Three years from testing to rollout
The annual inventory per Stadium branch lasts more than 200 hours. Although the inventory results seem 98–99 percent accurate at first glance, a closer look revealed a false conclusion: Since positive and negative differences balance each other out, missing stocks became “invisible” on the system side.
The result: stock accuracy of just 70 percent, missing goods in stores and time-consuming communication channels for error diagnosis.
In a pilot store, the company successfully tested an RFID-based application in the areas of inventory and replenishment processes.
Johan Stenström, Supply Chain Developer at Stadium, reports in an interview with RFID & Wireless IoT Global how the implementation of the retail solution Clarity by SML generates numerous advantages for the company – even beyond the actual objective.
Editor in chief and Conference Manager
Lüneburg, near Hamburg, Germany
Deputy Editor in Chief
Lüneburg near Hamburg, Germany
First challenge: Identifying discrepancies
“The first challenge to overcome for Stadium was to correctly identify inconsistencies,” explains Johan Stenström, Supply Chain Developer at Stadium.
“In our annual inventories, we achieved results between 98 percent and 99 percent. Obviously, there was no reason to make any changes to the inventory process.”
This changed, however, when those responsible at Stadium asked themselves the fundamental question of whether the inventory process had met the original objectives.
“The guidelines for the inventory were set by Stadium‘s Finance Department. Their objective was that the financial value of the actual inventory should correspond to the expected inventory in the ERP system. In fact, negative and positive differences in this approach balanced each other out, so that the result was a total sales value that did not allow any statement about the accuracy of the inventory.”
Solving the mysterious causes of missing articles in stores
This was accompanied by a further challenge in merchandise logistics, which became clear in the course of the process: “We received feedback from numerous store managers that they were always lacking merchandise on the floor.”
In order to get to the bottom of the problem, Johan Stenström took part in inventories in the stores to experience the process firsthand.
“The result was that there wasn‘t a single systematic, big problem, but numerous smaller ones that had a negative impact on numerous processes: complicated IT systems, overburdened personnel, picking errors and thefts. Each small problem often lead to an inventory inaccuracy. Over time all inaccuracies will accumulate to a big problem. If you only take inventory once a year you will end up with a low inventory accuracy and that will affect sales.”
Two challenges – one solution: RFID
“In order to overcome these problems, a new perspective on the subject of inventory was necessary,” says Johan Stenström.
“We needed a new KPI to look at our inventory from an accuracy perspective, not just a financial perspective. When we saw the results from the first RFID-based inventory, we were amazed – instead of 98 percent accuracy, as previously assumed, it was just 70 percent. This was the starting point for Stadium to integrate RFID into its logistics and store processes.”
The objective was to address two issues that were directly linked: increasing inventory accuracy and replenishing missing items in the stores.
A comprehensive solution for the entire supply chain
Before deciding on a solution from SML, Stadium obtained offers from various companies.
„We opted for the Clarity solution. Stadium had already had good experience working with SML in other areas. Stadium has been implementing source tagging with SML labels for some time now, so this process was already implemented. The relatively simple update to RFID source tagging was given. The process for handling price stickers are already in place. Basically we only needed to shift the regular price sticker to an RFID price sticker.”
In addition, SML Clarity offers other advantages for Stadium as well, says Johan Stenström: “The solution covers the entire supply chain. Other vendors also have strong solutions for the stores, but our plans included integrating the distribution centers into the system to automate store replenishment processes from the backstore to the sales floor, among other things.”
Three years from testing to rollout
About two years ago, Stadium began to look into the implementation of an RFID solution for the company‘s logistics processes. With the implementation of the pilot store, the company is currently in the roll-out phase.
The RFID rollout in all 173 stores is scheduled for completion in spring 2020.
Automating replenishment from the backstore to the sales floor
“Earlier, before testing RFID, customers came asking sales staff if specific products where in stock. The product could be in the back stock or somewhere on the sales floor. Perhaps a customer had not returned the goods to the designated location or the store might not have it at all due to poor inventory accuracy,“ Johan Stenström describes the challenges for the store staff and outlines:
We hire sales staff because they love to work with sales. However, in reality searching for products is a big part of the work and is more of a logistics activity then sales activity. In the pilot store we saw an interesting development: Customers no longer approached the sales staff to ask if certain products were in stock because the desired product was already on the sales floor. This frees up time for sales staff and allow them to work less with logistics activities and more with sales activities. The result is exactly what increases sales.“
Stadium has been active in the European sporting goods and clothing sector for 45 years. With a total of 173 stores and 3,800 employees, the family-owned company is primarily present in Sweden and Finland, but also operates stores in Germany.
Since entering the online market in 2007, E-commerce is Stadiums largest growing sector.
With the introduction of goods labelling with RFID, the company wants to greatly increase stock accuracy and thus also optimally adapt shop fittings to the needs of customers. Listen to Johan Stenström, Supply Chain Developer at Stadium at the RFID & Wireless IoT tomorrow 2019 on October 29th and 30th in Darmstadt in the Retail forum!