Suppose there was a simple RFID item-level tagging system to let retailers know their in-stock position at any given moment, without the need for a lot of additional infrastructure.
Truecount RFID and its recently developed RFID 2-GO — an application for pop-up stores and other external merchandising events — counts and tracks individual inventory items quickly and accurately.
Mammoth, Calif.-based Mammoth Sporting Goods, a small chain operating under the banners Mammoth Outdoor Sports and VALUESPORTS, was the first retailer to beta test the system last year. It has since rolled it out to all business units, including its e-commerce site, and is planning to use it in 20 temporary units set up at ski and snowboard expositions this winter.
RFID 2-GO helps retailers “get up and running with RFID very quickly without having to deal with a lot of IT integration or capital investments,” says Truecount founder, CEO and president Zander Livingston, the former director of RFID for American Apparel.
Item-level RFID implementation at American Apparel generated impressive results, Livingston says: More than 10 percent sales lift vs. control stores during peak shopping seasons; a 75 percent reduction in the time needed to take inventory; an 85 percent reduction in the time needed to receive goods; and 99 percent inventory visibility.
The improvements in inventory management, Livingston says, correlated to sales increases. “If you have more items represented on your sales floor all the time, you are going to see a sales lift.”
With item-level RFID, he says, “you have real-time replenishment, the ability to validate that items got to their destinations, and, through a true count, you can calculate how long it takes for product to hit the sales floor and you can notify your staff if they are not performing up to expectations.”
Daily inventory reports
Mammoth co-owner and managing director Phil Hertzog says their former inventory process was daunting. “While we tried to do manual counts twice a year, we often did them closer to once a year,” he says. “Manual counting means you have to touch each item, and in our biggest [30,000-sq.-ft.] store, which doubles as our warehouse, we have 50,000 items.”
Mammoth now counts its high-ticket, high-shrink items in real time daily, cycling through a percentage of its inventory every day with the goal of counting everything every two weeks.
“Truecount lets us create a comparison report based on what our computerized inventory system says we have in stock and what we can count,” Hertzog says. The process takes about one hour after closing, and the following morning “we reconcile our inventory to discover why we have differences,” he says. Truecount software tells associates where the missing item should be so the location can be physically checked.
Problems “can be spotted quickly and resolved quickly,” Hertzog says. Perhaps a tag is not activated correctly and is not readable. In that case, the computer system may say two items are in stock but the RFID only reads one. That can be fixed when the staff performs a reconciliation.
“You need to have an operating discipline to minimize it,” Hertzog says. “The Truecount system identifies the discrepancy between the two systems, which allows our staff to make the appropriate correction.”
Hertzog says Mammoth is still in the process of putting together before-and-after measurements, but in the past, “we had a very high rate of error. Now our accuracy is of a magnitude much, much better than it was before RFID. Now our errors are identified either daily or every two weeks, and we remove those errors from our system.”
RFID as security
In addition to the Truecount RFID software, tags and readers, Mammoth’s only other expense was replacing its barcode printers with RFID printers and linking those printers to the POS. The idea is to be “consistent,” Hertzog says: Tag as close to 100 percent of the items as possible, and use RFID throughout the system to drive replenishment.
The RFID tag is also being used as Mammoth’s security tag, eliminating the need to put additional electronic surveillance (EAS) tags on each product, creating another key labor saving.
A module called Execution Enablement ensures that Mammoth’s sales floors are always at 100 percent capacity, while mobile handhelds give sales associates visibility into specific stock levels.
The bottom line, says Hertzog, is “a very accurate inventory, and every day a comparison report tells me where I have problem areas. My store managers are now responsible for providing me with a reconciliation of the inventory errors from the inventory read done the night before when they close.
“That control also means that every employee is aware now that we are checking our inventory,” he says, “so we now have a built-in discipline in terms of someone being tempted to take something.”
Hertzog stresses that Truecount is not a miracle solution — it takes “a certain degree of effort to operate.
“Truecount is pretty straightforward, but there is always a tendency for some people to say ‘this is too complicated.’ You just have to work through the problems, which are mainly ... internal errors in your inventory computer system. The count is your way of working out those problems.”