Over one billion encoded RFID tags sold per year, ...
... more than 1,000 stores rolled out with the software platform “Clarity”, customers such as American Apparel, Decathlon, and Tesco – SML demonstrated its solution capability on the fashion market.
Now, the RFID supplier uses the experience gained from working in the fashion and shoe retail markets onto other retail sectors: smartphones, cosmetics, pharmaceuticals, glasses, food, and drinks.
Being interviewed by RFID & Wireless IoT Global, Dean Frew, CTO of SML, explains how RFID provides benefits in all retail sectors and why omnichannel would be unthinkable without RFID technology.
Chief Technology Officer and Senior VP of RFID Solutions
Plano, United States
RFID is the leverage factor for store revenue
SML RFID sees in-store use as the biggest potential for RFID employment. All products being tagged enables frequent and accurate stocktaking. “Depending on the frequency of the stocktaking – between once a month to thrice a week – using RFID, retailers achieve an inventory accuracy of between 95 to 98 percent. This figure was proven in many rollouts. Without RFID, retailers only reach an average inventory accuracy of between 55 to 70 percent”, says Dean Frew, CTO/SVP RFID Solutions at SML. “Improved inventory accuracy automatically leads to less items being lost, more precise restocking, and higher revenue.”
There is no omnichannel without RFID technology
In addition to the known benefits, increased inventory accuracy also supports new sales concepts. Dean Frew notices that more and more retailers offer omnichannel services like click & collect or delivery directly from the local branch store: “Customers nowadays expect omnichannel services, yet, it is difficult and costly to implement omnichannel at inventory accuracies rates are below 95 percent.
When a retailer promises to deliver an item, he must make a promise to customer of stock on-hand immediately. Not being able to find it on the spot, he does not only lose the money from then individual sale, but the missing service might also damage the company’s image. Without RFID, omnichannel cannot be reliably implemented!”
“Customers nowadays expect omnichannel services, yet, it is difficult and costly to implement omnichannel at inventory accuracy rates below 95 percent. When a retailer promises to deliver an item, he must find it in his stock immediately. Not being able to find it on the spot, he does not only lose the money from then individual sale, but the missing service might also damage the company’s image. Without RFID, omnichannel cannot be reliably implemented!” - Dean Frew
SML expands to further retail segments
SML identified six market segments that have numerous elements for business cases and omnichannel solutions in common with fashion and shoe retail: mobile phones and accessory, cosmetics and perfumes, spirits and wines, food, pharmaceuticals, and glasses. Since early 2018, SML provides item-level RFID inventory management solutions on item level for these market segments.
“The key challenges of these retail sectors can be compared to those prevalent within fashion and shoe retail”, says Dean Frew. “Our market analysis shows that all segments are increasingly facing challenges regarding their stock management. Combining RFID technology with innovative item level inventory management in these segments creates benefits of which fashion companies have already been benefiting for some time now.”
18 service bureaus around the world encode tags for manufacturing
To prepare fashion products, shoes, cosmetics, mobile phones, and numerous other retail products for item level stock management, SML runs 18 service offices worldwide. These service bureaus are not only located in the main sales market regions for retailers but also in close proximity to their factories. Having numerous service bureaus in Asian countries, SML puts a strong focus into the fashion industry’s main manufacturing locations. This provides a sustainable basis for source tagging.
Apart from comprehensive consulting and support, SML’s offices also offer encoding of tags as a service. “With our coding service, manufacturers do not need their own encoding solutions in their factories. RFID tags encoded by us can be integrated into the product right at the source. The comprehensive structure makes the service network installed by SML unique in the world”, illustrates Dean Frew. “SML provides an extensive infrastructure in order to be close to the customer and their factories.”
RFID does not require a replacement of the IT systems!
Various retailers still today associate RFID with high, investment-heavy integration efforts – an assessment that has long been outdated, according to Dean Frew: “For RFID solutions, retailers do not need to replace their IT systems anymore. On the contrary – RFID provides existing systems with precise data and enables new automation steps to improve many processes in the stores and supply chains.”
For example, warehouse management systems in use at retailers nowadays already perform various tasks. The warehouse management system uses data of the goods reception, storage, commissioning, packaging, and shipping department”, enumerates Dean Frew. “However, the systems still lack some data to optimally perform these tasks. RFID provides the inventory management system with more precise data on individual products.”
RFID optimises existing processes with more precise data
The software platform “Clarity” from SML blends into existing IT systems of the retailers. It provides the database for optimised processes and allows the automation of procedures that before were previously done manually – such as replenishing a sales floor, picking omnichannel orders in a store or the packing of orders in the warehouse. “We do not create new processes”, explains Dean Frew, “we enhance current processes by linking existing systems with an item-level RFID system.”
Integration into both, SAP and proprietary systems
SML can integrate “Clarity” into both, world-leading ERP systems such as SAP and into proprietary or inhouse-developed platforms. “Enterprise systems are in principle not suited to process item level data. Therefore, a layer is required that performs and controls/executes processes based on item level intelligence”, explains Dean Frew. “Our software platform integrates this layer into existing systems and allows retailers to perform more efficient processes directly at their ERP systems.”
RFID solutions expected to grow by 50 percent per year
With their expanded RFID solution portfolio for various retail segments, SML strengthens its position as a partner of the retail industry for digital transformation. Dean Frew expects the worldwide adoption of RFID technology in retail will accelerate further in coming years. “The retail industry – especially in Europe – is a market currently undergoing big changes. Like with every innovation, there were companies to adopt RFID early and companies that wait until other market players have successfully implemented RFID solutions.
SML was involved, tags or software or both, in 95 percent of the successful item-level RFID roll outs in the world. We expect RFID use to grow by about 50 percent per year. Currently ten percent of all retail companies use RFID, but this number will increase in the following five years to around 40 to 50 percent.”