More satisfaction and less costs using RFID
Electronic product codes (ePC) and radio frequency identification (RFID) can greatly increase a supply chain's effectiveness and accuracy, with some retailers and suppliers having reaped cost savings of as much as 5% of sales, according to AMR Research.
The new research report from AMR, ePC/RFID and its Imminent Effect on the Supply Chain, suggests that RFID technology will be economically viable by 2006, with early adopters (primarily coming from the retail and consumer packaged goods industries) realising value from 2004.
Although RFID is available right now, it comes at a price. However, the research highlights the need for companies to start preparing their infrastructure for RFID today in order to keep a competitive advantage.
Too early yet? Early adopters speak of RFID's potential to cut costs in the supply chain and provide faster, cleaner data. Everyone else may be instead waiting for the 'Holy Grail' - the five cent, or penny tag.
While the price may not be right for every retailer, or for every application, the information that RFID can provide will certainly enhance supply chain effectiveness - which is likely to positively impact the consumer.
Start small... Although expense and a lack of standards are major drawbacks of RFID at the moment, businesses should still evaluate the technology and start with a pilot implementation within one segment of their supply chain where it could bring the best return.
For example, Prada, a high-end apparel retailer, implemented RFID tags, giving employees the tools needed to provide better customer service, resulting in larger up-sells, increased revenue, and potential return on investment within 24 months (see April 29th, 2002).
This technology allows companies to track stock items and maintain accurate inventories, resulting in less out-of-stock situations, which helps maintain customer fulfillment and satisfaction levels.
AMR's report recommends the most effective ways to approach RFID implementations, including:
- The need to assess business requirements and initiate a plan for the necessary infrastructure and application changes.
- Leveraging infrastructure from existing technology implementations as a key to the beginning stages of RFID.
- Implementing RFID applications in stages to help remain within budget, get a better return on investment, and minimise disruption to the current business environment.
- Ensuring that in-house system applications can support the collection, storage, and processing of RFID data.
- Guaranteeing the cleanliness of the data, which is vital to a successful RFID roll-out plan.