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BLOG: Retail RFID initiatives are flourishing

Leslie Hand | April 25, 2011
RFID enables leaner store inventories, without sacrificing lost sales.

My 7th annual visit to RFID Journal Live! (April 12-14th, 2011) was jam packed with engaging conversations with optimistic and energized retailers, suppliers, academics and technology vendors. Mark Roberti, the founder and editor of RFIDJournal magazine and host of the event, reported that preregistration was up 15%, in an RFID Journal editor's note on April 18, 2011. Interestingly, it seemed to me that there were fewer vendors and more endusers than last year. Most importantly, the endusers that attended were already working on projects or feverishly trying to figure out how to leverage RFID in their businesses.

The biggest surprise, for me, was the number of retail suppliers earnestly taking notes and asking questions as industry experts and peers provided guidance in breakout sessions, and the number engaged in serious discussions with technology vendors. This makes sense, with more than a dozen US based retail pilots and/or rollouts underway, many suppliers have gotten on the bandwagon to gain early competitive advantage. Most of these suppliers are working on identifying their own business benefits, so that these projects don't become underwhelming "slap and ship" efforts, like many of the consumer goods company's efforts, whose RFID efforts heated up in 2004 in response to Walmart and DoD mandates, but progressed at a snail's pace. In fact, the story is quite different today for apparel manufacturers. Gerry Weber, the winner of the 2011 Best RFID Implementation award by RFID Journal, drove their initiative based on the benefits as a supplier.

Astounding Benefits Continue to Drive RFID Implementations

I have to reiterate that I am convinced that the benefits are real for retailers, particularly vertically integrated retailers, who generally work with a limited number of suppliers, and can tag all products and roll out store by store, rather than having to go through the painstaking process of assisting suppliers, one by one. I am also convinced that RFID enables leaner store inventories, without sacrificing lost sales.

Retailers continue to resist being very vocal about the benefits they've received, arguing that they don't want to give up competitive advantage, but the numbers I continue to hear over and over include the following:

    • Up to 30% improvements in inventory accuracy
    • Up to 50% of the OOS (out of stock)eliminated
    • 96% reduction in amount of time to cycle count, enabling more frequent and more valuable insight into real physical inventory

The bottom line is, doing physical counts and making sure shelf availability is managed appropriately is no longer primarily an exercise to make our accountants happy, but an exercise that enables better customer service. The value of improved shelf availability on the top line, on increased sales, is the best kept retail secret. The truth is there are so many factors that go into increasing sales for a retailer, that it is nearly impossible to pin a true value on sales lift due to an isolated initiative. Perhaps, Myron Burke, Director, Store Innovation and Electronic Product Code, Walmart explained success at the shelf best, "If the customer finds what they want and it goes into the cart, that's success.

The DoD gets my vote for the most impressive and steadfast RFID program, even ahead of Walmart, as they consistently report significant benefits from their end to end RFID enabled supply chain management strategy. Paul Peters, Deputy Assistant Secretary of Defense for Supply Chain Integration, reported that 74% of goods are tagged at receipt and that perfect order fulfillment is as good as can be expected and material availability is at a remarkable 85%. Despite these successes, Peters pointed out that counterfeit goods are still "a looming cloud" for all to be concerned about.

The Technology Keeps Getting Better

The technology is undoubtedly fit to meet the needs of many industries including retail, manufacturing, packaging companies and 3PL's. These days, it seems that every potential challenge is quickly met with a solution. For example, one of the challenges that department or general merchandise retailers in particular face, as they expand RFID programs, is getting supplier tagging initiatives started quickly. In a breakout on Thursday, Larry Arnstein, Senior Director Business Development, Impinj, gave a really good presentation on how to formulate a scalable RFID source tagging strategy, accounting for the many source tagging scenarios employed today. Not surprisingly, Impinj announced technology a week before the conference that helps solve the source tagging issue. The new Impinj Monza 5 chip and STP source tagging technology can enable encoding of up to 1750 tags/minute for both inline and bulk encoding situations.

Another vendor, Tagsys announced FiTS (Fashion Item Tracking System), its commercial off-the-shelf, end-to-end supply chain system for apparel and fashion businesses. Tagsys says that RFID enabled FiTS will provide end-to-end visibility from manufacturing, through the distribution center, and to the retail floor. Tagsys has already proven itself in item level RFID library and laundry systems, and has been a leader in item level pharmaceutical tagging efforts.

Tyco Retail Solutions and Checkpoint Systems are also helping retailers with item level RFID inventory tracking implementations, but due to their heritage in product security and loss prevention applications, they are particularly well equipped to help retailers with dual tag initiatives, enabling even greater asset protection than possible before. Retail feedback suggests that EAS security tags thwart external theft, while RFID tags combined with actionable reports significantly reduces internal crime.

Intelleflex won the RFID Journal Best in Show for its breakthrough condition monitoring tags that can be read from producer to retail receipt. Unlike tags often used for this task today, these tags are able to be read in transit, so that logistics providers can participate in the tracking of goods as they make their way through the supply chain. Another cold chain monitoring tag manufacturer of note is Infratab, a company that has developed a very low cost, simple to implement and use passive tag.

Five years ago, vendors shied away from developing purpose built tags - they simply did not have enough business to support doing this. Some companies are now discovering just how lucrative designing and manufacturing tags for specific business cases can be. One of these companies, Omni-ID has developed a variety of purpose built tags, and as a result has successfully deployed tags in several industries including healthcare, automobile manufacturing, oil, gas and utilities, and defense transportation and logistics. The secret to this success also has a lot to do with the strength of the partner relationships they have developed in these industries and with the fact that they own their own manufacturing facility, limiting production and security issues.

Alien now has a small footprint RFID handheld reader, but they may be late to the game, as Motorola continues to lead in retail deployments of handheld readers. Motorola's latest MC75A handheld has NFC contactless reader capability built in, for the coming wave of high frequency NFC tagged media, assets and payments applications. As retailers get to full rollouts, vendors need to expect that retailers will shop around, so the Korean and Chinese handheld companies will become serious competitors in the North American market.

There are so many other technologies that are worth discussing, but just not enough room on this page - this is a blog after all, so allow me to sum up.

Today's best innovations are being driven by business need

Gene Delaney, Executive VP, Motorola Solutions, said it well in his keynote presentation, "RFID initiatives today are all about businesses driving initiatives, enabling intelligent processes by applying RFID technology." Data is merely collected via smart tags and wired and wireless networks. The real magic happens when real time information about products, inventory and sales are ultimately converted into actionable data that result in better business decisions.

I do feel compelled to emphasize that RFID is not a silver bullet. Much work will need to be done to maximize return on investment for retailers and suppliers alike. The benefit comes from the intelligent use of real time information and inventory visibility. I'll spell this out more in a full length report at


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