reduce the amount of labor needed.
The goods-to-person approach also fits perfectly with robotic picking, so even the actual picking aspect of order assembly can be automated in some instances. For these reasons, [automation offers] a significant opportunity to reduce the labor needed to fulfill a customer order.
Q: If you could pick one thing a company should do to improve its distribution center operations, what would it be?
A: Evaluate. Evaluate the opportunities for improving by considering automation. In my experience, the challenge most companies have is recognizing that automation is an alternative. The barrier to entry is far lower than most people think!