The impact of RFID-deployments on Out-of-Stocks in various apparel stores

The impact of RFID-deployments on Out-of-Stocks in various apparel stores

de Boer, Daan (TU Delft Mechanical, Maritime and Materials Engineering; TU Delft Marine and Transport Technology)

Negenborn, R.R. (mentor)
Pang, Y. (mentor)
Van der Zanden, Ivo (graduation committee)
Maknoon, M.Y. (graduation committee)

Delft University of Technology

Marine Technology | Transport Engineering and Logistics

2018-01-11

The retail market is changing rapidly. Many new offline, as well as online competitors, arrived. As a result, customers became more demanding. One of the critical elements is that customers expect a high variety of products that are always available. Out of Stocks (OoSs) in apparel stores result in lost sales in the short term and a declining brand reputation in the long run. For many retailers, it is therefore critical to minimise their OoSs. A high inventory accuracy is necessary to reduce the number of OoSs. This is practically unable to achieve with traditional techniques. Radio Frequency IDentification (RFID) has the potential to increase the inventory accuracy, thereby reducing the number of OoSs. RFIDs in the apparel retail, especially more sophisticated deployments are relatively new and specific benefits for various store types are unknown. This research compares different RFID-deployments for apparel stores regarding the reduction of OoSs.

An apparel store exists out of a backroom and a sales floor. Both can be seen as inventory systems, which have to be replenished to prevent OoSs. To achieve this, retail stores use replenishment systems, based on the recorded inventory. The problem in retail stores is that there are inventory losses, mainly due to internal and external theft, which are not registered. The result is an increasing discrepancy between the actual and recorded inventory. As a result, items that appear to be available in the inventory system are not. An effect is an increasing number of OoSs. RFID can increase the number of inventory counts to align the recorded inventory with the actual inventory. The following RFID-deployments are compared in this research: handheld readers, a robot reader, a combination of overhead and handheld readers and overhead readers. The deployments are linked to inventory counts that are performed once every seven days, once a day, partly continuous and continuous inventory counts. All deployments for various store types are compared to the original situation. To be able to analyse the different situations, a base model is constructed. The base model is implemented in a discrete event simulation model in which several parameters can be adjusted.
The Key Performance Indicator (KPI) to measure the performance is the OoS percentage. The following parameters are adjusted in the experiments to mimic various store types: 1) the ratio between the sales floor and backroom, 2) the average number of items per Stock
Keeping Unit (SKU), 3) the replenishment frequency. RFID significantly reduces the OoSs compared to the original store for each store configuration.

It can be concluded that for each store configuration, RFID significantly reduces the number of OoSs. The implementations hardly differ from each other for a particular store configuration. Regarding the results of this research, it does not matter which RFID-deployment is implemented.

RFID
Out-of-Stocks
replenishment
retail

http://resolver.tudelft.nl/uuid:34b925dd-6da5-414d-8ed4-d6f43bfefe6d

Student theses

master thesis

© 2018 Daan de Boer