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One Small Retailer Abandons RFID
It appears that poor-quality tags and poor process management were at fault.
Jul 06, 2015—
In 2010, we published an article about Peltz Shoes, which had adopted radio frequency identification to track footwear at its four stores (see RFID Helps Florida Shoe Retailer Keep Its Customers From Walking Away). The company said that it had tagged every box of shoes, conducted five inventory counts and saved 1,500 man-hours of labor, while increasing inventory accuracy. Last week, Peltz put out a press release announcing that it was abandoning RFID. Huh?
This was strange, because companies don't typically put out press releases when they stop using a new (or old) technology. The release said: "Part of the problem was that the RFID printer would print unactivated tags that were undetectable until inventory cycle counts were initiated. Also, if an associate mistakenly put the wrong label on a box, the inventory would not be counted correctly. Both of these issues caused another incurred cost: unexpected labor to remove the tags from the boxes to re-label and re-inventory."
The release goes on to say: "The scanners [readers] were 99% accurate; however, the 1% caused a big increase in labor. If scanning 300,000 pairs of shoes, 1% of those, or 3,000 pairs, would need to be manually verified for accuracy. The time and effort involved to correct such inaccuracies did not warrant the extra costs when compared to the low expense and accuracies of hand-scanning the entire inventory."
I find this a bit odd. Bar-code scanning is far less accurate than RFID. Apparel stores have a 65 percent inventory accuracy rate. It might be higher in shoe stores, but it is nowhere near 99 percent. So what about all the additional labor required to check and recheck all of the missed inventory with bar codes?
The release also indicates that the 11 cents per-tag cost got to be too much with 300,000 inventory items. My guess is that if the company factored in the savings on 1,500 man-hours and an increase in sales from having more accurate inventory, the system could pay for itself—though it might be more of a challenge for a small retailer than a large one that can afford to keep dedicated teams to ensure that RFID-tagging processes are followed, and that the technology works the way it's supposed to.
One thing I wholeheartedly agree with in the Peltz release is this statement: "If manufacturers applied RFID labels at the factory inside of the actual product, it would be much more beneficial. Doing so would increase inventory accuracy straight from the factory, but would also have the added benefits of preventing mismatches and theft."
This is why more retailers need to talk about their RFID deployments, to encourage more suppliers to tag at the source. This would allow retailers large and small to take advantage of the technology and sell more goods to the people they attract to their stores.
Mark Roberti is the founder and editor of RFID Journal. If you would like to comment on this article, click on the link below. To read more of Mark's opinions, visit the RFID Journal Blog, the Editor's Note archive or RFID Connect.
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