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Why an RFID Strategy Is Important for Retailers

Radio-frequency identification holds the potential to eliminate errors and claims costs in the supply chain.

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Dan is an editor focusing on healthcare technology. His experience includes stints with newspapers including the Washington Post and the Washington Times.

While a report published by IDC earlier this year notes that nearly 8 in 10 retailers have set aside funds to spend on visibility platforms, including radio-frequency identification, research out of Auburn University’s RFID lab indicates that such technology could potentially remove claims costs in the supply chain.

The study, which reviewed the flow of product information of eight retail brand owners and five retailers from June 2017 through July 2018, found that order accuracy for brands using RFID tags to capture information and reconcile shipments exceeded 99.9 percent.

“In an era of omni-channel retail — which demands high inventory accuracy — the errors created in the supply chain propagate downstream and ultimately impact a retailer’s ability to meet customer demand in a timely manner,” the study’s authors write. “As our results suggest, several of these errors found at the store or in direct shipments to the consumer via a retailer’s fulfillment center are caused by the upstream disparity between the information flow and the physical product flow amongst brands and retailers. … RFID technology eliminates the errors commonly found in the process, ensuring the accurate flow of information and products.”

A Tool to Boost Customer Experience Management

Despite the already widespread use of RFID in the industry, analysts from Frost & Sullivan say that retailers need to adopt the technology, along with videos, cameras and data analytics, to keep track of inventory and improve customer experience management.

Ram Ravi, the firm’s industry analyst for industrials, states that such tools will strengthen investments in handheld readers and smart point-of-sale solutions. “RFID sales will get a further boost from the intensifying focus on loss prevention, inventory management and customer behavior analysis,” he says.

Macy’s is one retailer that has notably benefited from deployment of RFID. In 2016, it announced a plan to expand use of the technology to track 100 percent of items in all stores by the end of 2017, according to RFID Journal. According to an article in Supply Chain Dive, Macy’s is tagging individual apparel items for 900 locations with an accuracy rate of 97 percent.

RFID Helps Get More Products into Customers’ Hands

A key factor in the rise of RFID use is cost. According to an article in Stores, the price of an RFID tag fell from $1 in 2003 to 10 cents in 2017.

While the Auburn researchers say failure analysis requires more investigation (which will take place in a second phase of their study), they also point out that the major retailers they examined attribute cost savings and increased sales to the use of RFID technology.

“Item level RFID is driving visibility and efficiency as well as playing a critical role in helping retailers create a seamless omni-channel customer experience,” they write. “Retailers around the globe are using it to increase inventory accuracy, decrease out-of-stocks and improve loss detection as well as to get more product into their customers’ hands than ever before.”