[01/13/09]
A white paper recently drafted by VDC Research Group, Chaos in The Retail Cosmos, details the acute requirement for better inventory visibility and management on the retail floor. The paper also details the benefits that retailers realize by investing in item-level inventory management solutions, and the requirements for achieving the highest possible ROI.
"Out-of-stocks, misplaced merchandise, shrink and vendor fraud are ongoing challenges for retailers that that can adversely impact sales and profitability. Given the current economic outlook, retailers need to consider investing in a new breed of inventory management solutions that are capable of addressing these challenges head-on, while enhancing the customer's shopping experience and creating opportunities to capture incremental revenue," explains Tom Wimmer of VDC Research Group.
VDC's analysis suggests that investments in improving item-level visibility can provide retailers with immediate benefits. When carefully staged and managed, with the cooperation of trading partners, increased item-level visibility can lead to material improvements in planning, forecasting, merchandising and execution, creating a viable source of competitive differentiation: item-level intelligence.
Seen as the Holy Grail of retail automation, the technology is available now to make this aspiration a reality. There are a handful of tech-savvy, insightful retailers and suppliers who have begun this journey and are achieving promising results.
One retailer experiencing the benefits of item-level visibility is Boekhandels Groep Nederland (BGN), the Netherlands' largest book retailer. According to Jan Vink, CIO for BGN, "We participated in this important industry research to share our experience implementing item-level RFID within our stores. With the deployment of the TrueVUE RFID platform, we realized an increase in inventory accuracy from 65% to 97.5%, while reducing our receiving process to less than 20 minutes. Our investment in item-level RFID has created opportunities for us to reduce inventory carrying cost, and enhance revenue capture with each customer visit."
The TrueVUE RFID platform is offered by Vue Technology, recently acquired by Sensormatic Retail Solutions.
Some item-level management deployments are well known and often cited by proponents of these solutions. American Apparel, a vertically integrated clothing manufacturer and retailer, offers another example of positive results achieved with item-level RFID. Some of the technology benefits included the ability to achieve 99-plus percent inventory accuracy at their RFID-enabled stores, a 15% increase in sales and reduction in labor for replenishment by up to 60 hours per week. VDC's investigation goes further than past research initiatives by examining deployments in the context of the current economic climate and by examining project management best practices that pay off, maximizing ROI.
In focusing on the requirements for successful implementation and ROI generation, the paper recognizes the importance of partnering with suppliers and integrators that have the technical and commercial capabilities to deliver, deploy and manage these solutions with or for their customers.
"Our white paper offers a compelling case for the need to develop item-level visibility in certain retail environments. We have reviewed many of the initiatives being undertaken by leading retailers. Some of these initiatives have been wildly successful; many have not. Through our research, we have identified best practices to deploying these solutions which materially increase the likelihood of success. Success being defined as short-term ROI, sustainable inventory cost reduction and support for a number of customer experience and productivity enhancements. We believe that item-level intelligence is, and will be, a source of sustainable competitive differentiation for a number of segments of the retail market," states Rory Gardner, Retail Automation Analyst, VDC.
You can receive a complimentary copy of this white paper here:
http://www.vdcresearch.com/PurchasedDownloadFile.asp?type=executivebrief&id=2319
About VDC Research Group
VDC Research Group (VDC) is a technology market research and strategy consulting firm that advises clients in a number of technology markets including: Automatic Identification and Data Collection, Embedded Hardware and Systems, Embedded Software and Tools, Industrial Automation and Control, Mobile and Wireless, and Power Conversion and Control. Using rigorous primary research and analysis techniques, the firm helps its clients identify, plan for, and capitalize on current and emerging market opportunities. We strive to deliver exceptional value to our clients by leveraging the considerable technical, operational, educational and professional experience of our research and consulting staff. During our nearly four decades of ongoing operation, we have had the pleasure of serving most of the world's leading technology companies, many high-profile start-ups, and numerous blue-chip early and later stage investors. Our products and services consist of research reports, annual research programs, and custom research and consulting services. Founded in 1971, the firm is located in the Boston area. Please visit our Web site at www.vdcresearch.com to learn more.
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