The New Warehouse: Part One
Written by: - Mark Hill, Vice President and General Manager, Avery Dennison RBIS Global Innovation and Solutions Development
It’s no secret that we live in an extremely fast-paced and technology-driven world. We demand the most from everything we use and consume, so why shouldn’t that apply to our retail shopping experience? The problem is most retailers still rely on outdated technology from the last century to manage their global apparel supply chain from source to the store floor, and it’s just not up to the task. The net result is the average retailers in-store accuracy is only 65-70% at the size/style/color SKU level, which is where customers buy. Every day, customers walk into stores planning to buy, but walk out empty-handed and disappointed because they can’t find the items they wanted. Many then turn to competitors or online retailers for the purchase, perhaps never to return to that store again.
A large part of this problem comes from the limitations of barcode technology for item tracking and hard tags to prevent shrink. When barcode technology matured in the ‘80s, it represented a dramatic improvement in checkout productivity and gave new insights into what was being sold. However, barcode scans are only as accurate as the person operating the scanner to process checkout and returns, so they are prone to ongoing human errors. Barcodes don't provide any insights into manual restocking operations, and they were never designed to support rapid cycle counts. While hard tags may prevent some inventory loss from shoplifting, they provide limited data when shoplifting occurs. A sales associate may hear an alarm, but has no idea what was stolen, so the item isn’t restocked. They also don't deter large amounts of theft by employees. Thus hard tags only address 43% of overall retail shrink. The combined human errors and losses drive inventory accuracy way below where it needs to be to deliver a great shopping experience and full profit potential.
The time has come for retailers to revolutionize the supply chain and deliver immediate, compelling ROI while dramatically improving the consumers shopping experience. RFID is a proven, ready-now technology that improves inventory accuracy and visibility, reducing out-of-stocks that frustrate customers and drive lost sales for retailers. Using a handheld RFID reader, one associate can complete inventory in a vertical retail store within just a few hours, yielding 99% or more inventory accuracy. This visibility allows retailers to replenish out-of-stock items and draw down excess inventory and ensure that items are available when customers are ready to buy.
Stay tuned tomorrow for Part Two!
Biden establishes Supply Chain Disruptions Task Force
The US government is to establish a new body with the express purpose of addressing imbalances and other supply chain concerns highlighted in a review of the sector, ordered by President Joe Biden shortly after his inauguration.
The Supply Chain Disruptions Task Force will “focus on areas where a mismatch between supply and demand has been evident,” the White House said. The division will be headed up by the Secretaries of Commerce, Transportation, and Agriculture, and will focus on housing construction, transportation, agriculture and food, and semiconductors - a drastic shortage of which has hit some of the US economy’s biggest industries in consumer technology and vehicle manufacturing.
“The Task Force will bring the full capacity of the federal government to address near-term supply/demand mismatches. It will convene stakeholders to diagnose problems and surface solutions - large and small, public or private - that could help alleviate bottlenecks and supply constraints,” the White House said.
In late February, President Biden ordered a 100 day review of the supply chain across the key areas of medicine, raw materials and agriculture, the findings of which were released this week. While the COVID-19 health crisis had a deleterious effect on the nation’s supply chain, the published assessment of findings says the root cause runs much deeper. The review concludes that “decades of underinvestment”, alongside public policy choices that favour quarterly results and short-term solutions, have left the system “fragile”.
In response, the administration aims to address four key issues head on, strengthening its position in health and medicine, sustainable and alternative energy, critical mineral mining and processing, and computer chips.
Support domestic production of critical medicines
- A syndicate of public and private entities will jointly work towards manufacturing and onshoring of essential medical suppliers, beginning with a list of 50-100 “critical drugs” defined by the Food and Drug Administration.
- The consortium will be led by the Department of Health and Human Services, which will commit an initial $60m towards the development of a “novel platform technologies to increase domestic manufacturing capacity for API”.
- The aim is to increase domestic production and reduce the reliance upon global supply chains, particularly with regards to medications in short supply.
Secure an end-to-end domestic supply chain for advanced batteries
- The Department of Energy will publish a ‘National Blueprint for Lithium Batteries’, beginning a 10 year plan to "develop a domestic lithium battery supply chain that combats the climate crisis by creating good-paying clean energy jobs across America”.
- The effort will leverage billions in funding “to finance key strategic areas of development and fill deficits in the domestic supply chain capacity”.
Invest in sustainable domestic and international production and processing of critical minerals
- An interdepartmental group will be established by the Department of Interior to identify sites where critical minerals can be produced and processed within US borders. It will collaborate with businesses, states, tribal nations and stockholders to “expand sustainable, responsible critical minerals production and processing in the United States”.
- The group will also identify where regulations may need to be updated to ensure new mining and processing “meets strong standards”.
Partner with industry, allies, and partners to address semiconductor shortages
- The Department of Commerce will increase its partnership with industry to support further investment in R&D and production of semiconductor chips. The White House says its aim will be to “facilitate information flow between semiconductor producers and suppliers and end-users”, improving transparency and data sharing.
- Enhanced relationships with foreign allies, including Japan and South Korea will also be strengthened with the express proposed of increasing chip output, promoting further investment in the sector and “to promote fair semiconductor chip allocations”.