Host Mike Graen is finishes his conversation by Umesh Cooduvalli and Jamie Kress from Sensormatic to discuss opportunities for RFID and other supply chain technologies at retail.

Hello, my name is Mike Graen. Welcome to another

Conversations on Retail and the University of Arkansas Supply

Chain Management Research Council focusing on on shelf

availability. Today, we are joined by a couple of experts

from the Sensormatic company. When we think about

radiofrequency identification to get inventory accurate and

products on the shelf, we typically think of three

hardware, certainly the tags that are actually on

the product and the software. Sensormatic provides a great

solution and we're about to hear a lot more about it. So please

join me as we join the conversation in progress. I

think other retailers actually think about displays, for

example, if I'm a Procter and Gamble, and I've got a display,

it's going to go into Walmart, some of them are thinking about,

in addition to tagging all the items on the display, I'm going

to put a case level tag or pallet level tag on the display

itself. So if I read that tag, which is identifying the pallet

and the products at the same time, I could pretty much tell

you guess what the pallet got set the way it was supposed to.

Right. So that's that's another obvious benefit of that. So So

you guys, this is a little bit of an off question, but we've

got Jonathan asking this one, I think it's a really good one.

This doesn't happen with just software, right? There's

hardware component, there's a tag component, etc. How in the

world do you think through if I, if I'm coming to you, for

example, Jamie and go, Hey, I want to build an RFID solution.

I don't know that Sensormatic has all of the pieces. So what

are the various pieces that I need to consider and who do I go

to for both tagging as well as the hardware aspects of this?

Right, great point. So the solutions are typically

hardware, software services, and tags, you know, oftentimes fall

within the cousin of the hardware bucket. And you do need

all of those. And I saw Jonathan's question in there.

You know, getting tags on product, customers ask us all

the time, especially when they're new to RFID, how do I do

this? Well, you know, we have run pilots for years where for a

pilot, you don't have to have source tagging. I, we recommend

that if you can tag for a pilot in a distribution center that is

ideal. We have run pilots where they're actually tagging in the

store, not ideal, because you're taking a lot of that labor in

the store to do that type of task. So if you can move that to

DC, great. But our ultimate goal is always to move that tagging

back to the source. And, you know, we've been doing that as

an industry for years and all the major players, the tag

providers who are providing tags to the source today have RFID

enabled tags that they can apply to, to the goods. And the form

factor of those tags, run the gamut from a hang tag to a label

to a sewn in, all sorts of different tag formats to meet

the particular retailers needs. And one more thing I wanted to

touch on Mike that made me think of earlier, is when we talked

about category expansion that's really tagging, I want one of

the bad pieces of information that's out there is that a

retailer has to tag everything in their store to make make it

successful. There are programs in the market today that have

been around for years, that are not tagging all of this all of

the items in their stores. It may, if it makes sense for a

certain retailer to do so absolutely. But there are major

programs rolled out across the country or the or the globe,

where they have selected certain categories to be tagged with

RFID and other categories not to so and you can work with your

tag provider to say these are the items that are going to be

tagged and other ones are not.

Perfect.

Couple of things I would like to add is

you know, we also recommend the right hardware for the right use

cases. You know, in the store automation use cases we would

like to you know, I always recommend the mobile handheld

device, you know, the RFID slide with a device. Whether it's iOS

or Android, we support both. And you can do a lot of use cases

with it. And most typically, most retailers will add a fixed

reader like a transition reader from the back of the sales floor

and or vice versa, you know, for moves and replenishments

automatically it will push the items from one zone to another.

So that's another one. And we also have used fixed radars for

of course, you know POEs and ship from store use cases.

POE.

Yeah, point of exit

Point of exit. Thank you.

You know, there's a use case for RFID as

EIS you know where we mark the item as sold at the POS and as

it leaves the door if the item wasn't paid for, it alarms.

Yep. Okay, great. So let's go into a couple of the

other ones. You know, Jamie, you and I were sort of talking back

and forth before we got on this thing around implementing RFID

for product availability for picking etc. Obviously, you guys

work with a lot of retailers, do you have any good examples where

people sort of best in class that they're leveraging this

capability for the omni channel purposes?

