Managing Innovation with Design Thinking

The story behind the Autonomous RFID Inventory Tracking Robot . . .

Part I: Inspiration for Design Thinking

first came across “The Art of Innovation” by Tom Kelley in 2008 and immediately fell in love with it. That was a time I was feeling the desire to experiment within the limited opportunities I was presented with. It was a short, yet inspiring read and resulted in me following IDEO much more intensely. Many years later “Creative Confidence” and “Change By Design” provided further impetus to try and practice Design Thinking in managing our innovation processes and strategies.

Around the same time, I got introduced to a project what is known today as the, The RFID Autonomous Inventory Tracking Robot. The challenge was to help retailers take store inventory as frequently as possible for Omnichannel Fulfillment, incurring as less cost as possible.

Confronted with these multiple challenges, I was naturally inclined to experiment with design thinking.

This project provided a real world opportunity to put all what I had read and tried over the last few years into practice. While the journey is still in progress, this is an attempt to reveal a bit about our approach to designing a solution, which will dramatically change a very central facet of modern day retail inventory management in supply chain.

I pen this post only as a precursor to a series, which will elaborate how we incorporated design thinking into our work. Due to the nature of the work involved, I would try to only reveal things strictly related to the topic and not deviate too much.

Part II: Empathizing with the Customer

Design thinking puts the customer right at the epicenter of product design. As a designer, you empathize with the customer and make design decisions. The other key facet of design thinking is Integrative Thinking. One would not empathize with a customer without integrative thinking. Integrative thinking is “Big Picture” thinking. The ability to look at the problem at hand, from multiple dimensions.

The more you look at a problem this way, the more opportunities you uncover to add meaningful value to your customer.

A New Normal

One of the first things done was to understand the larger problem context. Retail inventory management has become a major challenge for many retailers.

In particular, selling apparel is fast becoming commoditized. This is happening because customers are getting used to a new normal, “Get more for less”. They want more value, a better overall experience and satisfaction from shopping. At the same time, they do not believe in paying more for that. They want to order goods and return them if necessary and get refunded. They want free shipping and off isle prices.

However, like everything else, this did not happen overnight. But it is questionable whether retailers saw this coming, as they should have.

Annual Inventory Turnover (how many times you sell your complete inventory within a year) is declining for many apparel retailers. Also, many of them report slow moving inventory and inventory gluts. Customers complain on inventory accuracy and that they cannot find the products they want, in-store. From these findings, one could determine that Retail Inventory Management is a pain for the retailer as well as customers.

RFID in Retail Inventory Management

Radio Frequency tags are the most widespread approach we have today, for item level tracking and information visibility of an apparel. More and more items are source tagged (tagged at the point of manufacture). With high volumes, tag prices also tend to come down to couple of cents USD.

For many retailers, RFID tagging is not a question of IF but WHEN. RFID handheld readers are the most commonly used approach to capture the inventory. These are operated by either store associates or dedicated trained people from inventory service companies.

The concern for retailers is the increasing cost of labor to repeat inventory counts frequently. Then you have ceiling mounted fixed reader systems, which can provide real-time tracking inside a store. Unfortunately, the cost of covering a large store with fixed readers is huge.

So there must be another way to achieve this.

Our solution was to look for this alternative. It is clear that the new approach must have a high degree of automation to reduce human involvement and also must cost significantly less. This is how the need for a smart inventory robot came about and as we expected, there are already robots claiming to achieve exactly this.

That begs the question, why aren’t retailers adopting these solutions?

From our observations and interactions with retailers, we identified the following as concerns: