RFID and Digital Twins: What’s in it for retail?

According to IBM, a digital twin is a virtual representation of an object or system that spans its lifecycle, is updated from real-time data, and uses simulation, machine learning and reasoning to help decision-making. When translated into a retail landscape, digital twins can give a real-time view of what is happening in a retailer’s estate, for example with product flows and inventory positions, and can help retailers to get even better insights from their supply chains.

What is a Digital Twin?

Although digital twins have been around for a few years, the concept dates back to the first digital technology projects. A good example is NASA’s space exploration mission of the 1960s when each voyaging spacecraft was exactly replicated in an earthbound version.

In terms of more everyday practical examples, these include the digitization of machines for supporting maintenance and buildings becoming digitized to improve the efficiency of energy consumption. In healthcare, a digital twin of a patient or an organ allows surgeons and health professionals to practice procedures in a simulated environment.

Digital twins are also used for simulations for the driver and the car team on Formula 1 so that adjustments can be made to improve performance. However, for retailers, RFID data from products in-store is used to analyze purchase behavior and simulate the optimal placement of products.

RFID is (Just) The Carrier

These days, product labels in the apparel, sports and footwear industry can go beyond just sharing the likes of washing temperatures or cleaning instructions and can be enriched with an individual digital identity via a QR code or a chip. If products carry a unique identity, you can consider this a digital replica of a physical object. For example, it is like the product having its own digital passport.

A unique digital identifier has to be attached to an individual item to connect the physical with the digital world. If the digital identity is stored in an RFID chip, it is possible to track and trace products seamlessly. If an article is equipped with an RFID tag, it is easy to register it on its journey through the supply chain. RFID read-points gather data from the physical world and send it to (cloud-based) systems, where they are processed and used for additional data analysis.

From a wider perspective, physical things can be equipped with an additional sensor that generates even more data. These sensors can produce data on temperature, humidity or pressure. Simply put, anyone looking at the digital twin can now see crucial information about how the physical item is doing in the real world. This data can then be relayed to a processing system and applied to the digital copy.

Whats in it for Retail

On the item level, stock visibility is a key driver to a retailer’s success yet remains a top challenge. Still, stock information remains in silos, sometimes even just in emails or spreadsheets. Digital twins help retailers identify stock shortages and demand curves in seconds. Based on these insights, they can replenish stock, re-adjust placements of products and create targeted ads to minimize waste.

With the growing number of supply chain partners, regions and sales channels, it becomes critical for retailers to create a ‘single point of truth’. Unique identity should ideally be an EPC so that it’s possible to use the EPCIS standard. EPCIS (the Electronic Product Code Information Service) enables a standard to create and share visibility on stock positions in the supply chain or a value network. Global standards and open formats enable the partners to share provenance and transparency information with each other easily and securely.

Advanced Supply Chains Insights

By definition, ‘supply chain management’ means the cooperation between suppliers, customers, and other partners. As such, sharing data and insights among those partners is crucial to operating efficiently and the foundation to build trust. Tracking stock movements and status changes in real-time is especially important within complex supply chain structures, where products are regularly shipped and transferred between partners, warehouses, distribution centers and stores. Cloud-hosted data from each product’s digital twin can share real-time data on its provenance, material contents and journey through the supply chain. As a result, it is possible to create visibility where products come from, where they are and where they need to go.

Digits Twins Enable New Levels of Visibility

While RFID is by no means new, the disruption of the supply chains throughout the pandemic and the rise in sustainability demands has led to its use picking up momentum in the retail space. Something that will only continue.

Recent studies reveal that the RFID adoption in retail has strongly grown in response to COVID-19, with 16.9 billion RFID UHF labels being consumed in 2021 by retail apparel and shoes. The reason for this is that data-driven brands and retailers need actionable insights to ensure products are always available to shoppers.

Product labels with a unique identity – or a digital twin – have the potential to become the new normal with a variety of related benefits such as carbon accounting, supply chain transparency, and customer interaction. Digital identities, RFID technology, and an EPCIS repository are creating true and comprehensive stock visibility enabling demand-driven allocations, provenance insights, predictive replenishment and stock transfers to the location where products are really needed. This is only set to accelerate and advance, and will be invaluable to the retail industry both now and in the future.