June 10, 2020
COVID-19 is not only imposing a stress test on society and the healthcare system as a whole. It also puts enormous pressure on the supply chains of distributors and retailers worldwide, be it through sudden supply shortages or extremely volatile demands. Touchless technologies that digitize supply chains provide answers to these challenges, says Francisco Melo, vice president and general manager, Avery Dennison Intelligent Labels, and come in the shape of RFID-based solutions. RFID technology shines a light on existing ‘black holes’ in supply chains, providing comprehensive and accurate real-time inventory information as well as enabling seamless tracking of all products from source to the consumer.
By Francisco Melo, vice president and general manager, Avery Dennison Intelligent Labels
RFID allows businesses to create a digital twin for each of their physical products. This unique digital identity enables visibility of every tagged item in the supply chain, virtually anytime and anywhere, leading to previously unheard-of levels of inventory transparency and accuracy. That in-depth information provides real-time data on the journey of every single product, including its provenance and history from source all the way to the consumer. The current situation amplifies the importance of this more than ever: If your supply chain wasn’t keeping you awake at night prior to the COVID-19 crisis, it likely is now: In a recent global survey among key executives from technology, logistics, retail and supply chain, over 63% of respondents believe the COVID-19 pandemic will bring supply chain behaviors into even sharper focus (The Avery Dennison Global Panel, March, 2020).
Real-time data becomes the key success factor
In times of supply shortages and demand volatility, it is crucial to have reliable real-time data that shows stock levels in different locations, and that immediately reveals if a product is being held up due to border closures or customs delays. Having that kind of information enables informed decisions on how and when to redirect inventory to areas that have limited stock, or where there is high demand. It also helps primarily store-based retailers to develop flexible e-commerce fulfillment models: Offering direct-to-consumer services like parcel shipping or home delivery straight from any point in the retail supply chain is not only key to solving lock-down situations; it also paves the way to more effective omnichannel strategies of the future.
It’s obvious that accurate stock management helps retailers to manage supply and demand effectively, and to prioritize orders that are business critical. It’s less obvious that RFID is a 'touchless' technology that offers a huge benefit in terms of hygiene, by allowing items to be accounted for without needing to be ‘touched’ or manually scanned.
E-Commerce will continue to strive
Future, by the way, is a truly important term in this respect. While the COVID-19 situation is surely contributing to current e-commerce growth rates, it is more than likely that a large proportion of these newly acquired shopping habits are here to stay. That is putting extra pressure on brick and mortar stores to commence or step up their omnichannel efforts and touchless retail concepts.
Omnichannel and ‘touchless technology’ are beneficial to all
The good thing is that both omnichannel and touchless technologies open up opportunities for traditional stores. While omnichannel primarily means establishing an additional online/e-commerce sales channel, touchless means an efficiency surge and positive future prospects for the good old offline business. Brands and retailers in apparel and footwear have been some of the first to benefit from adding digital, RFID-based identifiers to every product, but other categories can easily follow. In addition to improving inventory accuracy and brand security, they could be using such intelligent labels to enable more satisfying omnichannel shopping experiences for customers who shop via a hybrid of brick and mortar stores and online channels. Products turn into multi-purpose items that create accurate real-time inventory data and 1:1 consumer experiences - they essentially become the new ‘digital edge’. Higher inventory accuracy enables a prioritized sale of aged stock, e.g. through the existing or to-be-created online channels. And even though panic buying may remain unpredictable, having an increased agility of a digitized supply chain and streamlined processes between suppliers and retailers will dramatically accelerate response times to unexpected demand surges.
Efficiency and hygiene gains in one go
It’s obvious that accurate stock management helps retailers to manage supply and demand effectively, and to prioritize orders that are business critical. It’s less obvious that RFID is a 'touchless' technology that offers a huge benefit in terms of hygiene, by allowing items to be accounted for without needing to be ‘touched’ or manually scanned. Products tagged with RFID – notably when utilizing high-range RAIN RFID (UHF) technology – can be “bulk-read”. In such cases, hundreds of items can be scanned wirelessly within seconds, all without the manual interaction needed to count items by hand and to optically scan barcode labels. That not only reduces the workload of the store staff but also helps to reduce the spread of infection by reducing the amount of ‘hands’ touching each product. Which raises a great question: Will consumers be concerned whether products have been returned and if so whether they are safe to handle? It’s RFID that could provide the desired visibility of every product's movement and purchase history. Last but certainly not least, the social distancing measures required for the foreseeable future will also create additional pressure for retailers to reduce or even eliminate queues, possible through self-checkout systems or RFID enabled Point of Sale (POS), enabling reduced handling and more accurate and faster processes.
The order of the day: supply chain optimization and digital automation
No matter which perspective you take on the current COVID-19 situation and its impact on supply chains and shopping habits, one key takeaway is obvious: It’s time for retailers and distributors to explore the most effective ways to digitize their supply chains, and adjust themselves for the ‘new normal’.
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