We are a medium-sized business and are looking with great interest at the
RFID initiatives of benchmark companies such as Wal-Mart with great interest. What are some of the
benefits that RFID can deliver?
Requires Free Membership to View
When you register, you will start receiving targeted emails from my award-winning team of editorial writers. Our goal is to keep you informed on the hottest topics and biggest challenges faced by SAP professionals today.
Hannah Smalltree, Editorial Director
The costs for implementing RFID are still too high for most mainstream applications, but they
are falling. While the costs and risks might be too high to deploy in a production environment, the
benefits are proving more apparent and many should be conducting research projects to begin
determining the potential ROI.
Here is a quick checklist of several benefits that can be achieved with RFID solutions:
- Reduce warehouse and distribution labor costs -- Replace the point and read
labor-intensive operation of tracking pallets, cases, cartons and individual products with sensors
that can track these items anywhere in the facility with pin-point accuracy. This can reduce the
high labor costs and service fees of regular stock management and store shelf inventory.
- Reduce point-of-sale labor costs -- With RFID-enabled products, checkout can be
completed with a quick scan of all items in cart helping to reduce point-of-sale labor costs. The
current scan-it-yourself component of self-service checkout can be improved, helping to improve
adoption, reduce self-service checkout
times and reduce fraud.
- Reduce inventory -- Inventory accuracy is important to helping eliminate excess/missing
inventory, losses and write downs. With RFID, inventory errors can be reduced so that the company
can be assured that the inventory indicated is the actual inventory available.
- Improve forecasting and planning -- Visibility improvements throughout the supply-chain
can help to improve the forecasting capabilities to help better track where inventory is and what
is happening to it throughout the supply chain.
- Reduce theft -- Losses due to theft are estimated to cost retailers over $30 billion per
year and are estimated conservatively at 1.5% of overall sales. With RFID, products can be tracked
through the supply chain to pinpoint where a product is and eliminate inventory errors that can
cause shipments to go missing, or to better find where and when in the process the product was
lost. Within the retail store, RFID can and has been successfully deployed, particularly on higher
margin items, to help prevent theft.
- Reduce out-of stock conditions -- When an item is out of stock the customer is often
left disappointed, either avoiding the purchase altogether -- common in grocery stores where as
much as 4% of their revenue is lost each year due to out-of-stock conditions -- or worse, the
customer moves on to a competitor in order to source the product. Eliminating out-of-stock
conditions via better RFID product tracking and inventory visibility and forecasting, such as
alerting the store staff immediately when the last item leaves the shelf, can have an immediate
top-line revenue impact and have residual effects by improving customer service and satisfaction.
- Improve customer experience -- With RFID, items in a cart can be tracked and if a high-tech cart or kiosks are part of the shopping experience, offers can be made automatically related to the items -- such as dynamic up-sell/cross-sell of useful or necessary accessories.
This was first published in December 2005