William Toney – VP at Avery Dennison - joins Mike as they discuss RFID technology and its impact on the Retail Supply chain.  

Avery Dennison is a leader in RFID tag technology and Bill’s perspective on the retail industry and the role that RFID technology plays.

Hello, welcome to the podcast today. We're here to

talk a little bit more about technology to drive on shelf

availability. Joining me today is Bill Toney, Vice President

for Avery Dennison. Avery Dennison is involved with all

aspects of labeling but including the RFID technology

and future technologies to drive on shelf availability. Please

welcome my guest and good friend, Bill Toney. Welcome to

the podcast, my good friend, Bill Toney. Bill, how are you my

friend?

Good, Mike, how are you?

I'm doing well. I'm doing well. So I'm excited to

spend some time with with you personally just based on your

expertise in the retail supply chain area, as well as obviously

being an important contributor when it comes to Avery Avery

Dennison and the role that it plays with RFID. So couple

things just just to start out before before we start talking

about you as a help being the solution provider. We are asking

some of our participants because we're also customers, we all go

into stores, we all look for things, we all thought they were

going to have something available, they found out they

didn't have it available. So take off your Avery Dennison hat

for a second and put on your personal hat. Do you have a

personal example where you ordered something online and

either the order wasn't fulfilled? What was your

experience as the customer of this?

Boy agreat question Mike and so I'll give you a very

interesting story. So last holiday, I was looking for a

gift from my wife. And she really wanted a certain type of

watch, and I actually went online to find the watch. And I

couldn't find the watch anywhere, I actually found a

watch about two hours away outside of Dallas, I bought the

watch online, I drove two hours to go pick up the watch, and

when I got there found out the watch was not available. So I

actually made a concession to get a different watch, to make

sure I didn't spend more time looking for what I was looking

for. And so that was one experience that I had. That

unfortunately, ended up buying a watch that really wasn't what

she wanted. But I made the concession just because it was

really hard to find at the time. And ironically, I got the email

from the retailer right when I got there about two hours after

I started driving that it was not available.

Oh my gosh. We've heard a lot of stories, but

never I drove two hours for a gift for my spouse and wasn't

able to get what I wanted. I think that just takes that one

takes the cake. That's for sure. So you did end up fulfilling it

and getting a watch. But that's that that that is a very

frustrating feeling. I'm I'm sure that you were pretty

frustrated for the whole thing driving back kind of grumble

grumble I wish I wouldn't have driven two hours for a watch

that I really wanted and I didn't get, right?

Yeah, exactly. I mean, it was definitely

frustrating. I mean, the good news is I did have something for

my wife, which you know, I, I've made that mistake once in my

life where I didn't have something ready in time. So I

figured somethings better than nothing but very, very

frustrating.

Oh, goodness. So do you think in that example, it

was just on hand accuracy issu by that particular retailer? You

don't have to say who the retailer was. Or did they just

think they had it and didn't have it? Or what was that, what

was the context of the email that you got?

Yeah, it's interesting. It was essentially

a buy online pick up in store order. And because I couldn't

get the product available in time for holiday. Again, I was

searching everywhere to find the find exactly what I was looking

for. So it had to be a SKU inaccuracy issue just because

they said they had it and it took a few hours to respond. And

then they said they didn't have it. And they actually didn't

give me any options to find something else. But luckily I

was there in the store. And we actually found something else

that was close enough that allowed me to get the watch. But

it was definitely had to be a SKU accuracy problem because it

was a buy online pick up in store order.

Fascinating. I know, you know, Dr. Bill Hardgrave and

he and I spent some time talking about the whole bopis

opportunity with retailers etc. And he said there's ditches on

both sides right one ditch says I have some, you set

expectations with your supplier and then they end up not having

it so you disappointed, that was kind of your scenario. He said

the other one is he's went into and he wouldn't tell me which

big box DIY, or DYI retailer was but he went and called them and

said do you have this specific ladder? And they said, No, we do

not while he was actually sitting and standing right in

front of the ladders at that store and saw four of them

sitting in there. So you're either, you don't have what you

think you have which is the ditch you are on. The other one

is you got situations where people are literally hiding

inventory, because they just want to make sure they got it,

they don't want to disappoint customers, but they ended up

hiding inventory, which obviously is going to impact

their sales, right? So, I tell you what this retail industry is

as about as crazy as I've seen in a long time with COVID, with

product on the water trying to be unloaded. We've just seen

examples where major retailers are taking, having to adjust

their profit forecast because of inflation and general

merchandise and apparel isn't selling as much as they should

be. So they're having to do big markdown work. Just you know,

you've been in this industry for retail industry for a long time.

