How RFID enables end-to-end visibility through Digital Twin Technology

RFID and digital product identification are helping retailers close that gap by creating what is often described as a digital twin: a digital representation of a physical product that exists throughout its entire lifecycle. Instead of managing inventory in batches or snapshots, retailers gain the ability to identify, track, and understand every individual item from source to consumer. This shift is changing how retailers think about visibility. It is no longer only about knowing what inventory exists, but about understanding how products move through the entire retail ecosystem.

Digital Twin Technology

Although we speak of digital twins for just a few years now, the concept certainly 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. Other practical examples are: 

• Digitization of machines for supporting maintenance 
• Buildings, or even entire cities, are digitized to improve the efficiency of energy consumption 
• In healthcare, a digital twin of a patient or organs allows surgeons and health professionals to practice procedures in a simulated environment 
• In Formula 1 car racing, digital twins are used for simulations to the driver and the car team know what adjustments can improve performance 
• Retailers use RFID data from products in-store to analyse purchase behaviour and simulate the optimal placement of products 

RFID as the carrier

These days, product labels in the apparel, sports, and footwear industry can go beyond just sharing washing temperatures or cleaning instructions – they can be enriched with a (unique) digital identity, either via a QR code or on a chip. If products carry a unique identity, you can consider this a digital replica of a physical object. So, for example, you could simply say that the product has 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's easy to register it along its way 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, e.g., about temperature, humidity, or pressure. So anyone looking at the digital twin can now see crucial information about how the physical thing is doing out there in the real world. This data can then be relayed to a processing system and applied to the digital copy. 

Retail market trends

Conscious consumers

Consumers are becoming more conscious of the impact of the products they buy and the brands they support. Sustainability, ethical sourcing, and social responsibility remain important considerations, particularly among younger generations. At the same time, purchasing decisions are becoming increasingly pragmatic. While brand purpose still influences emotional connection, consumers are placing greater emphasis on quality, durability, availability, and fair pricing¹.

Trust through consistency
Purpose continues to shape how consumers perceive brands, but long-term loyalty is increasingly built through consistent delivery. Recent research shows that shoppers reward brands that combine transparency and responsible business practices with reliable quality, strong value, and seamless customer experiences². This shift is also changing consumption patterns. Instead of prioritizing fast or trend-driven purchases, many consumers are becoming more intentional in their buying behavior, with growing interest in resale, repair, and higher-quality products that last longer.³

Sustainability as part of the value proposition
Sustainability remains an important factor in brand choice, but consumers increasingly expect measurable action rather than high-level messaging alone. Transparency, traceability, and authenticity are becoming essential to brand credibility.⁴ For brands and retailers, this means sustainability can no longer stand apart from operational performance. Product availability, supply chain visibility, accurate information, and consistent experiences all contribute to how consumers define value today.

Direct to consumer

Brands are strongly pushing their direct-to-consumer (D2C) business through both online shops and new physical stores. Brands with a strong D2C business gain real-time insights into what customers want and quickly respond to the actual demand. In this context, own stores are becoming a platform that connects the community with the brand. Ultimately, stores are points of contact, where shopping experiences come to life. Unsurprisingly, one of the most important reasons consumers switch brands is that the desired product is unavailable.

Everywhere-commerce

One of the most fundamental changes resulting from the COVID-19 crisis is where and how consumers are shopping. For the last few years, there has been an ongoing adoption of omnichannel concepts – or: “everywhere commerce”. Especially in times of lockdowns and social distancing, shopper behavior has massively shifted to buying online and we can expect that this is here to stay. Consequently, an increasing number of digital touchpoints are becoming the first point of contact for consumers with their favorite brands and shopping destinations. At the same time, brands are complementing their physical stores and digital offerings to get to a “phygital” model, with innovative applications to mount a truly omnichannel experience.

Benefits of RFID and Digital Twin Technology

To address these trends, data-driven brands need actionable insights. The overall goal is to ensure products are always available to shoppers. 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.

With RFID in place, brands can seamlessly collect data from various read points wherever a product’s location or status changes. An EPCIS repository acts as the central platform that adds detailed information about the actual stock situation across the entire supply chain. Together, RFID and EPCIS create comprehensive inventory visibility, enabling demand-driven allocation, provenance insights, predictive replenishment, and stock transfers to the locations where products are truly needed.

Consumers demand origin information and authenticity

There will be growing expectations for brands to make shopping faster, easier, and more transparent in the coming years. Consumers increasingly expect accurate product availability, seamless experiences across channels, and real-time insight into where products are, how quickly they can be delivered, and whether they are actually in stock. Besides that, shoppers still expect strong product quality, ethical sourcing and fair pricing, making operational reliability more important than ever. To meet these expectations, brands need greater visibility across their supply chains and inventory flows. Below are several ways RFID solutions help address these challenges:

Origin information
Brands and their customers, as well as partners and even legal authorities, need to know if products are genuine and where they originate from. Digitizing products and tracking them along the supply chain can generate unmatched insights. In this context, RFID provides a secure, unique product identification and tracking data in the EPCIS repository, delivering insights into their actual provenance. At the same time, all over the world, there are legislative initiatives that even make certain supply chain tracking, on an item-level, mandatory. The intention is to support social responsibility, sustainability, and a circular economy by bringing transparency into the global value chains.

