Dean Frew - the CTO of SML Technologies - joins Mike to discuss the role that RFID technology plays in improving retailer on hand accuracy and driving OSA.     

SML technologies is a solution provider that provides a fully integrated RFID solution for retail.  

Donnie Williams 0:04

Welcome to Season Two of the SCMRC Lead podcast featuring epic supply chain lessons from our industry partners. My name is Donnie Williams and I am the Executive Director of the Supply Chain Management Research Center in the Walton College at the University of Arkansas. Season Two of the podcast will be hosted by Mike Graen. Mike is the director of the retail supply chain initiative, and this is a strategic partnership within the SCMRC. The goal of this initiative is to surface the challenges and opportunities of on shelf availability or OSA, focusing on the concepts tools and technologies driving retail OSA. Season Two will feature a dynamic guest list of retailers, CPG suppliers, solution providers and industry leaders to drive collaborative efforts and advance learning within the industry. Thank you for joining and enjoy the podcast.

Mike Graen 1:02

Dean Frew 1:55

Thank you, Mike.

Mike Graen 1:56

Awesome, it's so good to see you and appreciate you taking some time to talk to our audience about the importance of the retail supply chain and specifically the role that that RFID and onhand accuracy play in all that. We've actually been talking to everybody and asking them before we get into whatever the focus area for the retail supply initiative is, if they have a personal story as a customer, where you wanted to purchase something from a retail outlet, either an online purchase or an actual brick and mortar purchase, and you went to get it assuming you could get it and you didn't have it, and how that made you feel. Do you have any real good examples, that you could walk us through?

Dean Frew 2:40

I got a couple or all of us do. My mine, get the one I'll talk about first is wife loves this one retailer, so does daughter, I've got four kids, but my daughter and my wife ordered a bunch of stuff for Christmas, right? So helping dad out making sure he gets the right stuff. So they order it or tell me what to order. I order it online, I'm going to pick it up in store. And, of course my typical approach being a busy guy is I wait until the 23rd of December. Okay. And I expect when a retailer tells me that that my stuff is ready for pickup that when I go to pick it up, it's there. And major shock when I show up and I'm now in a world of hurt because the stuff that the only stuff that the two ladies in my life have asked me to pick up was no longer there. And now I'm left to my own devices to come up with something better.

Mike Graen 2:40

So did you have another choice of another place to get it? Or did you

Dean Frew 2:43

No because this was private label stuff, okay. And so it wasn't like I need a green t shirt. It was I need a green t shirt from this company. Right?

Mike Graen 3:57

Gotcha.

Dean Frew 3:57

So that's one the other one is one where during COVID I ordered an additional office chair.

Mike Graen 4:04

Okay

Dean Frew 4:04

and and so this is kind of on the other side of it, where they told me that the office chair was out of stock, and I would have to order another one. So I ordered another one and they both showed up. Okay. And so you know, you've got the the other situation where your inventory accuracy is so bad, you don't think you have it, but the order system actually found it and shipped it to me. So I had a couple of $300 office chairs. I only paid for one and of course I call up the vendor. And they said which we're starting to hear as a term now, which is just keep it.

Mike Graen 4:40

Just keep it yeah

Dean Frew 4:41

Exactly. So anyway, those are a couple of examples. Yeah.

Mike Graen 4:44

Interesting. I heard somebody the other day. This is an interesting comment. This is one person's perspective. If I go into a store to buy something, let's just say a printer cartridge, and it's not there. I'm disappointed. Okay, cool. He said, But if I actually ordered it online and I pay my money, then I go in to pick it up. I feel like I got lied to.

Dean Frew 5:12

Exactly, there's a trust issue, exactly

Mike Graen 5:13

There is a trust. And I never thought, man, I've been working on shelf availability for 25 years, right? I never connected that, wait a minute, there's a difference between I ordered and paid my money and now you don't do it, versus just being disappointed if something's not on the shelf.

Dean Frew 5:30

Yeah, it's that whole issue of I think clawing back your money.

Mike Graen 5:33

Yes.