Yeah, I mean, I probably have a similar

examples. And I skipped over at the beginning talking about some

of the customers that we work with, you know, we work with

customers like Ralph Lauren, Tommy Hilfiger, we've been

working with Macy's for years, Victoria's Secret, Allbirds. So

we have lots of different customers who are at different

stages of using it. I would say the vast majority of those

retailers are enabling or utilizing their RFID tagged

goods to augment their omni channel program. I think that's

the question you're asking me. So they're all doing it in a

little bit of a different way, but I think they're all trying

to reach the same end goal, which is, make sure you have

inventory accuracy, make sure that the OMS system is directing

the right the orders to the right stores, making sure that

you do not have split shipments, and that you're not extending

labor, where you don't need to in the store so. And then when

when that OMS order arrives in the store, being able to use

RFID as a Geiger counter, or as to help the the store associates

find those items, that's been a huge benefit. So if there's one,

let's say there's one pair of jeans, a 32, 34 jean in that

store, that's hard to find. And so to first be able to look at

the RFID data for the store and say, Hey, that item is actually

on the sales floor and not in the back room, that gives them

the first bit of information. And then they can use the tools

with the handheld that Umesh was talking about to direct them to

where in that in the store that is and that's been a huge

benefit as well.

Yeah, a couple of points here. You know, so the

goal is to reduce Omni cancelled rates, right? So you get an omni

order, and then, you know, you use the Geiger function that

beeps louder and louder as you get closer to the item to find

it. Now, I say if you don't hear a single beep, just transfer the

order to another location. So you don't lose that order.

Because it's definitely not there the item.

Perfect. So this one is an interesting one. Because

Jamie, you started out this conversation saying that you

guys were both an inventory as well as an asset protection loss

prevention tool. And for years, you had basically EAS portals

that alarmed when a certain item didn't get demagnetize at the

register, didn't necessarily have a lot of intelligence. Now

I have an RFID tag. Walk us through and I think two reasons.

Number one, you have the reason you have the right to be able to

lead in this area, because you've been in loss protection

so long. Plus you're working with I think, is a state of the

art retailer with Macy's and Joe calls specifically about the

great things he's doing leveraging RFID as an asset

protection tool. So a big broad question, which is what is the

future look like with the RFID and EAS? How are they going to

play together? What do you what do you see is the future?

Yeah, so they certainly will play together.

I'll answer this question in a couple of different ways. We're

seeing you know, we're seeing customers who are somewhat new

to EAS or utilizing something at the door who are getting started

with RFID EAS and when we use that terminology, we actually

mean just using an RFID tag, it doesn't even have to be or maybe

can't be uniquely encoded for that item, but putting an RFID

tag and letting the RFID system at the exit alarm. So that's

really just using RFID but as the same tool that they use

previously. What's nice about that solution it gives is it

gives that retailer the migration path to get to a full

inventory program where they could then move from non

uniquely tagged items using it just for loss prevention

alarming purposes, to item level encoded tags, with a full

inventory program that has all the benefits we've been talking

about on this call and and allowing them to utilize that

RFID tag for a loss prevention purposes. Knowing if that item

has been sold or not at point of sale so when it goes to the

exit, it alarms. Creating shrink report at the exit that show you

how many bulk events did I have in this in a given day in a

given week. What is the trend for when these items are going

out of the store? What are the price points for the items going

out of the store? The data that's available to the retailer

to the loss prevention professional now, in many ways,

it's almost overwhelming because previously they reacted to alarm

events. And we talk all the time as a company about a loss event.

And so you know that something happened, you don't necessarily

know what happened, but you know something happened. Now you know

exactly what was taken, you have you tie that to video and you

really have now investigative tools that can allow the loss

prevention team to resolve those cases much faster. So that's

just one example. We're also working with customers who are

utilizing RFID and taking readers into bodegas and reading

items that have been stolen or being resold, below a barbershop

in Soho. And identifying these are all these items that were

stolen from various stores all over the country, and where were

those items stolen from? So, you know, the loss prevention

capabilities, once you have those tags on those items is

pretty wide and broad for sure.

