Improved Inventory Accuracy

In April 2007, footwear manufacturer and retailer New Balance initiated an RFID pilot to determine if tagging individual shoeboxes would increase inventory accuracy and reduce out of stocks. New Balance partnered with Avery Dennison (Pasadena, Calif.) for the pilot. Philip Calderbank, director, global marketing RFID for Avery Dennison, discussed details of the pilot during a Supply Chain Summit session.

“RFID labels were applied to the shoeboxes with item-level indicators including size, width and style,” explained Calderbank. “The information is stored in one of three in-store databases indicating if the product is in stock-room inventory, sales inventory or sold inventory.”

RFID readers at the store’s back door update the stock-room inventory. Portable RFID readers enable daily inventory checks throughout the store. Readers on the sales floor maintain the sales database and RFID readers at the front door help keep track of the sold inventory.

The front-and back-door readers also help in the area of loss prevention. If a box of shoes leaves without being sold, the RFID reader captures the information and, as Calderbank noted, “The general rule of theft is that 60% of store losses are attributed to employees; only 40% are usually taken by customers.”

New Balance has also experienced significant improvements in receiving inventory. With the traditional barcode-scanning technology, it took an average of one minute to scan a carton of 12 shoe boxes. Using RFID, that same carton can be scanned in a matter of seconds.

In addition to reduced shrink and reduced receiving time, Calderbank indicated that New Balance anticipates RFID will contribute to reduced restocking time on the store floor, reduced out-of-stocks as a result of the daily inventories and a reduction in the amount of inventory needed at stores.