Tell me exactly, what's your perspective on where the

industry is going? And has it changed since this whole COVID

pandemic?

Yeah, Mike, again, really good question. I think

it's a really interesting question. And I'll reflect back

a little bit longer than COVID. I'll go back to 2007. And I

think the invention of the smartphone via the iPhone really

started a revolution, a transformation in retail, where

the consumer started to get more visibility and information

around what retailers have and where they have it. And so I

think as the power started to shift a little bit more to the

consumer, retailers did a really nice job of trying to formulate

systems and solutions to try to understand how they better

service that customer now that they have a power of a mobile

device. And then you fast forward into COVID. The big

transformation was we went on average globally from about 23%

of retail sales being online to about 31% of retail sales being

online, just literally overnight. And that shift

created a complexity in demand channel forecast. So is a

retailer going to order online? Are they going to come in the

store? If they order online where's the inventory? How do we

service it, do we service it through a store, do we service

it through a DC? So I think it just really amplified the

complexity of I might have the inventory, but do I have it in

the right place in the right time. And to your point earlier

am I hiding some of that inventory because I'm nervous to

disappoint a customer. Because at the end of the day retailers

are really focused on customer experience, customer service and

really servicing the customer. So I think we're in this really

unique time where demand planning is getting more

complicated. And inventory and supply chain visibility is

becoming a bigger and bigger topic because of that

Oh, well said well said. And I think this kind of

complexity.

leads into the segue which is Avery Dennison which you're

obviously a part of. So Avery Dennison is a solution provider

that basically helps retailers and suppliers navigate through

these very difficult waters. Tell us a little about Avery

Dennison and most people probably think of you as a label

company. But I know you guys do a lot more than that. Tell us a

little bit about how you guys are trying to play a role in

this ever changing retail environment.

Yeah, it's interesting, Mike. So I mean,

essentially, we're fortune 500 company, at the heart

specializing in material science in the design and manufacturing

of a wide variety of labeling and functional materials. And

then we have several different divisions right we have a tape

division, we have a retail branding Information Systems

Division, and a healthcare division. But the division that

we work in essentially under the retail branding and Information

Systems Division, is what we call Avery Dennison Smart Track.

And we're very focused on bringing what we call digital ID

or sensor technology to the market, whether that's UHF RFID,

which is what we're talking about here, whether it's NFC

RFID, or whether it's digital ID via QR, intelligent QR codes.

Essentially, we're trying to ensure that sensor technology is

unlocking item and inventory visibility for retailers to be

able to make better decisions to enable better customer

experience and customer solutions. So at the end of the

day, that's what we do. And then in the RFID UHF space, which is

what we're talking about. We're the world's largest UHF RFID tag

developer, manufacturer and provider, again, that supplies

this material all throughout the world.

Wow. That's that's a big responsibility for sure. So,

so you talk about UFH RFID. And the importance of that, just to

link this with the discussion that we've had with our audience

before. RFID is one of the technologies there are others,

but there's one of the technologies that really allow a

retailer to understand what they have and where it's located. So

when you say you're the biggest one out there, what exactly does

that mean? Do you guys provide hardware software solutions? Are

you primarily in the tag area? When people think about Avery

Dennison, how should they think about how to leverage you guys?

Yeah, great question. And we're primarily a

sensor tag provider is what are our core business is. Now we did

bring the market back in March of 2021. A what we're calling a

digital ID platform called Atma IO, that allows retailers to

take advantage of a platform as you start to then unlock sensor

data. It allows a platform where retailers can pull different

metadata from that platform to drive other applications and

solutions throughout the supply chain. But the core part of our

business is definitely sensor and tag, for instance, or in tag

perspective. And I think one one really important clarification,

like we like to kind of position is, when you look at RFID, or

sensor technology, you've got one to many technology, which is

UHF RFID. So you want to capture a lot of information, like

inventory information very quickly. And then you've got

your one to one sensor or technology portfolio, which is

NFC or QR codes. And so we like to really separate, the use

cases are quite different. And I think sometimes people kind of

confuse RFID between UHF and NFC, but they're very, very

different technologies when it comes to to the sensor

Great, great point. Great perspective. Yeah. And I

portfolio.

think about, again, for the audience, I think about more NFC

is almost like, I've got a badge around my neck and to get access

into this building I touch that badge to that. That would be

more of the NFC type of technology versus UHF RFID,

where you're wanding thousands of tags a second. Is that the

kind of the big difference between the two of them.

