By Jessica St. John
Here’s how COVID-19 has accelerated the implementation of the technology.
03 Oct 2021The success of a business is generated by the approval of its consumers and stakeholders. To stay trusted, businesses must meet the needs and values of their consumers. More than ever, consumers in many demographic groups are promote sustainability above cost, product, and location, and it’s the companies that recognize and adapt to this trend that are thriving. The global pandemic has only reinforced this determination, with 45 percent of consumers making more sustainable purchasing choices as a result of COVID-19.
The need for sustainability on the part of consumers is present throughout the supply chain. They want to know where the products they are buying are located before they reach them, as well as confirm that they are not having a negative impact on the environment. This is where Radio Frequency Identification (RFID) can play an important role in meeting and exceeding sustainability expectations.
In the past, RFID solutions were generally sought after for their ability to improve inventory accuracy. Yet retailers now also understand their role in monitoring and improving sustainability practices using RFID tracking capabilities. This is especially true in the aftermath of the pandemic.
Turning to sustainability during COVID-19
Among the many coronavirus-related changes the retail industry has experienced over the past year and a half, consumer sentiment is high on the list. Two-thirds of consumers say that sustainability has become more important to them in order to limit climate change, while 88 percent believes that reducing pollution is not a sufficient priority by industry.
As buyers increasingly want to get a better idea of the sustainability of retail supply chains, brands are now expected to provide access to this kind of information, including the origin of the product. Partly because of this demand, 65 percent of retailers plan to achieve full fiber-to-store traceability by 2025 and are increasingly turning to technologies such as RFID to make the product lifecycle visible and traceable.
It is estimated that 58 percent of retailers expect to adopt RFID for traceability over the next five years, with 13% saying they already have the technology in place. The added benefit of supply chain transparency is a company’s increased ability to ensure operational resilience, which the pandemic has shown to become more important during events causing global stress.
A trend towards transparency in the supply chain, combined with the fact that investors are prioritizing more and more companies that quantifiably fight against climate change, is pushing the industry to step up its sustainability efforts. It is usually the case that a painful momentum is needed to stimulate significant changes in society that result in lasting change. COVID-19 provides this pain point and spurs business activity, as well as investments in the direction of sustainability.
RFID makes fair inventory possible
The environmental and financial waste caused by overstocking was previously considered necessary as it enabled retailers to meet customer needs. This “just in case” approach has worked in fulfilling customer orders. However, the widespread adoption of RFID, driven by the need for increased inventory accuracy, can reduce this waste by decreasing safety inventory. Inventory visibility and accuracy allows retailers to reduce their total inventory while selling more, allocating products to stores in need and lowering safety thresholds. The latter increases the availability of digital goods and gives the product more chances to sell.
While the industry-wide challenge of excess inventory is widely known, few know the best course of action to address it, as there are a number of reasons why such excess can occur. Some key contributing factors include a lack of visibility into what is present in stores, the desire to have the right product readily available to customers, and insufficient retail store processes. Fortunately, RFID can and does help retailers achieve this goal. RFID and inventory visibility can also unlock information from the consumer’s point of view, such as allowing them to verify the provenance of a product.
While there will likely be some return to professional life before the pandemic, many of the new practices and trends are likely here to stay. Therefore, it is up to those responsible for the supply chain to take an active role in planning and designing the future of their organization. COVID-19 continues to create challenges, but the fundamentals of what it will take to compete after the pandemic have now come into practice sooner than expected.
In many cases, the seeds for change were sown long before social distancing and video calling became staples of everyday life. While there is no doubt a rocky road for many, supply chain organizations that invest in interconnectivity and transparency are the ones best positioned to thrive in the years to come.
Jessica St. John is the President of RAIN RFID Alliance‘s Sustainability Workgroup and the RFID Project Manager at Retail business. After earning her MBA in International Business from Texas State University, Jessica began working as a project manager in the RFID field. She is currently focusing on RFID deployments in North America. During her time at Nedap, she developed an interest in the use of RFID to help retailers achieve their sustainability goals, particularly in waste reduction. This led her to chair the Sustainability Working Group, where she works with cross-industry professionals to further develop thought leadership at the intersection of RFID and sustainability.