Dean Frew 5:34

Okay. So there's a clawback process that we have to go through. Much like what happens when we buy something we find out it's defective?

Mike Graen 5:42

Right

Dean Frew 5:42

Okay, we've got to go now. But at least in that situation, I can bring it in. And I can say, see, it's defective. And there's somebody to talk to, to get a return if it's a human. So yeah, I think it's, it's clickable.

Mike Graen 5:54

Well, you have a very, very unique, and you and I've worked together for years. So I'm just going to, you know, I'm just going to compliment you a little bit, you have a very interesting ability to understand the business challenges very, very well, as well as understanding the technology. Usually you get people are really good at the tech, but they don't really quite understand the business or you get people who are really good at the business, but they don't understand the tech. Yeah, there's one a unique individual, that you actually put those things together, you could just as easily talk to the CEO of JC Penney is some technology provider. So give us some perspective. I mean, I just covered your work history for the introduction. But how in the world did you get to where you are, because you are you are playing a very important leadership role in the industry, and this whole idea of on hand accuracy?

Dean Frew 6:41

Oh, thanks. I mean, it. You know, I was an athlete in college, I was an engineer. Wasn't that good as a student, and I went to my first job at Texas Instruments, and I was awful at it. And so it's not one of these things where you started off, you know, I went to New Mexico State and then went into Texas Instruments, the first job I was not good at at all. And fortunately, there was an opportunity for me to move into R&D. And I did that and moved into something, what I found was, is that I was pretty good at kind of being a systems guy, right. And I was developing some advanced packaging to semiconductors and things like that, that we use today in RFID, actually. And so from there, I was presenting at a conference as a 28 year old and had somebody see me and they said, you know, have you ever thought about going to Washington, DC and running technology programs for us, and I thought I didn't even know we had an office there. And so then they moved me from the technical ladder over into management. And then I ran technology in Washington, DC for TI for three years. And then did some M&A work and some corporate strategy work and found out that kind of putting together the pieces of the puzzle, and I had another interview with somebody one day, and I said, I'm more like, an orchestra conductor than I am the number one Vaio seat violinist, okay. And anyway, so I found myself doing that. And then ti did something that was a huge benefit to myself and my family. And that was, they did this complete psychological evaluation, which at the end of that they didn't fire me, which was good. They didn't call the police, which was also good, but they, you know, basically, it helps you determine, really, you know, I was not the guy that was gonna go shut down the plant in the Philippines.

Mike Graen 8:39

Right.

Dean Frew 8:39

That's awesome. That's awesome. Well, you certainly have had the ability to be able to communicate that from a business perspective, as well as the technology. And, and there's a lot of reasons why things aren't on the shelf where they belong. But and I've said, there's probably three reasons. Number one, the on hands are wrong. Number two, store operations isn't doing what they need to do to get the product out of the back and get on the sales floor. And then this big, uncomp, completely complicated thing called the supply chain, whatever that means, is not allowing product flow through but on hand accuracy. Let's just plant right there. Because that's really one of the key benefits of leveraging RFID. You've been in so long, probably longer than I have in terms of the on hand accuracy. I've been involved with RFID since about 2003. But we started at the case level, we didn't start at the item level.

Right

So so what's this journey been like this whole, getting people to understand the importance of on hand accuracy and the fact that you can't throw people at it and you can't throw process at it. And how do you get RFID? Because to me, 2022, we seem like we've gone from kind of nice, slow, steady growth to we're starting to hit the rocket ship, we're starting to really help people understand, what are you think some of the driving factors that people finally now get it?