Yeah and also, we can identify, if somebody

were to buy an item, or, you know, steal an item and return

it in another store, we will know, it was a stolen item. And

all you know, in my view, you know, AM technology, you know,

EAS technology has been around for for decades, right? A lot of

customer we have in retail been using that, what is their path

to progress. So we have to give provide them a path to progress.

And that progress is the dual technology AM and RFID. And we

offer those tags, the dual technology tags, and then

they're certainly able to do a lot of the use cases we talked

about.

Yeah. And Jamie mentioned, it's not an all or

nothing, right? So you have some retailers out there that are

really RFID heavy in certain categories, apparel,

electronics, etc. But they're also selling razor blades, which

are a high shrink item, etc. So EAS and RFID are going to have

to work together. I don't think it's a it's a no brainer that

they eventually will merge into one. From my perspective, you're

gonna have to have both unless you're like a Macy's where you

are 100% RFID tagged across your box. From from my perspective, I

think that makes sense. So one of the questions, I guess, that

has been asked is, is there a way and somebody texted this one

to me, so it's not in the chat. It's great that you can see what

left the store that didn't get paid for that we call that kind

of the POS bypass, what bypass POS etc. The question is, if

RFID is able to be read throughout the retail store, are

there any actions that a retailer can take before it

leaves the store? It's great to know when it left the store

exactly what time and what location and match up the video.

But is an RFID capable of catching it before it leaves a

store to potentially stop that individual from from taking the

item inappropriately.

Yeah, I certainly think you know, there, you can

you can use RFID to create alerts, right. So if you see, we

used to talk about, could you put readers under tables to see

if there's been a a table sweep, right, so that you know that

front table that's, you know, typically the table it's being

stolen from and you could send an alert to an associate that

there is a stealth sweep taking place. There are you know, you

could alert an associate that there are a certain number of

items being taken into or out of a fitting room or that there's

activity taking place at the back of the store. There are can

we, can we utilize RFID to see what might be taking place in a

DC environment? Are there items leaving a DC that shouldn't be

leaving a DC so. And if so, what what loss prevention tools

should we put at those exits or in those locations. So I do

think there's some things that you can do to to minimize those

shrink events in a store environment. What what I always

say we have to be careful of is we don't want to over alert,

right? We felt like we really want that store associates to be

doing what their first job is, which is servicing the customer.

So we got to be really careful about what you what you there's

a difference between what you can alert on and what you should

alert on. So we're really cautious and careful when we

work with our customers to say yes, there's a huge opportunity

for you and what you do with RFID, but let's take it small.

Let's take it let's take it piece by piece so that we're not

overwhelming the store associates.

Umesh, anything you want to add?

It's all about actionable data, you know, not a

core dump of data.

Absolutely.

Fair enough. Some of the interesting use cases that

I'm that I'm seeing in Jonathan Aiken, who's actually on this

call from from Avery Dennis and I've had this conversation

several times which is the labor reduction play. Okay, number one

RFID does a much better job and is much faster at counting

inventory levels, etc versus scanning every single item. But

what do you see the future of potentially leveraging RFID to

replace the annual inventory audits which are typically very

expensive, you got to shut down the store basically to do it. Do

you ever see a day and what's the path look like that allows

us to literally replace these annual inventory audits with an

RFID cycle count.

