RFID Benefits

Radio frequency identification (RFID) technology can work on several levels. In the first wave of its enterprise adoption, the one prompted largely by the Wal-Mart mandate, RFID has been applied largely at the case and pallet level.
But RFID can be used to track individual items as well. This kind of RFID use isn't very popular yet because suppliers are still scrambling to meet the case- and pallet-level requirements of their retailers, but the value proposition will lure in the market, says Jeff Richards, CEO of RFID consultancy and systems integrator R4.

R4 and Intelligent Systems, a division of MeadWestvaco (and a RFID solutions provider to Tesco), recently conducted a study designed to measure the benefits of using item-level RFID.

The benefits break out as follows:

*A potential eightfold increase in employee productivity in the realm of inventory management. Here, item-level RFID saves a lot of employee time in looking for and retrieving inventory.

*A 50 to 60 percent reduction in out-of-stocks. The Tesco item-level RFID trial, for example, resulted in a 50 percent on-shelf availability increase.

*A 40 percent reduction in shrinkage.

Given that stocking and shrinkage problems represent billions of lost dollars for the retail industry, those are remarkably promising figures -- tempered, of course, by the limited sample space and the reliance on the Tesco experience.

If those numbers are in the ballpark, retailers will push suppliers to adopt item-level RFID in the near future; but, in this case at least, the business case makes a lot of sense for suppliers as well.

Think of it from the supplier's perspective. Spending millions of dollars on an RFID infrastructure to tag items that are seldom stolen or stocked out doesn't make much sense. But applying the same infrastructure to, say, higher-value, frequently filched, often stocked out items like DVDs makes a lot more sense.

FDA regulations are already pushing pharmaceutical companies to look into item-level RFID. The same thing is happening with the U.S. Department of Defense's weapons suppliers. The next constituency to give item-level RFID some thought if not active pursuit will be retail, Richards concludes. "You can make the case even with a $.50 RFID tag for fast-moving, high-shrink, high-cost items like pharmaceuticals, DVDs, video games, and CDs. But you won't see RFID tags on tuna cans any time soon."

Source : http://www.line56.com/articles/default.asp?articleID=6453&TopicID=2