As I mentioned in my last post, “shrinkage” such as theft and loss within retail environment have historically been a cost of doing business. Traditional barcode technology requires a high amount of user knowledge and input (store associates using scanners) and therefore many opportunities for error. Barcodes are also standard for any item, so individual items cannot be tracked. Therefore, a barcode can allow you to say that there were 10 of item X on the shelf and now there are 9, rather than RFID which allows you to say which of those 10 was missing. In addition to this, there is often so much variability between what shows as available stock in a store system and the items that can physically be found within a store, it is hard to quantify even what impact shrinkage has on large businesses.
In an effort to control inventory on the sales floor, some retailers have begun tightening control over high value products such as razors and apparel. Gillette, for example has RFID tags in the packaging of their individual razors to increase security. Other large corporations have limited RFID use to case and pallet levels to track items throughout a supply chain. One limiting factor on how widespread this technology is currently used is the high cost per tag. However, as the cost of this technology decreases, I think there is an opportunity to utilize this at item level on many more products to increase inventory accuracy from product manufacturer through sale in a retailer. The key attribute that RFID technology has for meeting this goal is automation. Many areas which currently input inaccuracies within the supply chain could be automated, reducing the opportunity for discrepancy. An accurate inventory is the backbone of determining how much shrinkage exists within an business, and RFID technology can go a long way to accomplish this.
For differing opinions about the opportunities for, or threats from, RFID see the links below.
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