Host Mike Graen is joined by University of Memphis President, Dr. Bill Hardgrave, to discuss the state of omni-channel in 2024. Topics of conversation in this part 2 episode include:

• RFID adoption and inventory accuracy in retail.
• Inventory accuracy and its importance in retail.
• RFID technology and omni-channel retail.

Well, The fascinating part to me is, and

we're not going to call out specific retailers, that's not

appropriate. But here's the soundbite. For me, 74% of

consumers are going to see if the products available online.

And 17% of the retailers actually expose their audience.

What would be interesting as a research project for somebody in

your student organization, which is, how many of them are

actually leveraging RFID. So they should be up in the 95%.

But they still don't expose their own hands. And why don't

they do that?

Well, I will, I will tell you this, that of the

RFID, adopters 96% offer BOPIS ship to store and the omni

channel elements are characteristics versus only 6%

of retailers who don't use RFID. They don't have they don't offer

BOPIS and ship from store and those type of things.

So I would argue BOPIS forget about inventory

accuracy and RFID. BOPIS, JAXA interview, don't do that in

today's retail environment. You're done.

Oh, I agree. But if you think about why wouldn't

a retailer offer BOPIS, is because they don't have

confidence in their inventory? Right. Right. I mean, they don't

have any confidence.

Yeah, what I'm asking is a different question.

It is. We we know there are big players out there, especially in

the apparel, I mean, we've we have a received received, 100%

saturation, versus a big chunk of the retail industry right

now. Especially the major players out there that are

already using RFID. For apparel. Yeah, but they still don't

expose on hands to customer.

Yeah, right. Right. And they absolutely

should. Right. No. And

I think I think they should as well, I think the

problem is, and we'll talk about this here in a little bit, I

don't want to jump into it now is they may say I have four of

those, but they may not have four to sell. So two of them. We

talked about this example before. Two of them, let's just

say if it's a television set, two of them. One of them could

be in the backroom and the claims department, we do have

it. But it's not available for sale because the customer just

returned it. Right. The other one is hanging on a wall showing

customers. Yes, we have it. But unfortunately, it's not

available for sale. So just exposing how many I have could

give a false expectation to a customer saying I got three I

can go get them. No really, I only have one available for sale

and that ones moveing around the store right now in the customers

cart somewhere. Yeah. So we got to figure out how to solve that

problem before you expose inventory. But to me, of the

retailers that are using RFID, how in the world do you start to

share the actual how many? I mean, Target does a great job,

only three left great marketing people only two left, come pick

it up now. Right? Right. And they're very confident to be

able to do that. I'm just surprised that other retailers

are not not adopting that methodology.

Well as am I right? And they're going to have

to and and you're right about the visibility to that and you

know, you know, if not youre doing buy online pick up in

store in you know, unless Let's shift our thinking of that buy

online pick up in store. Normally, what happens is when

we go out and let's say you're going to buy that TV, she is you

go to the website, you say Oh, this is the TV I want. I will

buy I'll pick it up in the store and the retailer, the good ones,

and most are doing this now. They say okay, we'll let you

know when that when that item. Right. Yeah. And so if it shows

that they had four and then they go look and go, Oh, man, this

one's This one's not ready to for sale. This one's on the

wall. You know, and customers just picked up the other two,

darn, we don't have any for sale. Well, they can let that

consumer the consumers gonna be very disappointed, because they

can't pick it up. But but I've started seeing retailers do this

lately, where they come back and they say, You know what, we

don't have it. We will ship it to you and get it there to you

know, tomorrow in major metropolitan areas. They will

say, we'll get it to you today. You were going to come pick it

up. We can't get it to you because you won't go pick up in

store. But we'll get it to you today. Or hey we've got another

store that's in another part of town that has it. Do you want to

pick it up there? So they're doing a much better job. Some

not all, some still just you just get an email that says I'm

sorry, we don't have that product in stock. And as soon as

you do that you if this is a national brand item, you've lost

that customer. Yep, yep.

So we've got a question for from the audience,

and I think is a really fair one to kind of talk through this,

Ursula has a question, if inventory accuracy is so key,

why is it so hard for retailers to prioritize it, in fact, is a

task that gets deprioritize many times? Is there a better way to

sell the importance of inventory accuracy to the C suite? Maybe

connect it bigger to the bottom line? You speak, you speak to a

lot of C level, folks? How do you get them? Because inventory

accuracy, it's sort of like, it's just one of those KPI that

feels like it in process thing? How's that gonna affect my

sales, etc. But it's a critical part of, of doing it, how do you

get the right level of people get excited about what they

think is probably an in process measurement, which is inventory

accuracy.