With RFID and an EPCIS platform, brands can uniquely associate tags to products with serial numbers (SGTIN), which act as a “digital product identity.” As an additional security measure, all information can be encrypted on the RFID chip. Allocating and managing the digital identities and tracking all product events along the distribution network in a platform enables brands to prevent counterfeits and illegal sales.

Product authenticity
Counterfeit products are a growing problem for brand manufacturers, causing a tremendous loss of reputation, trust, and money⁵. Consumers expect brands to be transparent about production conditions, raw materials and environmental impact. Finally, they need to trust the origin. Many imitations are so good that even experts find it difficult to distinguish between original and imitation. Customers are barely able to recognize counterfeits and want to know if a product is genuine and authentic.

Sustainability
Being able to leverage technology and data is crucial to accelerating the transformation towards a circular economy. If an RFID tag is applied to a product, it is the foundation for transparency and traceability within the entire supply chain. This makes it possible to precisely identify the material composition, value and quality of each product. Additionally, a central data platform, the EPCIS repository, contains the story of a product, along with its essential provenance data. This is the basis to provide information about a product’s origin and can be used to provide a “sustainability pedigree.”

Excellent omnichannel services

There is no doubt that omnichannel is here to stay. The number of delivery and pick-up services that are offered to customers is ever-growing. At the same time, the expectations of shoppers are steadily growing. Shoppers expect their desired items to be ubiquitously available, whether they browse in a bricks-and-mortar store or online. With these expectations in mind, brands are extending their service options, such as ship-to-home, ship-to-store, ship-from-store, buy-online-pick-up-in-store (BOPIS / Click & Collect), and a range of return choices. In this context, stock visibility is a key enabler for keeping the ‘availability promise’ and making customers happy!

Full stock visibility
While the lines between stores, e-commerce, and warehouses are blurring, the complexity in the supply chain is growing massively. This is why product visibility and inventory accuracy have become the foundation for efficient omnichannel operations. Only when it is clear where products are, brands and retailers can successfully fulfill their omnichannel promises. Since RFID can automate inventory management, brands can leverage the technology to achieve real-time data insights and ensure high product availability.

A 'single point of truth'

Collaborative stock & vendor managed inventory

While brands take more control of their sales channels and continue to increase their direct-to-consumer activities, a significant proportion of most brands’ revenue still comes via retail partners. To be successful together, they are more and more moving towards a “win-win situation” by sharing stock information and collaboratively managing inventory. Ultimately, brands and retailers share responsibility for an excellent customer experience.

The concept is not new: for the last 15 years, brands and retailers were already working on collaborative planning, forecasting, and replenishment (CPFR) initiatives. They are sharing sales and inventory data over so-called electronic data interchange (EDI) processes. However, this “one-to-one” communication is slow, error-prone, and requires a lot of manual data clearing. Furthermore, it does not provide insights into sublocation-level or unique item-level data. This is where a stock visibility platform, such as EPCIS enhances the concept of vendor-managed inventory to the next level.

Unified stock platform

Shoppers who want to buy products from desired brands do not care if they come from an owned-and-operated store, a franchise store, a department store, or a retail chain. They just want to know where they can get the product from. Shared inventory information enables the partners to offer products already close to the consumer rather than putting additional inventory into the market. With “Unified Stock,” brands and retailers can give each other access to their eCommerce and order management systems. The ultimate goal is to provide (real-time) data about available products to customers via online channels, apps, etc. If the brand’s web shop is connected with the stock of the retailer’s store, the digitally available product range is extended.

Fulfill and return anywhere

Boosting brand loyalty starts with adequate fulfillment and return strategies. Customers do not only expect to view in-store inventory online; they also want to order, reserve, and even return their products immediately. At the same time, rising customer expectations for fast delivery have triggered the development of innovative fulfillment options, taking advantage of existing infrastructure, such as the existing store network – whether owned and operated or partner stores, franchise stores, or wholesalers. There are clear benefits to fulfill orders from stores, for example, enabling greater overall inventory productivity, quickening speed to customers, and avoiding markdowns.

Additionally, just as shoppers now expect flexible fulfilment options, they also demand the same experience and options when returning a product. Shoppers consider easy returns as an inevitable service. An EPCIS allows retailers to accept returns at any location, offer partial or full returns, and get the item back into inventory as soon as possible.

The new role of stores in an omnichannel world

For D2C

For brands and their direct-to-consumer sales channel, all aspects that impact the shopping experience are vital. Besides the omnichannel paradigm, they also require detailed insights into their supply chains in order to optimally execute their distribution strategy. This includes tackling the growing challenges of counterfeiting, grey markets, and overdistribution.

