Retailers have RFID tagged

Imagine a technology that could slice the time it takes a retailer to measure inventory, one that could provide accurate information about a single item as it moves from manufacturing through a store and then on to post-sales support.

Imagine one that could finally fully automate checkout, freeing store personnel to provide increased levels of customer support. Welcome to RFID, a new technology that promises these benefits and more.

Retailers face the constant demand to have the right goods available at the right places in the right quantities. First and foremost, incorporating RFID technology into existing supply chain operations can reduce the labour required to monitor goods movement and inventory flow. Barcode-based tracking systems are an effective tool for basic inventory tracking. Used in conjunction with a barcode system or as a standalone inventory tracking application, RFID allows manufacturers and retailers to complement existing systems while gathering more information throughout a supply chain. Systems with the power to update the information that moves with an individual product, provide complete supply chain visibility, without the prohibitive labour costs and error rates a similar manual system would entail.

RFID can also act as a security guard at a gateway. As goods are moved from dock to truck to store, RFID can conduct automatic inventories and compare the goods with the manifest. Goods flow becomes more complete, stock outs are reduced, overages are curtailed and accounting discrepancies removed.

New manufacturing technologies already promise automated, high-speed RFID tag production that will reduce tag costs.

Andrew Fosbrook, MD, ProScan Systems

RFID tracking systems are finding their way into cross-dock and warehousing applications first. But as they stretch further throughout a retail supply chain, they will require close co-operation between suppliers and retailers. As RFID systems are adopted, manufacturers will tag goods during production so everyone along the way, from supplier to manufacturer to logistics teams and end customers, benefits from the increased information that RFID systems provide.

For this to happen, however, the cost of the system must drop to the point that its costs can be justified by the savings a company will reap from improved inventory management. Once that is the case, large global retailers will begin to demand that suppliers provide RFID-tagged packaging at the overpack or case level. That will likely happen first at the inventory control and pallet tracking level, followed next by high-ticket item goods such as electronics, then by other product groups as system costs come down.

Examples of adoption into other areas of the supply chain provide a review of RFID`s potential to impact retail systems. CHEP, a provider of pallet and container pooling services, and Georgia-Pacific, a manufacturer and distributor of tissue, pulp, paper, packaging, building products and related chemicals, are using RFID technology on recyclable plastic containers (RPCs).

RPCs are used to package and transport produce. A grower packs and ships fruits and veggies in RPCs for travel through distribution to a store`s product department. There, store associates simply lift the container onto the shelf for an instant display. That means no more manual unloading of cartons or disposal of used or soiled packaging. When the produce container is empty, it`s returned for cleaning and reuse. The RFID tag is used not only to keep track of the location of the RPC, but also to document its cleaning history, from the date and temperature of the washing to the chemicals used.

Each RPC`s tag incorporates a unique identification that can be read from 3m to 5m away as the RPF moves along high-speed conveyors, passes through doorways, rests in fields, is loaded on a truck or is stacked on a pallet, even in groups of 100 or more.

By adding tag interrogators, a grower can track loads of products to a specific retailer to help speed payment, or a retailer can make sure the first produce into the system is the first to go on the shelves.

The ultimate goal in retail is to create RFID systems that provide the benefits of the technology at a cost that supports item-level tracking. Such item-level tracking would provide each unit of inventory with a unique ID.

When this occurs, the inventory accuracy and improved goods tracking will rise exponentially. Physical inventories and product re-ordering will be done in a fraction of the time it now takes and retailers will be able to take inventory more frequently. Truly automated checkout will become viable as RF interrogators list the contents of a shopping cart without moving any of the items. And truly accurate and timely reconciliation of shipments will cut down on shrinkage.

New manufacturing technologies already promise automated, high-speed RFID tag production that will reduce tag costs, a major step in making these benefits possible. Although tags are only one part of a complete RFID system, industry experts now predict that tag prices may reach 30c to 50c per tag or less in the next few years. As item-level RFID system move from inventory tracking to item manufacturing, perhaps spurred by large retailers` demand for tagged merchandise, companies will begin to experience more of the efficiencies of a well-integrated RFID technology system.

An effective and efficient distribution system is key to retailer success. Major retailers and consumer goods companies are already conducting RFID pilot projects.

Now is the time to learn more. Companies remain reluctant to discuss return on investment, but as the roll-out of inventory and pallet tracking applications continues, the efficiencies will become clear and implementation of a RFID system will become a competitive advantage.