You know, Mike, I've been evangelizing inventory

accuracy for, you know, 15 plus years now. And, you know, you

think it's almost common sense. And I appreciate the question,

because it is like, well, if it's so important. Wow, why

wouldn't a retailer want high inventory accuracy there, and I

have the opportunity to bid bite it in to talk to C suite folks

about inventory accuracy. And I'll, I'll relate to you. One,

and again, where I'm obviously not gonna mention any names. And

I knew I was coming in to talk about inventory accuracy. And

this was the CEO, the CFO, the head, person in store store ops.

And I mean, there are eight or 10 people in the room. So we're

going to talk about inventory accuracy and the importance of

that it and so I'm about halfway to talk about it. And the CEO

turns to to this to the head of supply chain in over store often

says that, what is our inventory accuracy? And the person said

99%, sir? Well, what they didn't know is that I actually sent a

team from the lab to audit stores. Before I went had this

meeting, and their inventory accuracy was south of 60%. So

first thought is, well, is that person lying to the CEO? And the

answer is no, it is the it's the way that they have been

measuring inventory accuracy. And the way that they ought to

measure inventory accuracy. So when I talk about inventory

accuracy, I'm talking about accuracy at the SKU level, right

that every so if somebody wants this t shirt, in white V neck of

this size, then that's a SKU. And if either you have it or you

don't, it's either accurate or it's not right. But the way many

retailers still measure this is a measure by category. And they

say they measure actually from a financial side in some cases,

but if not the financial side, they just measure it from from

each as they say, You know what, in the t shirt category, we

should have 1000 packages of T shirts. And we have 990. So

we're at 99%. Right? And that's just not inventory, accuracy,

because that's not consumer level inventory accuracy. Right?

Right. The consumer, they don't care that you have 990 packages

of T shirts, they care that you have this white V neck in a

large. Yep, that's what they care about. And so part of it

is, is a shift in the way that retailers have been thinking

about that, because, you know, some retailers measure on the on

that category level, some measure just on a financial

level, they say, oh, we should have $10,000 worth of T shirts,

we have $9,900 worth of T shirts. And so therefore, it's

99 percent, we have to shift that focus that goes back to the

areas of retail, the consumer is in charge. And we've got to

think about the consumer facing SKU and getting that inventory

accuracy up so that we can get visibility and accuracy to the

single unit. That's the key. Yep.

And I think Ursula, just to build just to build on

that. It is incredibly insightful, because I would

said, consumer facing in, it's at the store item, unit level

kind of thing. So the first thing I do is I go find some

examples where you don't think it is to debate that number

because usually it's not somebody trying to deceive the

CEO. Usually it's Hey, we're at 99% accuracy and Dr. Hardgrave

you and I worked with a one retailer that they they would

take 47 different but if it's on a Tuesday and it's after three

o'clock, then what's this? Oh, we're at 99% accurate? No,

you're not you put a bunch of caveats in there. But when you

look at it through the consumers eyes, the shoppers eyes, you're

not 99% You're disappointing your customers all the time. And

by the way, just just for a quick soundbite, it's amazing.

Forget omni channel for a second, there are three pieces

of data that you need to know when you need product from a

warehouse to a store. How much do I have? Which is my on hand?

How much do I think I'm going to sell? Which is my sales

forecast. If I ordered today, when will I get it? That's lead

time. Yep. Well, two out of three of those are probably

wrong. The on hand accuracy. And the sales forecast are probably

wrong. So they got three numbers, two of them are

probably wrong. It's amazing. We got as much stuff on the shelf

as we did. And that's why we got full back rooms, all kinds of

stuff, because we don't want to, we don't want to run out of

product. But it's really because we got a fundamental

replenishment, the data garbage in garbage out when you when you

feed bad data and things bad things happen. Yep. All right.

Let me let me change gears a little bit. Let's go back to on

hand accuracy is important. Unfortunately, one of the things

especially when we get especially when we get outside

of apparel, there are factors that determine whether a product

is available to sell or not. Okay. The example that I used is

the televisions, I've got a television on the wall, I've got

a television on the display showing a video, I've got one

backing claims, etc. So yes, I have three televisions, that

specific store item has three, but none of them are available

for sale because they're all preoccupied for something else,

I want to ask you a little bit about something that I call item

serialization. And I'll share my screen real quick. For those of

you who haven't seen it. I think this is a really important kind

of topic that we talked through. Not this is not a serialization

conversation, because we've had several of those before. But the

basic, UPC is a UPC, which we've all seen for years. It's UPC,

quantity. UPC is this, and I've got 24 of them. Great. Thank you

very much. What RFID does, and what, frankly, GS one sunrise

2027 does is start to leverage serialized data. So it adds a

UPC to it, it adds a unique serial number, those two

combined together are actually the itemized serial numbers. So

I don't just have a UPC and a quantity of 50, I have 1 of 52

of 53, I have the ability to provide to assign attributes and

selling capability to each one of those items. I know we've

talked about this forever, Dr. Hardgrave, but I don't think

it's I don't think it's inappropriate to continue.

People who are implementing systems have not have got to be

able to capture and maintain that lower level of inventory in

serial numbers and not just get the really easy thing, which is

Oh, I found 50 of those. Let me just put on hand to 50. Talk to

us about the with the role, I'll stop sharing my screen talk to

us about the role that this item serialization which is

inherently part of RFID the way it works, and how is it going to

continue to allow retailers to be able to expose their on hands

to customers?

Yeah, you know, and that's, thanks for thanks

for bringing that up. Because that really is the key. And, you

know, again, although I've worked in RFID, for a long time,

you know, when you when you parse RFID, right, RF is the

technology side ID is really, you know, separately, they

don't, they don't mean much you put them together, you know,

RFID is just a data carrier, it's going to carry that serial

number. But if you don't do anything with that serial number

RFID can't really help you. And and you've got to have that

visibility, you know, from this host of point of manufacturers,

you can you get that that item level down to the individual, we

talked about visibility to that single unit. That's where it

comes in with inventory accuracy, right? Because now I

know exactly what I have. There's differentiation even

among, you know, if I've got 50, white V neck T shirts of size

large, I've got 50 different serial numbers, because we I

know exactly what we have in those. Here. Here's what

concerns me, Mike about serialization in where we're at

right now, and it is contributing to our inventory

accuracy issue is even some of those that are using RFID. Their

systems are not set set up to use the data, their systems are

all based upon UPC. And so what they do is they get RFID. They

they read all this data, then they collapse it into the UPC.

As soon as you collapse that data, you've lost all the

richness of the serial number. Now, that's easy for me to say

because and harder for retailers to do because all of their

systems are built on that UPC level. All their master data is

built around that and to take a shift from that to civilization.

That's a huge, huge systems change. You think about

everything that it impacts right where we used to look at things

that ups now, our UPS ups

now will appreciate they appreciate the free plug

good job. And don't do it. You live in Memphis Good job, good

job.

Let me get make sure I mentioned FedEx. But, but

they lose all that richness. And, and that's, that's one

thing that I see that retailers. Really we're not thinking that

far ahead of, Oh, okay. Well, now I've got this serialized

data, how do I store it? And what do I do with it? And you

know, now we're seeing retailers well let me start over here. And

it'll be separate from my system. And we'll collapse it

and try to use it. And it gets very convoluted. I think, Mike,

that contributes to part of the issue that we're having.

Well, and I think the other part, and here's the

unlock, it's hard, because all of our legacy systems are built

on UPC quantity, everything, entire supply chain or EDI

platform, everything is built on UPC quantity, here's the here's

what's going to unlock that what's going to unlock that is

the additional use cases beyond the store, I think will help

that this whole opportunity for the elimination of claims or the

dispute of claims of product authentication, you ship me Nike

product, no, it's not a Nike product its rip off product.

Those are the kinds of problems you can solve. When we and we've

got this great platform called EPCIS, as part of the GS one

standards, that's been around for over 20 years, we've never

really, in my opinion, we've never really taken advantage of

it. And we did the chip project with Auburn University while you

were still there. And we're still talking about trying to

create a platform that allows us to be able to share that lower

level of serialized data across the supply chain to solve these

big problems. It's hard, it is really, really hard lift a hard

lift to do. But it we're gonna get there, people are going to

figure out how to get there. But to me, that's how you stop the

summarize it up and say UPC quantity, because I need that

information to dispute these claims that it's going on in

this authentication. And honestly, people like

pharmaceutical and food etc. They leverage that RFID

serialized data to do a lot more than just UPC quantity. So yeah,

we'll get there. It's just it's been a painful process to try

and get the break back, because everybody just wants to make the

easy UPC quantity and be done with it. Right.

