Move to 0HIO

Retailers should let RFID do its job.

By Bill Hardgrave

Tags: Inventory / Warehouse Management, Operations, Retail

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Feb 19, 2013—It's time for all retailers to move to 0HIO. I'm not suggesting retailers move their businesses to the beautiful state of Ohio. Rather, retailers need to move to zero (0) Human Intervention in Operations, a termed coined by RFID industry veteran John Greaves. The concept is simple: Eliminate, or at least reduce, the human touch points in operations. Essentially, why have people do something that can be done automatically?

In pilots and early-stage RFID deployments, I have seen several retailers make the same mistake—they treat RFID as a "super bar code." They swap out bar-code equipment for RFID devices, and keep existing processes in place. In doing so, they minimize the opportunity for gain and maximize the opportunity for mistakes.

Let's look at an example. For complete inventory management, retailers must know when product is received at the store and when it moves from the back room to the sales floor. Retailers that used mobile RFID readers in place of bar-code scanners to track products experienced execution failures. That's because store associates became busy and forgot to read products that arrived at the store. And when they couldn't easily locate a mobile reader, they didn't read products that were moved from the back room to the sales floor. As a result, stores had incorrect inventory counts, and they did not know where items were located.

The retailers depended on store associates to do a job that the RFID system could have done automatically. Instead of simply substituting RFID for bar-code technology and keeping the same processes, the RFID system should have been built on the premise of human touch reduction. Installing RFID portals at the receiving door and transition door from back room to sales floor would have removed the need for human intervention and ensured products were recognized and recorded.

As I explained in a previous column, "Tracking Your Competitors," most retailers have an inventory accuracy problem. And if your inventory counts are wrong, you can't solve other business problems. You can't change human nature—it's inevitable that store associates will make mistakes. But you can let the RFID system do its job and read products without intervention.

One retailer, for example, had two full-time store associates use bar-code scanners to track the items going into and out of dressing rooms. After adopting RFID, the retailer replaced the bar-code scanners with RFID mobile devices and was disappointed to find there were no benefits. That's because the process hadn't changed. When the retailer installed RFID readers in the dressing rooms, the information gathered was better, and dressing-room associates were free to help customers.

When evaluating existing processes, ask the question: How can I remove the requirement for human intervention at this step? Or, perhaps it's easier to remember: 0HIO.

Bill Hardgrave is the dean of Auburn University's College of Business and the founder of University of Arkansas' RFID Research Center. He will address RFID adoption and business case issues in this column. Send your questions to hardgrave@auburn.edu.

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