Full control of distribution

Brand owners need to know where their merchandise is. Not having full control of distribution can result in lower full price sales of authorized products, inability to control quality, dilution of IP rights, and customer confusion. Thus, tracking and tracing the products with digital identities, in real-time, can help retailers stay ahead of the product’s flow and guarantee that products are authentic and originating from genuine sources. In addition, when products carry a unique digital identity and are tracked from the very beginning, customers can trace them back to their origin to see if they are authentic. This combats counterfeits and increases the trust in the brand’s value.

Grey market identification

In a world of online marketplaces and connected supply chains, brands struggle to ensure that their products are only being sold in authorized channels. By using RFID, brands can easily keep track of which retailer gets which product to keep tighter control over potentially (re-)selling to unauthorized resellers. For example, suppose all outgoing products are registered on a unique item level and at each unit’s destination. In that case, brands can later find out if their products have been distributed into the right, valid, channel or if they have been resold to any grey market.

Components for successful RFID deployment

As outlined in the previous chapters, RFID on the item-level in combination with an EPCIS repository will add another level of information about the actual stock situation along the entire supply chain for data-driven brands and retailers. Creating true and comprehensive stock visibility enables demand-driven allocation, predictive replenishment, and stock transfers to the location where products are really needed. And finally, this will enable brands and retailers to make their customers happy. But the question is where and how to start this journey. This chapter provides actionable insights.

Unique product identification

A so-called digital identity is turning each product into a data-generating asset. The prerequisite is that a serial number makes each product unique. In this context, “serialized data” can be carried on RFID tags or as a visual representation, such as Datamatrix, QR Code, or GS1 Digital link. If an RFID tag is the data carrier, the digital identity is also often referred to as “EPC” – the Electronic Product Code – syntax for unique identifiers assigned to physical objects. Since there is no one-size-fits-all solution, we believe that the future of digital product identities is hybrid - with a combination of different carriers, such as RFID, NFC, paper labels with QR codes, watermarks, or even embedded options.

One stock visibility platform

Break down inventory silos by creating a single view of stock across your entire supply chain. Once products are equipped with RFID labels - ideally at the source - it is possible to seamlessly track and trace all movements along the entire supply network. Using RFID technology in the supply chain enables error-free, real-time efficiency and visibility throughout operations. RFID read-events are then synchronized with an EPCIS repository, which – as a consequence – acts as a real-time stock visibility platform. Such a platform provides a standardized single point of integration to business and consumer applications for complete supply chain and inventory visibility in real-time. It monitors inventory transactions and movements from all related sources in real-time and can provide accurate stock information to relevant back-end systems, such as order management.

Common problem: Legacy systems are neither connected nor real-time

In many organizations, stock information is often kept in different silos such as ERP, POS, WMS, et cetera. Another problem is that stock information is often inaccurate, especially when it comes from the stores based on existing error-prone manual processes. Often, stock information is “outdated.” For example, suppose a retailer is just collecting overnight stock positions from various systems. In that case, the result of this calculation from last night will not represent the actual stock situation when a customer wants to buy. And finally, not having accurate insights into stocks has negative consequences: too much inventory sucks up the cash flow in carrying costs, while too little leads to stock-outs and lost sales. And as retailers develop more and more channels to increase revenue and brand awareness without real-time stock visibility to manage the whole thing, mismanagement costs keep rising.

Standards help us speak the same business language

Exchanging stock-relevant business data amongst brands, retailers, and other partners can easily and trustfully provide deep insights into the provenance, the location, and the status of products. The use of standards for identification (GTIN/SGTIN) and communication (EPCIS) is essential for successful collaboration. These standards guarantee efficient, cross-company communication and enable them to integrate their data with speed and ease. By exchanging information from the brand’s EPCIS with the retailer’s EPCIS, relevant stock data along the supply chain can be digitally exchanged and ensure more transparency and trust in cooperation. The presence of serialized data in the supply chain is steadily growing as more brands adopt source tagging. Therefore, GS1 standards guarantee efficient, cross-company communication and enable companies to integrate their data with speed and ease.

How to get started

The foremost reason brands implement RFID is to be able to maximize the customer experience by having full stock visibility. Successful RFID projects have one thing in common: the solution is embraced by the users.

1. Start small
   In a workshop with your stakeholders and a solution provider’s retail experts, you should put together a business case based on the specifics of your business and current experiences in retail, and then benchmark it against results of comparable retailers.

2. Test, learn and adjust
   The business case can be validated in a set of stores, with a selection of tagged merchandise. The products can be tagged in the DC or in the store. Now you can start running the pre-rollout, step-by-step.

3. Scale fast
   With a proven business case, you will get ready for the rollout and can implement the technology in each store. New functionality can be added along the RFID journey.