Yeah, the one thing I'm talking to GS one about,

Yeah and I agree. And I take one, one

brightspot. And it encourages me though is with sunrise 2027,

right into introducing that, at the point of sale, via sale, you

know, a scan, you know, where you can scan it, and using

existing scanners to be able to do that. I'm very encouraged,

because that will help drive that serial number to check out,

then you when you marry that with an RFID tag on there that

gives you that visibility all on supply chain. I think that that

will may be the catalyst Mike that will push people to say

hey, we've got to have serialization. Now. Look, again,

it's, as you said, it's a heavy lift. I mean, it's to go from

your systems being UPC to serialized data it's a heavy

lift. But I think that's that sunrise 2027 is going to help

companies go there. And and start unlocking this. And you're

exactly right about all these other unlocks from from shrink,

you know, to gray market to black market to all all these

things where you get that unlock with zero that you can't

serialize information that you can't get with UPC.

maybe you could help me plug this as well. I think in

addition to the EPC symbol on every RFID enabled product, we

need to have a 2d barcode representing that unique serial

number on it as well. Well, why would Ryan want to do that?

Because you know how long it takes to do those things. But if

I get rid of the UPC on that label and replace it with a 2D

bar code, people can start reading the serial number at

point of sale without trying to install RFID readers that we

know it's gonna get over reads and mis-reads and all that kind

of stuff. Yeah, Kyle, just asking question is that it's not

really an RFID. It's not really an omni channel question. But I

think it's fair, what are the limitations to RFID metal

fixtures and metal items interfere with the accuracy of

scanning the tags and your response as you used to lead the

Auburn RFID lab is,

you know, we know how to we can't we can't

defy the laws of physics, but we certainly know how to, to use

them and get around some of the things that are obstacles and

you know if we were having this conversation in 2003, then we

would say, well, that's, that's a tough one, let us figure it

out. But we've done this long enough. Now we know, you know,

and the lab does a great job of grading and certifying tags,

right on different products and different uses. So you can be

rest assured that the tags work. We know that, you know, if

you're on metal shelves around water, that how you need to

merchandise that product, and you know, what type of readers

you need, and so forth. So, where, you know, 15-20 years

ago, that was a big issue. And we spent a lot of time then at,

you know, answering the question, does the technology

work and under what conditions, we now have enough intelligence

in the industry, where that is a relatively minor issue?

I agree with you. And by the way, let's build an

add on to that, not only metal, you know, we've had examples,

and I won't tell you, the retailer, but we were working on

a project with RFID for automotive tires, right. And

some of those tires are held in outside the store, in a big

metal container. And people are like, well, this will never

work, I go, No, it's gonna work better. You go inside that metal

container or do an RFID scan, it'll take 13 seconds, because

it's gonna bounce all over the place, you get everything before

you even walk up and down the aisle. So you can leverage metal

for good in this case. The other one, which is really issue is is

liquids. And, you know, people at the Auburn labs synthol. And

some of the some of the various RFID manufacturers are coming up

with very creative ways of like putting the RFID on the inside

of the metal cap. So you don't have to read through the liquid,

but you can read through, you know, read the inside of the

cap, and there learning how to put RFID tags on metal spray

cans, as they're leveraging different approaches to thinking

outside the box to solve some of these problems. So I don't I

don't sense a day, in my lifetime, anywhere where an

entire big mass merchandisers is going to be 100% RFID tag, I

don't see this tag in watermelons anytime soon. I just

don't see it could be wrong. But I think there's some product

that just really doesn't make sense, either. From an RF

standpoint, physics standpoint, or just from a price standpoint

doesn't make sense. But But certainly, you know, we've got

more and more people that are solving more of these problems,

for sure. Cool. So we've got, we've got about five minutes

left, I want to I want to kind of give you the floor. What's

your what is your time, if you are going to give us kind of one

or two omni channel priorities can be RFID related or could

just be omni channel? What are what's the messaging to the

retail supply chain folks out there about what we have to be

looking at and focusing on to make omni channel successful?

Well, and you know, Mike, we really talked

about it. So I'm just going to repeat that just importance.

