Tyco’s P2LU plan based on RFID technology promotes omni-channel order fulfillment strategy
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In the Easton City Center of Columbia, Ohio, this remodeled Macy’s department store will be unveiled around June 25th, and it is also the prototype for the reconstruction of many Macy’s future stores. The transformed Macy’s department store reflects the emphasis on customer service and the free personal shopping service called “My Stylist”, which will provide one-to-one customer service.
As early as January this year, Macy’s selected the RFID application of Tyco’s retail solution, and promoted the omni-channel order fulfillment strategy through a unique “Pick to the Last Unit” (P2LU) plan.
The challenge that Macy’s has encountered is the high inaccuracy of inventory. The data it provides shows that in the process of operation, the inventory error rate is as high as 25%-30%, and the average monthly inventory loss has reached 2%-3%. For a department store, this not only means a reduction in operating efficiency, profits are eroded due to high inventory and loss, and more importantly, it is difficult for such a situation to effectively carry out full-scale development in a highly competitive environment. Channel development strategy.
As one of the five largest department stores in the world, with annual sales of more than US$25 billion, Macy’s selected the TrueVUE RFID inventory visibility platform provided by Tyco. Messi uses all-inventory matching and establishes an entire enterprise in key product categories. The range of inventory accuracy meets the needs of customers.
This high level of inventory accuracy and visibility helps Macy’s to promote sales and provide customers with a better shopping experience.
As a customer-centric retailer, Macy’s omni-channel strategy focuses on shopping anytime, anywhere and in any way for customers, providing an intelligent combination of iconic brands and matching. The retailer recognizes that for a single order, the physical store may be their biggest asset, and basically uses the comprehensive combination of its own inventory to play a substantial and flexible “warehouse” role. With item-level RFID, Macy’s can focus on product matching and services, while using existing inventory to meet order fulfillment needs.
In order to advance this effort, Macy’s has launched a unique P2LU program for the omni-channel order fulfillment strategy. P2LU tries to ensure that the last item in any store is available for sale and easy to find for fulfilling orders. Generally speaking, retailers will not put the last item in a stock keeping unit (SKU) for online sales because they have no confidence in the accuracy of the inventory and are afraid that this item will not be found.
Peter Longo, President of Logistics and Operations at Macy’s, pointed out: “In the store, the last item accounts for about 15% to 20% of the inventory. This is a huge budget. It can only be reduced or not sold, and this problem can be Solved by RFID.”
Using Tyco’s RFID inventory solution, Messi Department Store conducted a P2LU pilot in the women’s clothing department and achieved impressive results. The sales achieved by the pilot stores were much better than last year. The price reduction of the pilot stores also showed an improvement trend compared with other stores. Macy’s now confidently believes that even if there is only one item left in its inventory, it can still meet customer needs.
Using single-piece inventory, Macy’s can help drive sales and profitability. In addition to regular promotions and first price reductions, the retailer reduced inventory costs by reducing temporary inventory requirements by one-third.
After the inventory visualization solution was launched in more than 800 stores, the inventory readiness of Macy’s has increased to 98%. Based on this, each store has achieved a 3%-7% growth in performance, and the store display has also been better. Implementation, and through the system docking Macy’s online store, strengthened the operation of online orders.
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