In early July, SCDigest reported that Nike CEO Mark Parker was touting the benefits of RFID for inventory management and rapid response fulfillment.
On a July call with analysts, Parker said that Nike continues "to build our capabilities in data and analytics, digital demand sensing and connected inventory to create a supply chain that anticipates and response to shifts in consumer demand quickly."
Supply Chain Digest Says... |
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| Nike revealed that it will begin to use RFID across footwear and non-licensed apparel this fall at stores to "dramatically improve" inventory visibility, accuracy and ultimately drive quicker in-store fulfillment. |
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Parker added that starting soon, Nike will embed RFID in nearly all of its footwear and apparel, which translate into hundreds of millions of individual products.
"RFID gives us the most complete view of our inventory that we have ever had. It's quickly becoming the most precise tool in our arsenal to meet an individual consumer specific need at the exact right moment," Parker added. "We will go live with this capability in Q1 [Q3 on a calendar basis ] across 20 Nike Direct stores and then continue to scale across the fleet."
As a result, Nike then said its understanding of what's selling will also continue to inform its "express lane," which is already driving higher full price sales and better gross margins. (The "Express lane" program involves faster deliveries direct to consumers.)
Parker added that smarter use of data is also allowing Nike to provide extra services that add value to its most engaged consumers.
SCDigest asked at the time: Could Nike's plans be a turning point in the slow adoption of RFID in the supply chain?
That question has become even more germane when Nike announced two weeks ago that it has acquired Celect, a predictive analytics firm founded by researchers from MIT to accelerate its ability to match inventories to consumer demand.
Celect's says its Cloud-based analytics platform enables retailers to optimize inventory across an Omnichannel environment through what it calls "hyper-local demand predictions."
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"As demand for our product grows, we must be insight-driven, data optimized and hyper-focused on consumer behavior," said Nike COO Eric Sprunk. "This is how we serve consumers more personally at scale."
In a blog post, Celect's CMO Andrea Morgan-Vandome wrote that advancements in artificial intelligence and machine learning will enable retailers and others to have a more accurate and local view of demand across channels to choose the best fulfillment strategy based on such factors as inventory positions, forecast demand, capacity constraints, shipping costs, and delivery commitments.
For example, a retailer or consumer goods company could identify that a given retail store is seeing strong sales for a given set of SKUs and would not be able to cover expected walk-in demand, especially if that store was also fulfilling online orders.
Morgan-Vandome wrote that, "For each fulfillment decision that needs to be made, advanced optimization can account for the overall margin profitability and customer satisfaction by identifying the immediate payoff versus the long-term opportunity cost - instantly."
To make all that happen, inventory accuracy must be at a high level, or else the whole concept simply cannot work, and store level inventories have been notoriously error prone, often with accuracy levels of no more than 50-60%.
RFID has proven to significantly improve those store-based perpetual inventory levels, and hence becomes almost essential to successfully execute the kind of optimized decisions Nike is planning.
On the analyst call, Nike revealed that it will begin to use RFID across footwear and non-licensed apparel this fall at stores to "dramatically improve" inventory visibility, accuracy and ultimately drive quicker in-store fulfillment.
The Celect purchase builds on Nike's acquisition in March 2018 of Zodiac, another predictive analytics platform that forecasts the behavior and lifetime value of individual customers and customer segments.
What do you think of Nike's strategy? Is RFID a necessity to pull it off? Let us know your thoughts at the Feedback section below.
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