Myer puts RFID business benefits to the test
Myer, Australia’s largest department store, identified a key area of opportunity around Apple merchandise in its flagship store in Melbourne. As such it was decided to begin testing the benefits of RFID with a focus on two areas, inventory accuracy and stock take labour costs, with an aim to reduce stock loss and the cost of stock take labour.
During the financial year of 2016/17, Myer conducted six cycle stock takes and daily manual counts of Apple inventory in their Melbourne City store, with a significant labour cost associated with these activities. In addition to this cost, further losses were incurred due to shrinkage caused by a combination of theft and inadequate inventory control.
How Checkpoint Systems responded
Myer sought the assistance of Checkpoint Systems, an end-to-end solutions provider in loss prevention and merchandise visibility, to implement an RFID proof of concept in 2017. Checkpoint Systems, a division of CCL Industries, utilises GS1 standards which integrated well within Myer’s process.
The pilot involved applying RFID labels to all Apple merchandise in the Melbourne store once it arrived securely from the distribution center and had been checked off against the manifest (ruling out any inventory inaccuracies from the supply chain).
Each item was then encoded by scanning the Universal Product Code (UPC) barcode followed by the RFID Barcode to ensure the stock was uniquely encoded into the Myer inventory.
The merchandise was then placed in a secure reserve ready for selling. Once an item was sold and moved from the reserve, it was then retired from the inventory system using an auto retirement RFID reader, which communicates with the Checkpoint Systems software.
Stock take scans were conducted in the secure reserves every morning and at close of business daily. When discrepancies were identified, a manual reconciliation between Checkpoint and Myer data was performed.
The RFID programme was simple to implement and resulted in significant improvement to profitability for the Apple category. This was seen in labour cost savings through reduced stocktake times from 2.5 hours per day to 15 minutes and a large reduction in shrinkage.
Myer demonstrated that, with a little forward thinking and planning, inventory visibility and accuracy does not need to be a laborious task. Simple RFID labelling on Apple products is effectively 1000 times faster than line of sight cycle counting.
The Checkpoint programme delivered eight key benefits:
1. Managable implementation costs
2. No IT integration required to deliver business benefit
3. Significant inventory loss reduction with shrinkage reducing by over 80%
4. Reduced cycle count time and associated labour costs by over 80%
5. Daily inventory accuracy close to 100%
6. Fulfilment pick accuracy 100%
7. Simplified reporting on stock movement
8. Increase item availability to support sales
Guy Stone, National Retail Operations Manager, Myer, commented: “Standing up a basic RFID proof of concept is relatively easy and low cost. Once you can prove business benefits, you have the ability to reinvest savings into further POC’s and your RFID journey will be well on its way. I encourage all retailers and brand owners to look at what improvements their business can benefit from with the use of RFID technology.”