Exactly, one to one with NFC and then one to many

with UHF, you want to collect a lot of data very quickly, UHF,

is definitely the right technology.

Yeah. Well, well, for years, people were thinking

about RFID as a specific kind of niche technology for apparel,

you know, big retailers like Walmart and Macy's and Target

all getting involved with RFID. You see challenges beyond

apparel, you see things in electronics, general

merchandise, obviously things like food waste is a big huge

issue for the industry right now where you're not throw, you

know, not rotating properly your packaged meat and, and or your

bread, etc. And we end up throwing stuff away. So you

mentioned RFID, outside of just apparel potentially. Is there is

there a glide path you see that we eventually do other

categories other than apparel? And if so, what does that look

Yeah, again, really good question Mike. The way we

like?

kind of look at it is retail and operating retail. Yeah, there

are some nuances to operating retail between different product

categories, right, apparel is a little bit more complex from a

perspective than other categories. But there's some

very there's some synergies and some similarities between retail

operations across all product categories. And I think RFID

now, looking at the tech inventory availability is

critical no matter what category you're looking at. So I think

there's a lot of work being done to say, when you look at

inventory availability, how does this really play into other

segments and other categories and look broader? So I think

that work is being done right now. And I think we'll see some

really interesting results coming out of that. I also think

that as you look deeper into the use cases, there's other use

cases that I think are getting traction in the market that are

not just apparel specific and might be point of sales

transformation, it might be loss prevention, asset protection,

data, that gives you better data visibility to run the operation.

That, again, is not very specific to apparel, it's more

of a retail operations lens around all the categories. So I

think you've got these two different things that are

occurring, you've got inventory availability is becoming more

important across all categories and you've got other use cases

that are also important across all other categories that are

kind of converging to start to investigate these other

segments.

Perfect, perfect. So what is the future of the retail

supply chain? Obviously, your your analogy, and I think a good

perspective, which is the advent of the cellphone, created a step

change in terms of connectivity to data that you didn't

otherwise know, on a mobile platform. I've listed COVID, put

a dramatic increase in the whole buy online pick up in store, you

know, what's your, what's your crystal ball, say in terms of

the retail supply chain? And what do retailers and suppliers

have to do to get ready for those changes?

Boy great question, you know, I wish I had a really

good crystal ball. But I'll give you a high level perspective and

opinion. I think, at the end of the day retailers are hyper

focused on consumer experience and driving a really good

consumer satisfaction NPS perspective. And so I think

everyone's trying to understand how do I get demand and supply

chain availability more connected? And because I think

one of the things that we don't think about a lot of times we we

think of consumer experiences, you walk in a store and there's

a digital display or there's something on the shelf edge

right or something that kind of make the walk pattern easier,

easier. There's better signage. But the entire experience starts

when you find what you're looking for. And I think the

more that we can focus on having that experience start 100% of

the time with the right product in the right place at the right

time, you're going to get an overall better consumer

experience. And so I think that's going to be a big focus

on part of that consumer experience journey is making

sure that more often than not, you've got the right product in

the right place at the right time. And as a result of that,

how do we simplify supply chain? And how do we get better at

demand forecast?

Great point. And I'm assuming that all kind of starts

with the accuracy of data, because we've talked on this

podcast multiple times, and it's an oversimplification. But

there's really three pieces of information that a store needs

in terms of should I reorder this or not? One is how many do

I have? Which is my on hand. One is how many do I think I'll

sell, which is my sales forecast. And one is what's the

lead time if I order now, how long before I get it? And what's

interesting out of the three of those, and I think you would

agree with this, in traditional retail systems, two out of three

of them, they're really inaccurate, both, how many do I

have, with a high degree of accuracy, and how many do I

think I'll sell, a forecast. You know, maybe 75%, maybe 50 or 60%

on hand accuracy. So I've got two really bad pieces of

information, delivering information that says what I

need to order. And it's no wonder we we have sort of a mess

in the retail platform for sure. If we knew where everything was

all the time, and what's in route, and what am I going to

get again, and et cetera. It changes the paradigm. And I

think the first retailer to figure that out that magic sauce

out and be able to deliver product to a customer in a

seamless way quickly. And an effective cost is going to win.