There's two fundamental things and, and I'll send you back to

the RFID house, or the omni channel house, right that it all

starts with inventory accuracy, right? It all starts with

inventory accuracy. And if you don't have inventory accuracy,

as the foundation for your Omni channel, house, your omnichannel

house is not going to stand. I mean, you can try to stand it

up. I'll give you a quick example, Mike, and I know we're

running out of time, but we had a we had a retail we're working

with who their CEO said, I want us to be on this buy online

pickup in store. So we they brought the lab in we talked to

him about hey, you got to do that you got this, you got to

get to inventory accuracy, you got to go use RFID. To get to

that level, you got to take inventory, you know, and then

the, you know, on this case, probably once a week or so, you

know, to get that get the good insight. So we talked to them,

and then we didn't hear anything back from them for a while. And

saw them and said hey, what happened? Oh, we're BOPIS we got

our BOPIS system up and going. I said really, what you got, RFID?

No, no, we got it without RFID. And I said, Well, how'd you do

that? Oh, well, we just we figured it out. And they said

you know what, what we do is that, you know we're not really

sure what we have. So we build in a buffer. So we're not going

to show you inventory on on an item if we have less than four

items. So if we have less than four items, you're not going to

see it as a consumer that way we kind of protect that consumer

don't want to come to the store.

So the solution was the solution was to hide

inventory. There are solutions.

Many retailers do they'll build in above racks.

They don't know so but this particular one, this is the

hilarious part of this particular one is they build in

a buffer of four universally across all products. Their

average SKU depth was two. Oh. So if you go to their website,

there was like a 1000s of items that they had. There was a

handful, literally a handful of items. But the CEO wanted to

step it up, cause we're in BOPIS that's. So you've got to have

the inventory acuracy, you've got to have that visibility to

that individual item, which means serilization. So the two

the two keys, inventory accuracy, and serialization.

Now, I want to I want to read to you something, Mike, if I may.

Sure. Because we've been talking about omni channel. And, you

know, it's funny how we, we start getting comfortable with

with a term like omni channel and what it means right, you

know, product anywhere, anytime, any place, seamless, you know,

view one seamless view of the customer. Well, I want to read

to you a printout here. This was McMillan from Walmart at CES,

talking about adaptive retail. So that so I don't know if

Walmart coined this somewhere, they've been using it as

adaptive retail. He described it as people led that Walmart is a

people led omni channel retailer dedicated to helping people save

money and live better. Perfect. And then the Walmart CTO, Suresh

Kumar went on to define what adaptive retail means, because

Because Doug McMillan had mentioned it. And here's here's

his definite here's Suresh definition, shopping today is an

offline and online experience. And Walmart is bringing the best

aspects of all channels. This is adaptive retail, every

engagement is interconnected, frictionless and exceeds

expectations. We are not thinking separately about e

commerce or in store. We are designing one adaptive seamless

experience. That's omni channel, by the way. I'm not sure. But

you know, but now we've got a term out there adaptive retail

that's, you know, that we'll see if it catches hold. I wanted to

throw that out in case any of our listeners today are you know

go well, what does adaptive retail mean? Well, that's it's

really another term for omni channel and Suresh. His

definition of adaptive is a great definition of omni channel

and what we're trying to accomplish.

Absolutely. Absolutely. Actually part of

Doug's new vision statement that I didn't hear you say, people

led omni channel and tech powered, which is a really

important piece of that, which is, you know, retailers like

Walmart are spending an enormous amount of money on tech, via

RFID, and things like that. And they've been very public about

it. So I'm not sharing anything out of context here, that that's

going to be a key unlock to getting their inventory

accuracy. So they can do that kind of stuff. Because you can

build a great omni channel platform, but if you feed it bad

data. Garbage in, garbage out. We learned that back in its

early programming days. Dr. Hargrave, I can't thank you

enough for taking time, especially when you're in

Washington, DC. Go in and take care of your day job. We

appreciate your leadership so much in this, I believe you're

going to be speaking to the RFID journal as well. So if you have

a chance to go to RFID journal, please say hi to Dr. Hargrave.

Any closing thoughts before we wrap it up?

No Mike, I just appreciate you having me on.

Thanks for you know, continuing to to evangelize inventory

accuracy and RFID and serialization because we you

know, retail is getting better we can make it better. And I

appreciate all your leadership in the industry. Thanks for

having me Mike.

Take care everybody. Thank you.