When Will Merchants Realize the Disruptive Potential of RFID?
At the recent RFID Journal LIVE! 2013 conference, Bill Hardgrave, dean and Wells Fargo professor, College of Business, Auburn University, made the case that RFID is a much more significant technology than was thought 10 years ago. In 2003, he argued, the industry thought of RFID as a supply chain tool for pallet and case level. Since 2006, retailers such as American Apparel, Dillard's, Bloomingdale's, Walmart, Macy's and J.C. Penney have found item-level uses. At least 19 of the top 30 retailers in the U.S are doing something RFID related, he said, with most engaged in phased deployment and others almost at full deployment.
Dean Hardgrave called RFID a disruptive technology; a game changer. Disruptive technologies often lack refinement at first, have performance problems, appeal to a limited audience and may not have proven practical applications. He likened RFID to other such technologies such as fax machines, e-mail, digital cameras, smartphones and even Amazon.com. They all provided lots of opportunity for payback, but were much riskier than incremental or even radical change.
One of the problems with RFID, he said, is that it was initially used in a supply chain setting, but didn't have that great impact because retail supply chains were already pretty efficient. So, when used to "count things," RFID yielded only incremental benefit. Then, RFID began to be used for radical improvement, such as inventory accuracy, shelf replenishment, loss prevention, price change management and so on. Now, he maintains, RFID is becoming disruptive, as it is used to replace physical inventory counting, help prevent theft and improve food safety.
Eventually, Mr. Hardgrave believes, barcodes can be eliminated. So, the key to RFID success is not to use it in areas where you only need incremental improvement, but to think about what you can do with RFID that you couldn't do before and set a goal of zero human intervention in some operations.
American Apparel has 254 stores and produces one million garments per week in downtown LA. Vice president of technology Stacey Shulman said the company has tagged 95 percent of all items in its stores. This allows the company to take inventory every day in all stores, reconcile POS and RFID counts daily, reduce out of stocks to less than one percent, improve inventory accuracy, reduce shrink, and lower staff turnover, as associates like working in a fully accountable store better. With antennas in store ceilings, American Apparel can scan 35,000 items in under an hour with 98 percent accuracy while eliminating the need to use hand-held devices for inventory.
Erin Limas, chief financial officer at Borsheims Jewelers (part of Berkshire Hathaway), told how the chain has been able to virtually eliminate shrink with tags that are small and cheap. With 88,000 jewelry, watch and gift items in stock in a single store, security is able to track items as they move around in the store and daily inventory now takes about 15 minutes per day.