Tackling out-of-stocks

In 2014 SML won a tender process to provide software and RFID tags to Tesco brand F&F. SML's Clarity software sits in Tesco stores and, with the RFID tags, allows the retailer to manage inventory much better.

Dean Frew (pictured), chief technology officer & SVP of RFID Solutions at SML explains: "All apparel retailers deal with the issue of inventory accuracy. You have high SKU count and accuracy and speed of product flow is significant. If a retailer can get its inventory accuracy up to over 98% then a retailer can do some very interesting things. they can make sure out-of-stocks are down, customers are serviced better and sales are boosted. In turn, they can then reduce inventory without impacting customer experience."

But with RFID an expensive solution compared to barcoding, what is the value proposition in using it with apparel stock, much of which is relatively low value?

Dean answers: "If you come into the store and you're looking for items and they are out of stock, the retailer misses a sale. So what happens with RFID and Clarity, we're able to keep inventory accuracy above 98%, and compare what's in stock with what I want in stock, and drive back to front and DC to store replenishment in real time. If we sell a shirt and it takes me to zero quantity, immediately the staff knows to pull more stock from back of store. That's a major element in the value proposition. What is emerging is a fresh look at RFID successes in the market and evaluating the true value proposition in managing apparel stock and servicing customers."

The Clarity system is integrated with the many other systems used by retailers – supply chain, point of sale, product management. For example, when retailers change their product catalogue, Clarity gets a feed and updates accordingly. 

"What is different is none of our rivals are set up to manage inventory at the item level," says Dean. "We don't replace point of sale, we make it better, we don't replace the WMS, but we make it better. Integration is key and if you look at projects every one has significant integration. The less successful projects have tried to run RFID as a standalone system."

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In the opinion of SML there have been only six publicly successful RFID projects worldwide. SML is the software solution provider in stores in two of these, and from a tag point of view SML is a leading provider in five. The six projects are M&S, Macy’s, Tesco, American Apparel, Zara and Decathlon. SML is a leading technology partner on many emerging projects as well.

The software also helps when customers order online and pick up from store. In some cases Clarity is integrated with the retailer's eCommerce management system. This means when someone places an order online, and elects to pick up in store, the order management system has visibility to store inventory via Clarity. The retailer can check if the item is in store and if not, can elect to pick from warehouse and drop to store.  

"If you're picking in store for an online sale and don't have confidence in your inventory, you will only proceed if there is five items in stock," says Dean. "With RFID that drops down to two. Without RFID, the danger is a retailer will bloat their inventory to be sure they don't disappoint the customer."

At the moment, RFID tags are not being used in online straight to home sales but there is a case for using the tags, particularly in managing returns more efficiently.

At source

A key aspect of the SML proposition is its international reach. The company works closely with clothing manufacturers and has bases in over 30 countries. 

Steven Davidson, chief commercial officer, SML explains: "Even though the Tesco deal was won in the UK, we have local teams in Turkey, China etc, who are working with the factories around the globe  to fulfil the orders. We also have a design element to the business, so we are cradle to grave, right through to fulfilment.

"Having 'design to the point of the needle' coverage is important for consistent, high quality delivery. We are pushing technology all the way into the label. It must be accurate because if not, the whole system is thrown out and you are no better off than when you didn't have it.

"We've invested very heavily in servicing the apparel sector to be a leader in this space."

Dean feels the initiative by Tesco, and others, will influence firms to adopt the technology. With the market at what SML estimates is only 6% penetration, SML is growing over 100% a year.

"Most retailers are starting in store and working back to the DC and beyond. Some brand owners are starting in the warehouse and we see numerous customers using RFID to read receiving, manage and audit, do box packing on outbound, shipping verification etc. We could eventually see RFID end-to-end throughout the supply chain."

Dean concludes: "The industry is going through the Retail 3.0 transformation, it's going from barcode to looking at item level data with RFID for an Omnichannel market."