Yeah, I mean, I mean, clearly, your perspective is, in my opinion, spot on. It's that, you know, there was a fundamental technology that was developed years ago. And really, after we came out of MIT's auto ID center, we had a forum, we had some technology protocols. And that was essential, right, we had the users that would meet on a Tuesday, and we in the technology committees would meet on Wednesday. And our job was to take what they wanted and create an open protocol and open standard to do that. And so I think one of the smartest things that ever happened was that we threw we threw that kind of model together, it'd be like if all of us as users of cell phones got together, and we decided what we wanted. And then we told the cell phone companies what it was, and so anyway, it it that was the beginning is we sat there and the general feeling was is if we could read with our we read with an RF signal, where we moved away from line of sight, okay, and we were able to put into the payload, not just what that it's a blue medium t shirt, or that it's a case of Gatorade. But it's this case of Gatorade, it is this blue medium t shirt. That fundamentally, if we put a bunch of smart people together in an industry, we would figure out how to transform a number of different industries. And that was the beginning of it. And and then, you know, we walked through the same journey you did with we know we did Pepsi, Tropicana, Gatorade, Exxon Mobil, Dial, we did all their cases, and pallets. And what we found was is that we kind of missed the mark a little bit because the out of stock situation wasn't quite as critical. As what we found in 2007, 8, 9, which was moving to high SKU mix, high skewed density type product areas, is like apparel and footwear and home goods and fragrance and cosmetics, electronics and things like that.

Yep

That was more valuable. There was an ROI there. And, and so we saw that transmit, transformation in 7, 8, 9, and 10. Started the model. I mean, I'm a huge fan of Geoffrey Moore and crossing the chasm. Okay. And, and I think this market is the only market I've ever been part of where I've seen that happen, where there's a lot of activity, a lot of activity we had, you know, American Apparel was an early customer, Macy's was an early customer, Walmart clearly was an early customer. But then it we refined the model we as the technology community and the users and we came up with a business case and then now we're at this place where, you know, it is gonna be how a number of these retail segments they manage inventory at the fundamental level. And so that's what we're

In some cases like Macy's, it's already 100 percent of the way they do it. I mean,

Yeah, yeah

We got retailers that are all in right. Now not all of them are all in but a lot of them are all in.

Yeah, exactly. And I think we're gonna continue just, you know, I use the example of Wrigley put a barcode on for Meijer in Ohio, for the first time in 74. And we've been managing inventory the same way since 1974. And so I think we're gonna, you know, we're clear this is clearly going to be not something that it ends it's not a bubble. It the value propositions cannot be matched with any no matter how much AI money you spend. No matter you know, what you do on your labor side, you cannot address the fundamental problem without the technology like this.

Yep, 100%. So what do you think is going where do you think this obviously, we're gonna get category expansions, we're gonna go from apparel to other categories that makes sense, and I personally don't think it'll ever be 100% of a product in a store like a Walmart store. I don't think it's always ever gonna be 100% Could be wrong. But but I don't see it in my lifetime anyway.

Yeah,

but but talk about some of the other business capabilities, because everybody just loves the fact that you can very quickly, very accurately get your on hand much more accurate than it's been before. We're what have you help us understand from a from a perspective of business problem perspective, once you've got that fundamental tag and reader kind of talking in the store, and in the supply chain, paint a vision for us what else we can do with that data once we've got it?

Yeah, it's been interesting. I mean, as we've seen, you know, we have well over 5000 sites around the world using their software. And, and as we've seen across all these different customers, is they start off with what we call the inventory use cases, they're the fundamental ones give me stock count, give me receiving, moves. And let's move now into the new operational use cases, enhanced operators buy online pick up in store replenishment, back to front, promotion, picking, then we move into loss prevention, you know, we can move into things like returns, fraud detection, because now every single item I can determine if it's ever been sold before, and if it's been sold, then I'm gonna give you a different return rate than if it's not been sold, if it's the theft, or they took five items off the shelf and brought it over to returns desk. So we've got loss prevention use cases. And then we've got customer experience use case, which is everything from kiosks to dressing rooms to self checkout and point of sale and scan and go off your cell phone. And then we're moving to kind of the futuristic stuff where we're dealing with machine learning and AI based replenishment models, the weather changes in Bentonville and all of a sudden, I changed my replenishment values for the my raincoats to from two on the floor to eight on the floor. And immediately the system knows to do that. So you know, and we're we've done robots before we've done other things. And so, you know, we see, is every customer goes through that journey, they start off with the fundamentals, because that pays for the tags, okay, which is the highest and most retailers, that's the highest cost item over time. And so you've got to have a fundamental business case. And I think what I've seen over the years is that it used to be where we had, we had retailers going well, we want to start with dressing room. And it's like, what they all fail, because they never could produce an ROI large enough to do the base. But once you paid for that you can do other things. So what we're seeing is, is we're moving out of just inventory to where our systems are being used for operational, they're running the stores.

