CSCMP's Supply Chain Quarterly
Technology
October 23, 2018
Forward Thinking

The quiet case for RFID

Comment
New research says that radio frequency identification tags can help companies achieve greater order accuracy than bar-code scanning.

While talk of radio frequency identification has lately been drowned out by the attention being paid to other emerging technologies such as the Internet of Things, artificial intelligence, and blockchain, researchers have been quietly building the business case for the 14-year-old auto-identification technology.  

A new study from the Auburn University RFID Lab and the industry association GS1 US found that brand owners and retailers using electronic product code (EPC)-enabled radio frequency identification (RFID) for inventory management and product shipments are capable of achieving 99.9 percent order accuracy.

When RFID was not implemented, the study found that 69 percent of orders shipped and received from brands to their retailer partners contained data errors. These errors were revealed in picking, shipping, and receiving, resulting in inventory inaccuracies and costly chargebacks from the retailers to the brand owners. Additionally, the research exposed that brands and retailers generally accept these process errors and attempt "workarounds," which often result in additional errors and costs. 

"This study should cause retail industry stakeholders to consider the immediate positive impact item-level RFID can have on supply chain efficiency," said Bill Hardgrave, provost and senior vice president for academic affairs, Auburn University, in a statement. "Retailers and brands have a tremendous opportunity to eliminate errors, as the lack of inventory accuracy is a preventable problem that can be solved with greater automation through RFID."  

The research was based on a sample of more than 1 million items from five retailers and eight brand ownersand compared data capture via barcode scans to data capture via RFID tags in the supply chain to validate ship and receive accuracy. The study also found that compared to using a universal product code bar code, RFID:

  • Raises inventory accuracy from 63 percent to 95 percent,
  • Reduces retail out-of-stocks up to 50 percent, and
  • Cuts cycle count times by 96 percent.

The "EPC/RFID Retail Supply Chain Data Exchange Study," also dubbed "Project Zipper," surveyed the effectiveness of item-level RFID tagged items as they travel throughout the supply chain, from a brand owner to a retailer. It examined the flow of information between the brands and retailers over a one-year period from June 2017 to June 2018. During this time, the RFID Lab team examined the data obtained from barcode scans at the brand owners' distribution centers and barcode data at the retailers' distribution centers and compared them with data captured via RFID tags. 

The study will continue with a Phase 2 analysis that will investigate the causes of errors, the consequences of workarounds, and additional use cases for traceability and authenticity. Researchers anticipate Phase 2 will be completed in mid-2019.  

Founded in 2005, the Auburn University RFID Lab focuses on the business value of RFID and other sensor identification technologies. It partners with companies such as Delta Airlines, Walmart, JC Penney, Bloomingdale's, and Boeing.

GS1 US, a member of GS1 global, is a not-for-profit information standards organization that facilitates industry collaboration to help improve supply chain visibility and efficiency through the use of GS1 Standards.

Join the Discussion

After you comment, click Post. If you're not already logged in, you will be asked to log in or register.


Want more articles like this? Sign up for a free subscription to Supply Chain Executive Insight, a monthly e-newsletter that provides insights and commentary on supply chain trends and developments. Click here to subscribe.

We Want to Hear From You! We invite you to share your thoughts and opinions about this article by sending an e-mail to ?Subject=Letter to the Editor: Quarter : The quiet case for RFID"> . We will publish selected readers' comments in future issues of CSCMP's Supply Chain Quarterly. Correspondence may be edited for clarity or for length.

Want more articles like this? Subscribe to CSCMP's Supply Chain Quarterly.