Yeah, absolutely. I think that's the end goal. I

mean, that's a huge amount of labor as we all know,for those

annual counts. Not just there's not the labor component, there's

shutting down the store, there's closing the store early, there's

bringing in staff, and then the drain on the staff and or if you

hire an outsource firm. So yes, you can use RFID for those

annual PI counts. And some customers just choose certain

categories to do that with, they may say, okay, these 80% of

these categories, we're gonna utilize RFID. This other one,

we're going to do hand count. We have shown that the RFID data

that can be used for PI counts is more accurate than those

manual PIs. So I think that's really important information. I

think there were some some studies done by Auburn as well

that kind of backed that up. And then now that most of the

providers in the marketplace are moving to a Cloud solution, it's

important to make sure that you have the stock compliance, so

that you have the controls around the data from your

software solutions so that you can utilize those counts for

your annual PI. And that's something that we just came out

with in the last 30 days. We've completed that thought

compliance, so anyone using our solution, for example, can hit

the ground running and utilize tribute cloud for those annual

annual counts. So we view that as probably one of the biggest

differentiators and really important to our customers

because of all the benefits you look at, that's a number that

really becomes meaningful really fast.

And some of the, you know, just to add to

that, some, some of the third party, you know, audit companies

like KPMG, are accepting it, and they can provide references and

also McKinsey did an article as well, that's online about that,

as well. So it's getting more and more commonplace now. And

people who are, you know, some of the companies who are

traditionally doing the manual counting, they're also starting

to move to RFID so.

Got it. Got it. So back to where we started in 2005

Umesh, when you and I were first talking about this, the supply

chain. Talk to us a little bit about the supply chain

opportunities upstream to DC and I'd like to specifically talk

what do you think the emerging supply chain opportunities

specifically are leveraging RFID in food because I think

understanding from the field all the way to the grocery shelf,

what that that history looks like, I think RFID can play a

really big role here.

Okay, RFID penetration in the DC use cases,

and sports and fashion, I would say it's about 1%. It is still

is a huge growth opportunity. People who have been source

tagging people like Nike and others, just started doing dc

use cases, you know, maybe three years back or so. Right? So it's

very recent. And all all, all DCs warehouses are not yet using

RFID use cases. So there's a huge, you know, a knowledge gap

and understanding of what they can do with all the tagged items

coming through and using the data carrier for for their own

benefits. Right? We'll look at all the three pillars, of course

UPSs started doing it. We talked about that big announcement.

What about others, there are so many other 3PLs. Most retailers,

they, they have their own DCS, maybe one or two, but they

always use 3PLs. Right. And they rely on them to provide the

value ads and everything you know. So there's the three

typical use cases that I see that still need to happen in

many more places. This is a fast growing segment for us is, you

know, incoming receiving inspection against the essence

for reducing chargebacks and pick back audit, and

verification, basically, to enable catching errors as

upfront as possible in the supply chain and outbound

verification against the you know, your customer orders and

making receiving at the other end easier. Those are the four

key use cases that give the biggest bang for the buck.

And we did with the University of, Auburn

University, I always just put University first. Auburn

University we did a study in 2018 that said claims reduction

and product authentication, making sure that that that shirt

is actually a Nike product were the two big use cases. I'm not

going to steal Justin Patton's thunder, but they've just redone

those numbers, and the numbers are much larger this year than

they were in 2018. So not going to steal his thunder, I'm not

going to share anything that I shouldn't share, but I can tell

you one thing, the use case is not going down. It's going up

for sure.

Yeah, absolutely.

very popular. And the other one is the

customer experience with you know, in terms of brand

authentication, verification and diversion avoidance, and

wholesale, right. So those can be done in parallel with the

RFID benefits, you know, people aren't doing that we're, you

know, where you embed the EPC information in a QR image. So

end users can also authenticate the product after you buy the

product.

Yep, absolutely. Last questions, big open broad

questions. What's your guys's vision for RFID in the future?

What do you think the new categories, new use cases? What

exactly do you think the vision is? Where are we going to be two

or three years from now?

Yeah, you know, my perspective, we talked a little

bit about the beginning of the discussion and it's really, you

know, unpacking the capabilities for the new categories. What's

gonna happen in automotive, what's going to happen in

grocery QSR, and, and electronics and health and

beauty. I think, as we said, we've just scratched the

surface, we don't yet know even what those little pocket or

additional use cases are going to be. But I think the benefits

for those categories is they can learn from all of the paving of

the road that the apparel and footwear companies have done.