Yep

Every process in the store is touching that touches the garment an item is using a platform that leverages item level to do that job.

Right, that's awesome. Awesome. So here's, here's another interesting question around use cases. And I'm not sure that everybody completely understands it from a technical perspective. But I want to talk a little bit about literally serialization, and the fact that I have a unique license plate, a unique number for every single selling unit. So instead of I have this particular UPC, and I got 12 of them, I have an individual license plate for every selling unit that's out there. I don't think people are taking advantage of that. I think they're just reading them all and summing it up and saying I have 12 of them. But what are some of the key unlocks that you see from a business perspective about that serialization, and that could be RFID, it could be 2d barcode. I'm not saying this has to be specifically RFID. But where do you see the future of this and the opportunities for the whole serialization of items in the store?

Yeah, I think it's a great question. I mean, I'm we're starting to say the trance we're trying to talk about the transformation is not RFID per se.

Right

It's moving to item level. And I know you and I agree on that. And, and so whether it's a 2d barcode that has the information in it, or whether it's an RFID tag, that's just a data carrier discussion. But when you start thinking about the fact that, you know, this shirt, if I if I have item level data on it, I could tell you when it was this shirt was made, I could tell you where it was made. I could tell you what went into it to make it, I could tell you when it went through a DC, I could tell you when it went into a store. And now that we're dealing with circularity, and some of the work we're involved in, I can tell you that that Mike Green had it before I did.

Yep.

And now he's resold it to me on Poshmark.

Yep.

And now, you know, he had it for four years, and now I have it, whether I know his name or not. The fact is, I now can determine that this shirt has been in the market for four for four years through one time, you know, it's like when we buy a car.

Exactly.

You know, we go into Car Max, and we can tell you all this information. Yep. The whole history of it. And I think while that's not applicable to some things, I do think that is part of where we're going. Think of warranty, okay for things outside of outside of apparel in something, think of sporting equipment, think of electronics, think of things associated with brand authentication. There's some very interesting things going on with multiple brand owners and retailers about using things inside that item level data to determine and verify that the items are are legitimate and not not counterfeit. So there's some of the examples.

Great point. You know, one of the things that, that I typically talk to people at, because they like, Well, I'm not sure what the value is, and then I go, let's run through a real scenario where you're on hand accuracy is 100%. It's not today, let's just say it is. If you have three television sets in the store, how many do you have available for sale? And of course, there are answers always three, I go, No one of them is on the wall, displaying to customers, one of them just got returned by a customer because it didn't said it didn't work and is sitting back and claims, one of them is available for sale. So being able to provide a status of customer availability versus how much do I have is one of the I think a key in lock from a retail perspective, and then be able to track it all the way through the supply chain wait I didn't get that TV. Yeah, you did. Here's the serial number of the TV that I sent to you. If you have that serial number in your system, you got the TV, you cannot give me a claim for it. So you're exactly right. I think, you know, obviously, we've got really, really good companies out there that are really starting to think about the whole product authentication and you know, black market and trying to try and rip off their trademarks and stuff like that. Well, I now know every serial number of the things that I produced, I can tell you what's valid and what's not. So that's, that's pretty cool.

It was we've got, we've got one retailer we're working with where their home delivery, they sell equipment, I'll just say equipment, okay. And, and the whole whole, the whole home delivery process that ties into warranty that ties into customer service that ties into all of that can can be improved by 20, 30 minutes on a delivery, because they're not filling out a bunch of paperwork.

Wow.

