Macy’s has taken advantage of the RFID movement that has allowed them to improve visibility into the organization. RFID is known as a means for tracking pallets of product that come into a fulfillment center. Rather than tracing pallets and boxes, Macy’s has brought RFID to the store and considers it a method to help better serve their customers. Tracking products in the store allows for Macy’s to use its stores for potential fulfillment centers for online and phone orders. Because the cost of this technology is better and since it is easier to incorporate this type of tracking into a business, there is more of a reason for other retailers to incorporate this technology into retail stores. Improving the accuracy of inventory is a main goal of this system with Macys.
Macy’s senior VP of logistics and operations indicates that “inventory accuracy deteriorates about 2-3% a month. At the start of the holiday season in November, most retailers’ inventory is 60 to 70% accurate which means that as retailers go into their peak season they are the most inaccurate”. Retailers tend to take inventory after the holiday season in January and again before spring. Using RFID has allowed Macy’s to take inventory throughout the year and shows that inventory accuracy could be maintained at 97%. Macy’s uses this technology to scan items on the floor, allowing them to know what is being stored in the back so that it can be brought to the front for sale.
Macy’s is also working on streamlining the RFID process by implementing this with their suppliers. Since inventory accuracy has improved greatly by tracking in store, Macy’s feels it is motivating to their suppliers to invest in the technology since Macy’s is helping them generate more sales and create more efficiency. The senior VP of logistics and operations indicates that the cost of the tags outweighs inaccuracy, missed sales, and margin erosion when managing the inventory and implementing this system.