The renaissance of RFID

When radio frequency identification (RFID) first appeared on the supply chain scene it was expected to be taken up rfid
on block by the majority of the industry following the boost it received when Walmart announced their intention to use it throughout their supply chain networks to help to identify products on incoming shipments from outside suppliers.

In actual practice the forecast RFID revolution stalled. The problems were many-fold. At the time (2003), the technology that supported RFID was not fully developed and had several bugs it. Being at the birth of its cycle, RFID was still quite expensive to install, and together with the mounting problems being experienced during installation, many of Walmart’s suppliers reneged on their agreements to proceed. The excitement in RFID was quelled.

However, with the advent of omni-channel marketing, it could be about to experience a renaissance.

The retail industry invests in RFID

Many retailers are now jumping aboard the omni-channel bandwagon. It is now being seen as the appropriate tool for succeeding in maximizing order fulfillment within omni-channel supply chains, where retailers have to offer optimum product availability in terms of:

  • In-store collections from on-line sales
  • Picking, packing and shipping products from store shelves
  • Funneling of orders from various channels including telephone orders, catalogue sales and sales made through websites

In order to facilitate optimum order fulfillment companies must have accurate 360-degree visibility of their inventory, whether that inventory happens to be on the shelf, in transit or in good inwards – something that today’s advanced RFID technology can provide.

The 3-phases of RFID growth in global supply chain management

In terms of the development of RFID within global supply chains, it has come in 3 distinct waves according to Justin Patton, the director of the RFID research at Auburn University, Alabama.

  • Walmart’s initiative in 2003
  • Product tagging of clothing and footwear in 2010
  • The current trend towards omni-channel marketing

Mr. Patton is reported as saying, “Omni-channel is a key driver of RFID uptake. Without it you can’t tell a customer to drive to a specific store and collect a specific item, because you can’t tell what items are there with total accuracy.”


Greater utilization of RFID

Up until recently Distribution Centers (DCs) have typically used RFID within their supply chains to manage three specific areas of inventory control:

  • Incoming audits on quantity
  • Outgoing audits on quantity
  • Package content verification

But with the advent of omni-channel commerce, DCs are now taking advantage of a new set of benefits including things like monitoring shelf quantities of products and product lines, and providing real-time visibility of products for online shoppers. These benefits are leading to a surge in demand for installation in retail supply chains on a worldwide basis.  In the US approximately 30% of retailers have already invested heavily in RFID technology.

RFID – the basis of retail success in the omni-channel world     

Retailers who operate the omni-channel (O-C) philosophy must know exactly where their inventory is and how much they have in their supply chains at all times. It is the very basis of O-C success. The importation of RFID in the Apparel and Footwear retail sectors supply chains in particular, has made a significant impact, with an estimated 66% of US retailers trusting their operations to it.

Others industries too are now bound to sit up and take notice.

Would your company benefit from utilizing RFID in its supply chain management and if so what specific improvement will it offer?

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