Okay, and doing it all because they're having to go look on the thing and look for the serial number that's super, always super small and, and they can just boom, boom, boom, in an app, get somebody to sign and they're out the door, rather than filling out all the paperwork and sign it. So I think there's a bunch of things that we're going to find on the services side of retail, retail business, that's also helpful.

Yep, yep. So Dean one of the reasons that I wanted to chat with you is just SML technologies as a company. I've obviously been working with you for a number of years. I've seen your solution in work. I've seen the retailer's reaction to it. Give us some perspective about SML, your you are absolutely been successful, not only US, but internationally. Tell us some of the major components of it. And why are people choosing SML solutions to solve their business problems?

Sure. You know, I mean, the business was started basically making labels and tags. And in 2010, the management team of SML determined that, hey, this whole item level RFID things going to take off. And they began investing in that space. And then in 13, they they realized that, as long as we're just a commoditized piece of data carrier, it would be better for us if we were part of the enterprise solution side of things. And so then that's when they purchased my software company here in Dallas. And and so what it does is it allows us to address the two key components in the overall solution, which is the data carrier, not trivial, right? I mean, we produced almost 3 billion tags last year for retail and, and so when you think about the days of a printer, and printing and encoding, those days are gone, we're we're printing and encoding at a tag a second now across multiple lines in multiple facilities. So that whole thing of keeping track of the serial number organizing and inter interfacing to the retailer system to get all the data together and all that that's part of our business and, and I would tell you probably 95% of the major projects in the in the world are in leveraging us for some or all of our, of their tags.

Okay.

Okay. And the second part of the business is this part that I'm responsible for the technology on the RFID tag, but besides that, I'm also running the software business and the software business completely different where we're the ones that are touching the ROI. We're touching the business process and, you know, we bring this unique perspective to the table of being able to be the systems people and and where it doesn't matter if we make good software if the tags aren't good, and it doesn't make it, you know, we've seen multiple projects where we weren't the software provider, and those projects failed and were cancelled. Because the software never worked. And so, you know, we've got this unique capability, we don't force the customer to pick both of them. Sometimes they do, sometimes they don't. But we are bringing that to the table under what we call total care, which is the system's view of things that say, you know, you got to get the data carrier right, and then you've got to get the enterprise software right. And more importantly, that software has to grow across the use case spectrum over time, because this is not going to be just give me a counter, you're going to want to use the information like you talked about earlier, Mike, across the line across the spectrum of processes across the lifecycle of the product, whether it be from factory to store, or whether it be from stock count to self checkout. And then putting the technologies in place to do that. And you know, from from our standpoint, RFID now represents from zero in 2010, it now represents 40% of our business worldwide. And we're you know, we have deployments on the software side in 40 countries. And we manage over 250 million items a week that are being counted and managed on our software. So, you know, the problem is, is that the markets growing extremely fast, and it is only in my my estimation is only about 15% penetrated, in US and Europe. So we've got a long way to go. But it's a blast to ride this and to have watched it grow from an idea to to actually be something that's creating so much value for clients.

Yeah. Great point. Great point. Well, I think the other thing, too, that I would argue is for those people who are just getting involved with, you know, the RFID technology understand what it does. Okay, great. Well, how do I get started? The reality is there's several components, right, there's a tag component, there's a hardware component, there's a software, there's a cloud base, there's applications, there's all these other pieces. And if you have to go to seven different companies to work with those companies to try and deliver a solution, it can be somewhat overwhelming. The one thing I really love about sml, is they have the ability to say for the most part, we're one stop shop, we'll figure out your business need, we'll come up with the ROI with here, or you can come up with the ROI, we'll put in the solution. Do you want fixed infrastructure? Or do you want to want a solution? Okay, etc. Here are all the pieces of the puzzle. It's like going to a car dealership and just buying a car rather than I'll pick out that engine. And then I gotta go pick this transmission, and I gotta figure out how to make them talk and work, etc. That's what I really love about the SML solution is they you basically work with the client to basically put all those pieces together, which is

Yeah and our job is we you know, we're coming to the table with a Swiss army knife

