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RFID Solutions

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Retail RFID

Introduction

RFID technology is used to tag, identify and track individual items, cases and pallets as they move from the manufacturing floor through the supply chain and into the hands of the buyer or consumer. As the objects move through the supply chain, wireless RFID readers can communicate with an RFID tag on the object, collect information about the object (such as a unique number) and match that number in a database to access a complete record about the object. This real-time technology provides unprecedented speed and accuracy in the supply chain.

EPC and RFID

Electronic product code (EPC™) is a new standard that is reviewed in the second section of this topic. EPC is well positioned to become the open standard for RFID technology and a key information tool in the retail supply chain. EPC-RFID has great potential to deliver bottom-line business benefits on a mass scale.

The Impact of RFID on Retailers

Interest in RFID technology is driven by the desire of companies to achieve greater speed and visibility into their supply chains, while increasing both operational efficiency and store effectiveness. An efficient supply chain operation ensures that goods can be delivered to the place and at the time consumers are ready to purchase. Potential gains from the visibility RFID systems generates include lower inventory levels, reduced labor costs and increased sales-the bottom line: increased profitability.

Several major retailers and consumer packaged goods (CPG) companies have designed and deployed successful pilots of EPC-RFID. Also, several companies have announced target timeframes for expanded implementations. The number and scope of these efforts can be expected to grow as companies create business and process models that will maximize their return on investment (ROI) for EPC implementation. The following summarizes the benefits that retailers hope to capture with RFID-based solutions. The benefits can be grouped into issues of speed and visibility:

Benefits of Speed:

  • Eliminate lost sales due to out of stocks
  • Speed up store receiving, processing, replenishment and returns processing
  • Notification of units needed on sales floor upon store receipt
  • Satisfy customer requests immediately by locating products on sales floor and in the backroom
  • Faster and more accurate inventory audits
  • Increased distribution center efficiency and accuracy

Benefits of Visibility:

  • Unit, carton and pallet-level visibility throughout supply chain
  • Immediate identification of exceptions at check points
  • Visibility to replenish the right product to the right place at the right time
  • Block receipt of defective and counterfeit merchandise

In the near term, the emphasis for RFID technology is on "the supply chain to the store backroom" applications-tagging pallets, cartons and reusable containers to track the movement of goods throughout the distribution system. Longer-term users are just beginning to assess the impact of tagging individual items on the retail sales floor.

The Future - Innovations in Retailing Enabled by RFID Technology

The real-time features of RFID technology open the way for a variety of innovative applications. This is especially true in retail where having visibility into actions and accuracy of information is critical to speed of execution. Several retail executives have identified points in which RFID solutions would increase profitability. These include:

  • Scan-based trading (SBT) for merchandise
  • Item-level information that can be leveraged by management
  • Real-time, supply chain-wide inventory visibility by reading the RFID tags that are incorporated in the merchandise at the manufacturer, supply chain and store levels
  • A barrier to the sale and distribution of counterfeit merchandise
  • An in-store customer service platform and a high-value, in-store selling tool
  • True integrated retailing, where the inventory in transit, in the distribution center and in every store could be leveraged to complete sales
  • A barrier to the return of stolen merchandise for cash
  • An item-level quality control tool to provide enhanced control over suppliers