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Creating Confidence in RFID Data

Companies are employing a variety of strategies to convince both staff members and senior management that information provided by radio frequency identification systems is accurate.
By Mark Roberti
Nov 12, 2015

One question I am frequently asked when I speak about radio frequency identification is this: "If there are 100 tagged items in an area, how do I know I have read them all with RFID?" The answer, of course, is "You don't." But I always ask the questioner—typically someone who has not used an RFID system before and, therefore, has questions about its reliability and accuracy—"How do you know that a person has manually counted all 100 items correctly? The answer is, you don't."

The truth is that manual counts of a large number of items are always wrong. Time and motion studies conducted by the University of Arkansas' RFID Research Center (which has since been moved to Auburn University and is now called the RFID Lab), found that a manual inventory count of a large retail store was only 85 percent accurate. Worse, accuracy begins to degrade immediately and, within a few weeks, falls to roughly 65 percent accurate.

Yet, many retailers believe their inventory systems are 95 percent or 97 percent accurate. Dr. Bill Hardgrave, the dean of Auburn University's Harbert College of Business and the head of the RFID Lab, says retailers often look at inventory in the aggregate. "If a retailer's system says there are 12,000 items in stock and they count 11,500, they believe they are 96 percent accurate," he says. "But that's wrong." The system, for example, might say a store has five green paisley ties and five red paisley ties when, in fact, there are 10 red paisley ties and no green ties, he explains.

Other industries have similar issues. I've spoken to CEOs of large manufacturing companies who say their warehouse inventory accuracy is 99 percent. That's doubtful. There is a saying among warehouse guys: "Don't trust SAP." This doesn't mean don't trust the software company, but rather whatever the inventory system (often SAP) tells you is often wrong. Moreover, if employees can't find items they need to pick to ship to customers, then it doesn't matter that your system says you have those products in the warehouse. Additionally, if you are carrying extra stock to ensure that workers can find the items, you are tying up capital that could be better used elsewhere to grow your business.

Given that inventory systems are woefully inaccurate, it's curious that so many people obsess over the fact that one tagged item might not be captured out of 100. It seems businesspeople trust their current system even though it is wrong, while distrusting RFID solutions because they're new and unproven. But companies have begun to address this concern.

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