You know, they're we've all three of us, for sure, we're a

part of that and it was challenging over the years to,

you know, not have people say, well, I don't want to do RFID,

because the tag cost is too high. I remember that five to

ten years ago, that was the number one blocker. And we

finally got past that and said, it's not about the cost of the

tag, it's about the value you get out of the system.

Identifying use cases, so what I like to do when I talk to these

electronics retailers, and others, is try to draw the

correlation through things we've done in apparel and footwear

that they can leverage and then grow upon for their business. So

that's what's exciting to me is these new categories that are

coming online, getting those categories source tagged, that's

kind of my number one goal is is how do we make sure that we

expand product or source tag and proliferation amongst those

categories. And I should also say that, you know, because of

the things that are happening at Walmart, we're seeing so many

retailers now who have tagged goods in their stores, and they

don't even know it. And we walk into stores with a handheld and

say, let us show you, we pull the trigger, and we see 1000

tagged items, or 7000 tagged items in one particular case. So

there may be retailers who are on this podcast right now who

have tagged goods in their stores, and figuring out how to

take advantage of that is gonna be really interesting for them.

Yeah, and, from my perspective, the DC use

cases that I mentioned, will skyrocket. And also, I want to

mention AI and ML use cases, you know, artificial intelligence

and machine learning will increase significantly with the

data that we can generate and use. I'll give one example that

is, you know, combining dwell times with lead times to predict

reorder points. So there's a lot of good use cases that will

start to happen with the AI.

Got it. So one of my favorite questions to end with,

is this one. What did I not ask you about? What's on your mind

as a burning topic that I should have asked, but I didn't ask?

And usually my guests are much smarter in this space than I am.

So what's on your mind that I never brought up? Or any of our

our participants didn't bring up that you'd like to share?

I just mentioned it.

Yeah, Umesh mentioned AI and ML. And I

think, you know, how all these new technologies are going to

combine, you know, we we spend a lot of time I talked about the

very beginning, how do you utilize the data insights you're

getting out of your traffic solution, for example, with with

with our solution and stopper track. And how do you combine

those data insights? We've talked a lot about RFID and

we've touched around data, but it really gets to be

interesting. Think about if you had RFID in your store and you

also had you know, traffic, even interior analytics with traffic,

and you can you don't you see what your conversion rate is

with your your current solution, and it's dropping, and you just

don't know why. Now you can use RFID data to say in that

particular store where your conversion data is dropping, you

can see that that store is actually really not executing

with RFID. So the reason it's conversion is not high in that

store is because the store staff is not populating the store

shelves with what that customer wants to buy. So improve your

execution with RFID then relate to an improved conversion with

your stopper your stopping metrics. So that's really, you

know, an interesting conversation, probably a whole

podcast, Mike, into itself about what do you do with all the data

coming out of these various systems that can make you

operate better as a retailer.

Great point, great point and let's be honest, there

are still retailers that are leveraging that unique

serialization of that item and the unique serial number and

just do an RFID count, roll it up, say, Well, I've got 20 of

those and thrown away all that valuable information. Don't roll

it away.

Right.

It seems like a lot of data to store, but it's one

of those, you know, you're going to need that in the future to

take advantage of some of the stuff that you just talked about.

Absolutely. Absolutely.

Absolutely. Well, Umesh and Jamie, thank you guys

so much. I really appreciate you spending some time on a Friday

morning walking through this. We normally try and do these in the

afternoon. But we thought Friday morning was a better, better way

of doing it. You guys have done a great job representing the

industry and some of the use cases. And we really want to

thank you for your time and appreciate all the hard work you

guys are doing to help lead the industry. So thank you guys very

much.

Great. Thank you for having us. Really appreciate

it.

All right. Take care.

Take care, everybody.

Well, I hope you enjoyed today's podcast

regarding Sensormatic and some of the things they're doing with

RFID and software to take advantage of that. Join us next

time we will have a actual product very similar to that

called Nedap. They are a competitor to Sensormatic, they

do a great job of providing services for RFID solutions for

retailers. Look forward to joining you then. Take care.