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Phone-Tracking Pilot Down Under Points to Big Benefits
Australian telecommunications firm Telstra used RFID to track 12,800 mobile phones from a Sydney distribution center to six stores around the country, and estimates full deployment will lead to AU$4 million in annual savings.
Jun 30, 2009—Australian telecommunications company Telstra has completed an RFID trial that, if rolled out across its 130 retail outlets, could save the firm up to AU$4 million (US$3.2 million) in annual labor costs and product shrinkage. In the three-month trial—one of the country's largest item-level trials—Telstra tagged the packaging of 12,800 mobile phones, then tracked them from its Sydney distribution center (DC) to six retail outlets around the nation.
Using the RFID system, Telstra indicates that it improved its inventory accuracy through increased visibility from 65 percent to 99 percent. The company also reduced the time it spent receiving goods by 75 percent, the time spent on stock-taking by 50 percent and the time spent searching for missing items by 50 percent. The reduction in shrinkage, combined with labor savings generated by the reduced time spent taking stock that will free up staff members to serve customers on the sales floor, is expected to save the company up to $4 million per year.
Telstra Enterprise & Government, the firm's network-based solutions and services arm, developed the system and could roll it out across Telstra's retail stores as early as next year.
Julien Marchand, Telstra's project manager, says the trial—first proposed by the company in 2006 (see Telstra Takes On Two RFID Trials)—was held between October 2008 and February 2009. Miami-based supply chain management firm Brightstar, which manages Telstra's DC, had approached Telstra's retail arm, urging it to trial RFID to improve visibility within the supply chain. "The main reason given," Marchand says, "was to reduce the loss of mobile phones in the supply chain, and shrinkage at Telstra retail stores."
In 2007, the total value of retail shrinkage in Australia was AU$2.26 billion (US$1.8 billion), an average shrinkage rate of 1.39 percent of sales. Since phones are high-value items—with Telstra's ranging in price from AU$150 (US$121) to AU$1,000 ($805)—better supply chain visibility could reduce shrinkage.
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