Efficient and Secure Inventory Management
Most existing inventory management processes are time and labor intensive and, therefore, quite costly. In addition, few mechanisms are in place to ensure that merchandise is appropriately shelved and re-stocked in a timely manner once the inventory runs low. The result of such inventory inefficiencies is readily apparent: if customers can not find the merchandise, they can not buy it. Finally, because retailers lack the supply chain visibility needed to curb theft, shoplifting, administrative errors and merchandise misplacement, these activities produce inventory "shrinkage" losses equal to two percent of sales each year.
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Accenture Technology Labs developed the Physical Media Tracking prototype to help reduce the potential for theft and human error—all while streamlining the entire inventory management process. Using an innovative set of Silent Commerce technologies, the prototype makes products "intelligent" and allows them to assume inventory management responsibilities by continuously reporting their exact locations, wherever they may be in the value chain.
The Technology
The enabling technologies of Silent Commerce, such as radio frequency identification (RFID) tags, are already being used to revolutionize the inventory management processes that connect a manufacturing facility and a retailer's receiving room. Using a compact disc (CD) retailer as an example, Accenture's Physical Media Tracking prototype extends this supply chain revolution to the retail floor.
In this example, the manufacturer has embedded each CD with an inexpensive RFID tag. Unlike bar codes, which require line-of-sight alignment for individual product reading, RFID tags allow retailers to scan an entire shipment via a tunnel reader. The reader immediately integrates the CDs' RFID information with central database applications, which determine precisely where (and when) the product should be placed on the sales floor. In this way, the central processing hub acts as the supply chain "brain," providing real-time information and decision support to store employees and managers. Similarly, the system can monitor when an item is removed from the floor—either legitimately through a sales transaction or clandestinely underneath someone's jacket—or simply moved to the wrong location.
Such comprehensive product tracking is possible because the entire store is wired with antennas built into the CD display racks and the transport carts to a Silent Commerce infrastructure. This networked system allows employees to identify—immediately and with precision—the location of every item in the store. The system's applications are supported by pre-defined business rules, such as the number of CDs that can fit on a shelf.
This means that when employees access the system from a computer screen mounted on the in-store transport cart, they learn when and where to place individual CDs on the sales floor. If they make a mistake while restocking the shelves, they receive an instant prompt to place the CD in its appropriate spot.
RFID tags continuously gather detailed product information and allow the system to track the movement of a particular CD throughout its lifespan—from the manufacturer to the distribution center to the retailer's inventory room to the shelf to the checkout register. This means the system can enable vendor-managed inventories by automatically submitting a restock order once the number of in-store CDs falls below a specified quantity. Equally important, it means that if the CD is in the store, employees and customers will be able to find it. Conversely, if the CD is not in the store, the retailers can identify where it is in transit or when it was last moved and dropped from the system.
The Implications
By gathering information throughout a product's lifespan, the Physical Media Tracking prototype will allow retailers to analyze consumer behaviors much more accurately. When a customer picks up a certain CD, are they likely to pick up the one next to it? Do they tend to buy one or neither or both? This sort of detailed information leads to customer insights that enable store managers to position their products more appropriately to increase sales. In addition to streamlining their inventory management processes, retailers could make this consumer and product data available to marketers and manufacturers who have a vested interest in understanding how their products move through the retail channel.
Such a system would also improve a retailer's self-service checkout capabilities. Once the application is integrated with a store's billing systems, customers will be able to pass their items through a reader and complete their transactions in record time. Information related to the purchase will be added to the RFID information housed in the system, which will help identify and even deter theft by pinpointing exactly when the product exited the value chain. Additionally, these technologies can be applied to rental or broadcast media tracking, books, or government record-keeping.
The Physical Media Tracking prototype will help reduce the potential for theft and human error—all while streamlining the entire inventory management process.
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