RFID, WIRELESS, BAR CODE & VOICE
When the Benefits Are
There, Why Don’t
More Companies Use
RFID Tagging?
Research shows that more
than 60 percent of organizations do not yet have an RFID
tagging program in place.
Many of the organizations
that have implemented RFID
have done so to satisfy customer compliance demands
and have not used their RFID
systems to enhance their
own warehouse and logistics
operations.
—Marisa Brown, director of APQC
Knowledge Center, and Rob Spiegel,
knowledge specialist
FID is still in its early adoption stage, so should an organization
consider devising a strategy to implement RFID? The logical
question is “what are the benefits?” APQC’s research on RFID
tagging strategies found the most frequently cited benefit was
improved distribution processes.
Working with the Council of Supply Chain Management Professionals
(CSCMP), APQC is able to bring additional information to light on the question
of the benefits of RFID. Research co-sponsored by CSCMP, the Voluntary
Interindustry Commerce Solutions Association, and the University of Arkansas
found that RFID used at the pallet and case level shows benefits in reduced
stockouts and improved inventory accuracy, which is one of the keys to an efficient and effective supply chain.
In one instance in the CSCMP research, inventory accuracy in a retail store using
item-level RFID, relative to a control store without item-level RFID tags, improved
by 17 percent. In addition to the overall effectiveness of RFID for inventory counting (close to 100-percent accurate), the research showed that the time savings for
counting inventory—especially when compared to other methods such as bar-coding—is significant. In one instance, an activity that took only seven seconds for
items using RFID tags required nine minutes when bar-coding was used.
The co-sponsored research highlighted another benefit of RFID: it is able to
eliminate “frozen” inventory. In some out-of-stock situations the system “thinks”
ample product is available when it is not. The inaccuracy could cause the system
to not place a re-order for the product. Consider an example where the system
thinks it has six units of inventory, the re-order point is five units, and the store
actually has none. Since the store can’t sell what it doesn’t have, the number in the
system will not get checked, e.g., it’s frozen, and no re-orders will be placed.
This is the ultimate out-of-stock situation—the store has no product and will
not order any product because the system thinks it has more than the re-order
point. In the retailer in this study, after implementing RFID, the number of
frozen items dropped to zero and stayed there. With RFID, in this case, all
occurrences of frozen out-of-stocks have been eliminated.
R
The Outlook
The use of RFID in the retail space has potential benefits for customer service.
Accurate and timely information about product order, delivery, location, and stock
level help retailers to have the products their customers want when they want it.
