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Bill Hardgrave Auburn University Note: this document is copyrighted ( 2010) and confidential; do not distribute or cite without explicit permission.

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Presentation on theme: "Bill Hardgrave Auburn University Note: this document is copyrighted ( 2010) and confidential; do not distribute or cite without explicit permission."— Presentation transcript:

1 Bill Hardgrave Auburn University Note: this document is copyrighted ( 2010) and confidential; do not distribute or cite without explicit permission.

2  2003 – 2006: pallet -> case; Wal-Mart, Metro, DoD Issue: inventory management in the supply chain; unprecedented ‘affordable’ visibility Epiphany: most problems at the store Result: shift to store-level visibility and item-level  2006 – present: item-level apparel/footwear; American Apparel, Dillard’s, Bloomingdale’s, J.C. Penney, several in Europe Issue: inventory accuracy, loss prevention, etc. Epiphany: multi-use technology, start at the store and go up supply chain Result: more adopters, broader adoption

3 Playing Investigating Road mapping Phased deployment Full deployment

4  Movement is being driven by RFID’s use case applications (solving problems) Inventory accuracy Out of stocks Locating product Loss prevention Dressing room management Price change management Etc.  Focus on inventory accuracy … The big four

5 Inventory Accuracy Sales

6 Inventory Accuracy Store execution Theft

7 Inaccuracy causes Results in overstated PI? Results in understated PI? Can RFID reduce the error? Incorrect manual adjustment Yes TheftYesNoYes Damaged/spoiledYesNoPartial Improper returnsYes Mis-shipment from DC Yes Cashier errorYes

8 So what can we do? More frequent cycle counts Eliminate / reduce source

9  Cycle counting When to count? How often to count? What to count?  Currently, retailers have very little flexibility in answering these 3 questions

10 Barcode In 3 different settings, a 96% reduction in labor to cycle count (RFID handheld vs. barcode scanner) Barcode avg = 200 items per hour RFID avg = 5000 items per hour

11 Inventory Accuracy Store execution Theft

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14  Based on multiple studies … Before RFID:

15  Based on multiple studies … After RFID:

16 Inventory Accuracy Store execution Theft OOS

17  Recognizing out of stocks  Acting upon this information Awareness Prevention

18  Worldwide average out of stock: ~8%  Potential sales loss to retailers: ~3.2%  Potential sales loss for suppliers: ~2.8%

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22 Inventory Accuracy Store execution Theft OOS 2%, 3%, 10% reductions Supplier benefit

23 Inventory Accuracy Store execution Theft OOS Excess inventory 6%, 7%, 12% reductions 4.9 months supply to 2 months

24 Inventory Accuracy Customer satisfaction Store execution Theft OOS Excess inventory

25 Inventory Accuracy SalesCustomer satisfaction Store execution Theft OOS Excess inventory 2%, 3%, 14%, 15% Reduce markdowns / increase margins

26 Inventory Accuracy Forecasts SalesCustomer satisfaction Replenish- ment Store execution Theft OOS Excess inventory

27 Inventory Accuracy Forecasts SalesCustomer satisfaction Replenish- ment Store execution Theft OOS Dressing room Faster checkout Locating product Excess inventory

28  Inventory accuracy  Out of stocks  Locating product  Loss prevention The big four

29  How many people abandon a store because they cannot find the product they want? What do we have (inventory accuracy issue)? Where is it?

30 LocationEPCDate/timeReader DC :15inbound DC :22inbound DC :15outbound DC :23outbound ST :31inbound ST :10inbound ST :54sales floor ST :17sales floor If the product needed to be on the floor by 10/10/09 for the promotion, store 567 just missed an important window of opportunity – for themselves and for the supplier …

31 Backroom or sales floor?

32 On pallet rack in warehouse or sales floor (e.g., Sam’s)

33 With handheld or smart shelves

34 In 3-D space?

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36 Insights / possibilities …  Complete visibility Product and process tracer Where is shrinkage occurring? Visibility where you don’t have it today  e.g., employee entrances; box crusher / trash

37 Test Store --Employee entrance Customer entrance 10 jeans carried in stack; walking100%93% 10 jeans carried in stack; running90%67% 2 jeans in bag; walking100% 5 jeans in bag; walking100% 1 jeans concealed under arm; walking100%0% 2 jeans concealed under arm; running50%67% *Real life theft: more than $3500 in merchandise left the store without being paid for …

38  Technology Smaller, better, faster, cheaper Commodity pricing Variety of devices Variety of sensors Infrastructure considerations (fixed, mobile, shielding, etc.) It works, but must be deployed properly (data issue)

39  Critical mass  Unrealistic expectations  Displacement of existing technology  Incremental vs. radical/disruptive: paving the cow paths  Massive investment / ROI / cost  People! (change management)  What to do with all this information …..

40 Bill Hardgrave For copies of white papers, visit Keyword: RFID


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