Making Digital Connections to Improve Inventory Control

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By: Michael Kaufmann, Contributor

The global supply chain is evolving, with new challenges arising for inventory control operations. Many supply chain managers point to the seismic shift from B2B2C to B2C during the pandemic as the source of this change. Driven by this drastic change, the sheer number of parcels has increased a shocking 27% since 2020. The good news for those tasked with inventory control is that technology has moved forward to meet the moment and prepare for the future.

Inventory managers are not alone. All supply chain executives have been taking a step back to holistically examine operations. They are looking to implement technology and processes that enable resilience to address not only the current landscape, but to be future proofed for the next set of challenges. It is inevitable that supply chains will increase in complexity as consumer expectations for speedy, accurate delivery continue to escalate. The challenges for inventory control specifically, will grow as well.

To alleviate supply chain pressures, and better manage inventory processes, the industry is moving toward solving these challenges through a digitally connected supply chain. While it may seem intuitive to connect each link, the unfortunate truth is that the supply chain has been built silo by silo over time. While it is obviously impossible to physically connect the points along the supply chain, it is possible to digitally connect them. A digitally connected supply chain will meet current and future challenges.

Digital Identification at Source to Manage Inventory

Call it the power of “one.” When a digital ID is given to each item at source, it has a ripple effect all the way across the supply chain to the end customer and impacts inventory management throughout. A digital ID is created at the manufacturing facility utilizing intelligent labels such as RFID. An intelligent label houses the unique ID for the product that carries data and acts as a trigger for automation as that product moves through the supply chain.

Digital IDs on every product directly addresses the increasing volume and complexity of supply chain partners by allowing all operators to have full transparency on what is coming inbound and going outbound. The verification process is triggered by the digital ID at every touchpoint.

It is not a secret that a manual spot-check of inbound and outbound parcels is neither efficient nor accurate. On the flip side, by mass reading parcels, a pallet or truckload, a connected digital ID solution automatically spots the numerical difference and communicates the gap to the supplier. By digitally connecting products throughout the supply chain, retailers need not pay for items not received from suppliers.

The benefits in inventory control are clear for both the warehouse responsible for receiving orders and then sending them out, as well as the shippers who need to account for what comes into the trucks and what goes on the road. Further on, a retail store has accurate expectations for product count and arrival, enabling them to plan for operations from stocking to replenishment to promotions.

RFID and Digital IDs

The advantage of RFID is immediately evident in inventory control. People running around with clipboards and the errors that manual processes generate should be relegated to history. RFID accomplishes inventory control without a line of sight, much less a pencil and paper. Not only do intelligent labels allow operators to manage inventory faster and more accurately, data contained in the label flows through the entire ecosystem.

The objective of a digitally connected supply chain is to reduce the huge number of errors that happen across a multi-touchpoint supply chain and costs brands and retailers millions of dollars each year. Because inventory counts have been traditionally error prone with legacy manual processes, the cost benefits of RFID digital connections are significant.

Digital IDs created at source enable another essential attribute that aligns with inventory control: brand authentication. Although digital IDs can be assigned downstream, greater accuracy is achieved the further upstream the digital ID is created. Maintaining the chain of custody deters counterfeiting, tampering and entry of products into the gray market. There is also the issue of overproduction – a digital ID reveals where the unsold merchandise goes and how it gets there.

Digital Connections and Labor Shortages

Current labor shortages in supply chain operations will continue. In response, there needs to be a technology edit, not a labor edit. A labor edit will not be the way of the future, not only because the future labor supply is an unknown, but it is not efficient. Adopting a connected environment and automating processes is the clear path ahead.

In the past, supply chain executives relied on labor intensive legacy technology for inventory control. Removing the burdens of legacy technology leads to automation that focuses on collecting information about a product and utilizing that data to automate supply chain processes.

With RFID labels, no line of sight is required so products can be scanned passively by deploying automated reading technology, such as a tunnel placed along a conveyor belt or an overhead reader placed above a dock door. Whatever type of label is utilized, the result is the same: a true inventory count of every item as it travels to each subsequent touchpoint on the supply chain.

Inventory control operations can benefit from digital connections forged across the supply chain. It’s time to say goodbye to pens, paper and clipboards and manage inventory with all the tools that today’s technology offers. WMHS

Michael Kaufmann is Global Market Development Director – Logistics, Avery Dennison Identification Solutions. Avery Dennison Corporation is a global materials science company specializing in the design and manufacture of a wide variety of labeling and functional materials, including radio frequency identification (RFID) solutions serving retail apparel and other markets (www.averydennison.com).