Yeah, it's interesting perspective. I mean,

as you know, well, a lot of the work that Auburn did around on

shelf availability and inventory accuracy has really been a step

change. I mean, moving, moving from acknowledging 65% accuracy

to 95% accuracy is a really big step change. And obviously, that

work continues today to to broaden that scope to how fast

you can order, how fast you can reorder, how fast you can get

product in. I mean, you know, something's not available. But

then how do you become more flexible and agile and getting

that product in, I think is a really good perspective Mike.

Great point. Great point. Well, I think one follow

up question, the last question, which is an easy one for me,

which is what question should I have asked you, but I didn't.

What's kind of burnin on your mind that, boy, I wish you

would've asked something about this. Because I really have a

strong point of view, what's what's going on in that brain of

yours that you could share with people that I should have asked

I mean you always ask such good questions, Mike. I

you.

don't know. That's a really, that's a really hard one. No,

look, I mean, you know, I think the the exciting thing I think,

Mike about the future of retail is that we're moving into a

world where there's a lot more options. And consumers have

obviously a lot more visibility and the opportunity and power in

what they're actually buying. And I think it's a really

exciting time, Mike. And so if I if I take a step back, I really

think there's a lot of future in the store. A lot of people will

say, what's the future of the store? I think that the store

has tremendous future and retail, from an experience and

from an availability perspective. And but yeah, I

just think that the future is really bright for retail.

There's a lot of exciting things happening. As retailers are

planning for a holiday this year, I'm excited to see a lot

of happy customers. But I think it's really Mike maybe just

around where we see the future going in retail. And I think, I

know you asked the question, but I think it's a really exciting

time with all the change going on around availability and more

options and convenience. I mean, at the end of the day, retail

seems to be more convenient than what it used to be. And to me,

that's a that's a really exciting step change.

Yeah, that's true. Everything always goes back to

me. Maybe I'm a little jaded because I've worked with Walmart

for a little over 40 years now but everything goes back to a

Sam Walton quote and I love this quote and I've said it before on

this podcast. The customer has the ultimate authority to hire

us or fire us every day. By spending their money somewhere

else if we if we don't have what they're looking for, they'll go

somewhere else and spend it and and I just am amazed when I go

into retail outlets and I see customer shopping and I see him

go to a shelf and I see him head to the printer cartridge aisle

and they're looking for that one printer cartridge for their

particular printer. All the other SKUs are there but the one

that black cartridge they need for their HP OfficeJet is gone.

What's the first thing that you think they do?

Yeah, they're looking for the, yeah.

They pull out their phone, and they ordered from

somebody else using that retailer's Wi Fi.

Right

They're gonna find it that that that customer has

the obvious choice with that mobile device to your first

comment, they're going to find the printer cartridge it may not

be bringing it home with them like they thought they were

going to. But I'll bet I'll bet you they just ordered it online

from somebody, and it's going to show up two days later at their

house. So yeah, ultimately, they have the power to hire you or

fire you every single day. And if you don't have what they're

looking for on the shelf, there's not a lot of loyalty to

a retailer, they'll go somewhere else to find out what they need.

So that that, to me begs the importance of getting, knowing

what you have and where it's located. And making sure your

products always on the shelf for the customer. Bill Toney, as

usual, thank you so much for your friendship. Thank you for

all the hard work that you're doing with Avery Dennison.

You're an incredibly important business partner and business

associate for this industry. And we got lots more work to do my

friend. So we're looking forward to doing that. So take care. And

thank you very much for your time.

Amen Mike, thank you for your time as well.

I hope you enjoyed that podcast from Bill Toney.

Lots of very interesting things that are available today as well

as coming in the future to help on shelf availability. Next time

we get together we're going to talk a little bit about shelf

scanning robots again. We did have a podcast a few episodes

ago with a major for shelf scanning robots companies The

Brain Corporation, Zippedi, Badger Robotics, and Simbe got a

lot of questions from audience members about exactly how this

particular technology works. So joining me on the next episode

will be BJ Santiago from the Badger Corporation. Look forward