Right

Okay. And not every customer uses every tool on that. And, you know, we we don't make the hardware but we were one of the largest resellers for handhelds in the world. And so we you know, you want this handheld, you want that you want this reader, our job is to make sure we address your business problem, not that we are pushing something that that we happen to make. And it's anyway, it's uh, you know, I think it's a good model, we've spent a lot of time building it and refining it and making every mistake that you can, and learning from it. And but what's most important to us is watching a customer go from, you know, we increased our sales by 3%. Yeah, okay. Because our availability went up b, we reduced our inventory by 10%. I mean, these are, you know, you never hear the AI I hate to I hate to beat on the AI teams, but you never really hear the AI teams give you a hard ROI. And but you know, this is this is hard benefits.

Yeah

That you can put you can sink your teeth into,

For sure. So couple of last follow up questions that I have. The first is if somebody's interested in getting a hold of somebody at SML to have about this technology. Do you have a website or contact that you steer them? And what would that be?

Yeah, so you can go to SML hyphen rfid.com. And it'll point you to our item level RFID page and there's a number of places you can download. We just did a an exhaustive study of US and European retailers on the importance of inventory accuracy. And that study is free. You can download it you can reach out to us and ask for more information. We have offices in all over the world and Sweden, UK, France, Dubai, throughout the US. Our headquarters is here in Plano, Texas. We have offices in Hong Kong and Shinzen and so, you know, we're doing projects for the largest and some of the smallest retailers in the world. And our you know, at this point in time, the job that we're doing is trying to bring this item level world to reality for our clients.

Perfect. Perfect. Last question for you, Dean, what questions should I have I asked you, but I didn't? What's hot on your mind?

Considering considering you're representing the University of Arkansas, the question is, you had you one of the things we talked about early on, before we did this was, what would I tell a student? Okay. And, and more importantly, what would I tell the Dean of the University, and what I would tell the Dean of the University is, get out of the status quo, rheumatory management, okay, if you really want to provide value to your students focus on, you know, think about what was taught in 1975, 76, 77, about moving from that key coded point of sale to now a scan based trading. Teacher to teach your students work with clients, much like we've seen at Arkansas for years, and much like we've seen at Auburn, work on this item level world, because that's where the world is going. If you want to procreate opportunities in almost every retail segment, you know, focus on, you know, focus, I'm trying to do that at my alma mater, which is Virginia Tech and New Mexico State.

Okay

and so, but, you know, that's what I would tell the Dean of the University and the students, I would tell you, don't be satisfied focusing on how the existing retailers work. You have an opportunity at University of Arkansas to be around Walmart, which is on the cutting edge of what's going on.

Absolutely right. Absolutely right. And especially in light of the fact that Walmart's not satisfied with with apparel, they're obviously having some very, very aggressive expansion plans. It is here to stay for sure. I mean, it has, it has morphed, it's stored. It's stalled. It's moved on forward. And now suddenly, they got it. And they are saying, okay, boy, if it works for apparel, I think it'll work for most general merchandise, too. So it's exciting. It's almost scary, because the demand is going in this I'm kind of going is the supply there. Are we sure we are okay, there's always those kind of questions. But most people feel comfortable that we're whether we're within reason now, but if a couple of other companies kind of launch on this thing and go big, we may have some supply chain opportunities for sure. So, Dean, thank you so much. I appreciate your time. You're You're a good friend and a great colleague. And I've certainly enjoyed working with you and I just appreciate you taking time to give me some perspective from your, from your seat about the industry as well as you know how SML can help some of the retailers and suppliers out there.

No, I appreciate it, Mike, and I hope that it was the folks who listen in and the audience found it to be valuable.

Yep. Thank you very much. Take care.

See you, bye.

Thank you for taking the time for this epic discussion and special thanks to Mike Graen for leading the retail supply chain initiative. On behalf of the Walton SCMRC, we are delighted to lead with you as we learn, engage, address and develop all things supply chain to lead the world of commerce from Northwest Arkansas. Have a great day.

Transcribed by https://otter.ai