Inventory Visibility Is Just as Important to Restaurants as It Is to Retailers Right Now. That’s Why RFID Investments Should Become a Priority.

As I highlighted in my last blog post, COVID-19 has been a catalyst for quick service restaurants (QSR) to pivot at a lightning pace to protect customers and staff. They’ve been rolling out new apps and contactless payments and adopting smart ways to reduce queues and ensure social distancing. Though the initial goal was to make operations safe and sustainable in the near-term, it’s quickly becoming clear that some of these innovations are here to stay.

In fact, the positive impact that these new technologies have had for food and beverage providers has motivated additional investments. Many are calling my team asking: “what should I be thinking about right now to help my organization adjust to the demands and challenges presented by the current situation while also preparing for future growth opportunities?”

In most cases, the conversation automatically shifts to Radio Frequency Identification (RFID).

With RFID, smart tags are attached to items such as pallets or boxes that need to be tracked during deliveries as well as individual items in stores such as sandwiches, perishable food and drinks. The tags emit a digital signal that can be read by fixed RFID readers installed on premise or handheld RFID readers used by staff. In effect, the tags give items a digital voice: a voice that allows you to see an item’s location and status at any time and pretty much anywhere.

The retail, warehousing and manufacturing sectors have led the deployment of RFID in recent years as they looked to enhance inventory visibility across online, in-store and mobile sales channels.  However, we also see RFID as a viable way for food and beverage providers to gain the operational visibility they need to see and manage key operational areas – especially inventory – both in store and across the supply chain.

Inventory Insight

According to The 2018 Complete Guide to Restaurant Inventory, as many as 60% of QSRs do not run regular stock checks. Those that do conduct them tend to do so manually in a manner that’s unnecessarily time-consuming and prone to human error. Staff typically use paper and pen to document actions related to receiving, inventory counts, shelf replenishment and warehouse liaising. And communication between staff about the progress of inventory checks is often verbal and carried out during shift changes – when some staff are only just walking through the door and others are in a hurry to leave.

As a result, QSRs are spending around $1.5 billion annually on inventory checks, and accuracy rates are still running at only 65%.

The cost figure may seem high, but it’s actually not when you consider that the nature of the process can mean that inventory checks are out of date as soon as they are complete. In fact, we know one organization that runs three stock checks a day just to compensate and try to keep up with constantly changing demand for the large volumes of food it handles. And a leading coffee chain estimates that its staff spend 23% of their time on inventory-related tasks.

Diverting teams in this way has a detrimental effect on a range of core activities. Staff engagement can be impacted because they’re unable to fully focus on their craft and customers, while time spent on administrative tasks could be more usefully invested in value-added activities such as training. What’s more, a lack of inventory visibility can cause empty shelves that may prompt customers to leave the restaurant. The simple remedy for this is to order more than needed. But that comes at the cost of excessive waste and high overheads.

There are COVID-19 implications here, too. Because of all the to-ing and fro-ing between the front and the back of the restaurant to carry out manual checks (one customer we know has found that this leads to 22 extra trips), there’s an increased risk of colleagues coming into close proximity with each other.

In our always-on, data-driven world, a better solution is needed to improve inventory accuracy, accelerate the stocktaking process and enable staff to spend more time looking after customers. This is where RFID comes in.

RFID to the Rescue

The use of RFID to manage and order stock can achieve efficiencies across all stages of the supply chain. In distribution centres, boxes or pallets with RFID tags attached to them can be automatically logged into back office systems by fixed RFID readers.

In the restaurant, smart inventory systems can use the data collected from RFID tags to send messages to the handheld computers used by staff to update them when shelf inventory is running low. Orders can also be automatically triggered and sent to distribution centres if the restaurant needs to be restocked. And, rugged mobile computers like this one, which are equipped with RFID readers and specifically designed for use in hospitality environments, can enable colleagues to record stock levels quickly and accurately.

Optimizing Processes

In most of our current discussions with QSRs, we are looking at how we can help them better streamline the inventory process. The typical goals of these projects, which you may wish to think about for your business, are to:

1. Increase associate engagement scores and customer net-promoter values.
2. Positively influence a range of business metrics by reducing waste, decreasing the cost of goods and minimizing transportation costs.

These are ambitious targets. But our experience in the hospitality and retail sectors tells us that they're achievable via RFID. For example, RFID makes it easy to:

• Achieve accurate inventory: With RFID, our retail, healthcare, logistics and manufacturing customers report that inventory accuracy can run at 99%. Similar figures are achievable within the QSR environment.

• Streamline goods-in: Based on a consignment of 150 boxes, deliveries usually take around two hours to process when managed manually. With RFID, where systems automatically register items into the warehouse or store, check-in can be completed in under 10 minutes.

• Accelerate stocktaking: The customers we work with typically complete weekly inventory checks in 15-30 minutes with RFID as opposed to the 2.5 hours or more it usually takes.

• Secure real-time visibility: Every outlet can have a continuous view over its stock position. 

• Enhance customer service: By replacing paper-based manual inventory processes with RFID-based automation, store colleagues are freed up to concentrate on looking after your customers.

• Reduce data entry: From our conversations with customers, we estimate that it takes most outlets around 80 minutes a week to enter inventory data into a desktop or laptop computer. As RFID instantly captures inventory information, it can eliminate this task entirely.

• Increase sales: With stock in the right place at the right time, customers should always be able to buy the items they want.

• Reduce waste and space: With more efficient management of inventory, you may be able to reduce the space set aside for holding stock. Critically, too, RFID tags can keep an eye on sell-by / use-by dates to help you graduate price reductions to increase sales and reduce waste.

• Improve safety: Fewer journeys between the back and the front of the restaurant means reduced contact between colleagues to help with physical distancing.

• Delight staff: We hear it time and again from our QSR customers that admin-based tasks such as inventory management impact staff motivation. With RFID, you can free them from the vast majority of this work. And the tasks they do have to complete are managed by intuitive mobile devices that are much more rewarding to use.

Get Ahead, Get in Touch

While RFID is just now starting to be utilised at scale in QSRs, the trajectory of the technology in retail suggests that it’s now on the cusp of being widely deployed in the food and hospitality sector too.

Many retailers have deployed RFID technologies that can track every item across the supply chain, into the warehouse and across the store – from the stockroom, to shelves, the dressing room and returns counter. The proven technology can similarly provide food and beverage providers with a real-time view over inventory from the edge of the logistics chain to every shelf edge. This insight frees your team to do what they do best – look after guests – while also helping to reduce your costs, increase sales and improve the customer experience.

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Editor’s Note

If you’re interested in how Zebra’s hospitality solutions can provide a real-time and total view over your inventory, our team will be delighted to help you. You can reach them here or visit our website for more information.