Case Study: Major Retailer using RFID Inventory Intelligence to Support Omni-channel Strategy
Major DepartmentStore Relies onTyco Retail Solutionsfor RFID Inventory Intelligence toSupport Omni-Channel StrategySafer. Smarter. Tyco.TM
Retail Case Study / RFID Inventory Intelligence“RFID is a tool tobetter servecustomers anddrive sales.”- CXO// SummaryOne of the most renowned names inAmerican retailing operates a chain ofmid-to high-end department stores withmultiple online brands and hundreds oflocations across the U.S. With stores sellingapparel, footwear, cosmetics, jewelry,home furnishings and more, they ringup billions in retail sales dollars annually.Building on a consistent growth trend inonline sales, company leaders launched anambitious omni-channel, strategic initiativeto maximize inventory, selection and buyingopportunities available to their shoppers.Omni-channel retailing requires timely,reliable, available-to-promise inventoryand so improving inventory accuracy andexpanding visibility were fundamental totheir customer-centric strategy.As part of this initiative, all storeswere equipped with Radio FrequencyIdentification (RFID) technology in orderto provide accurate, real-time, item-level inventory visibility for all taggedmerchandise across the stores and DCs.This integrated inventory intelligence wasessential to deliver on the omni-channelpromise to their customers.The RFID rollout for inventory tracking began with alimited project conducted in a few storesand distribution centers, with identifiedbenchmarks desired, Return on Investment(ROI) proof points and a collaborativepartner deployment plan for the pilot.The retailer choseTyco Retail Solutions astheir valued partner and software solutionprovider for this strategic implementation.ChallengeTo achieve their strategic objectives, theretailer knew they needed significantoperational improvements to succeed inomni-channel fulfillment.Some of the key challenges included:// Erroneous corporate stock ledger// Inventory accuracy erosion// Out-of-stock conditions// Poor inventory visibility across locationsIn order to improve item-level inventoryaccuracy and resolve these issues, frequentinventory cycle counts were required.They needed item-level RFID, with itsrapid counting and detailed item visibilitycapabilities, allowing frequent cycle countswithout disruption to the business. Butimplementing new technology acrossthe entire enterprise, while continuingto run a multi-billion dollar business, is asizeable challenge.The pilot project had toadditionally focus on the key challenge ofproving the scalability of the technologyin a cost effective deployment model.To be successful, the retailer required asolution provider dedicated to entering acollaborative partnership to effectively drivethis new RFID technology forward in achain-wide rollout plan.
Retail Case Study / RFID Inventory Intelligenceaccuracy75%from“After two years of effectivetesting, we are confident that RFIDis fundamental to the success ofour digital retailing strategy andTyco is the partner to help usexecute on our vision.”- Senior Retail Executive95%accuracyto greater thanGreaterInventory Accuracy// Increased margin and revenue – pilotstores’ sales, margin, and stock turnsimproved across highly replenishedcategories// Enhanced shrink visibility – item-levelRFID helps the company uncover andaddress previously undetected sourcesof shrink and identify selling-floor lossesin hours instead of months// Increased customer satisfaction andloyalty – accurate inventory visibilityensures that the right product isavailable at the right place, at the righttime for in-store and omni-channelshoppersSolutionWith nearly 50 years of industryexperience,Tyco Retail Solutions waschosen as the retailer’s valued partnerand solution provider.Tyco’s InventoryVisibility platform, featuring RFIDtechnology, was selected to track inventorythroughout all store locations and DCsacross the enterprise.Tyco’s Professional Services team provideda strong foundation of technical knowledge,industry expertise, deployment skills andmethodologies.Through collaboration withTyco, the retailer was able to completethe pilot right the first time, successfullydelivering on time, on budget, and hittingall strategic business goals with acompelling ROI.Project ScopeThe multi-stage implementation beganwith a pilot project including eight storesand two DCs for item-level tagging ofreplenishment goods. As a result of thesuccessful pilot program, item-level taggingwas rolled out to all store locations in thesize-intensive merchandise categoriesof men’s furnishings and slacks, intimateapparel, denim, and women’s shoes.// With the initial deployment, the retailer tagged 30% of the company’s SKUs, representing approximately $8 billion worth of inventory// The deployment consisted of handheld RFID readers for store personnel to use in back rooms and on the sales floor for conducting inventory counts, replenishment, and store receivingResultsBy leveraging extensive retail storeexpertise, along with an ability to derivevalue from the software, technology andprofessional services,Tyco and the retailerimplemented a successful RFID project.They achieved their business requirementswith the lowest total cost of ownership,resulting in performance benchmarksreflecting the pilot program’s overallsuccess.// Greater inventory accuracy – inventorycounts and transactions are now moreaccurate and consistent across thecorporate stock ledger and perpetualinventory, providing reliable available-to-promise inventory in support of theomni-channel retail initiative. Overallinventory accuracy rose to a sustained95% in RFID- supported categories—upfrom pretest levels of 70 – 75%// Faster & more accurate cycle counts – efficient regular inventory counts nowreplace the arduous annual physicalcounts, allowing associates to focus onshoppers rather than tasks, and enableaccurate real-time inventory visibility// Improved stock positions – withaccurate inventory insights, actualmerchandise assortments are in linewith shopper demand and out-of-stockconditions are greatly reduced