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RFID and Small Business

To compete successfully in a marketplace dominated by larger corporations, small companies should deploy the right RFID solution.
By Greg Gilbert
RFID also supplies valuable data and knowledge to small businesses that can deliver a competitive advantage such as boosting customer retention rates. From a business standpoint, RFID readers (interrogators) situated at dock doors and other choke points allow automatic product detection. This brings about increased granularity, accuracy, visibility, real-time decision making, supply chain efficiencies and responsiveness to customer demand.

The result of more granular, accurate and timely information is a much smoother and synchronized allocation of inventory to orders. Shelves stay stocked without increasing inventory levels or safety stock.

On average, retailers lose approximately 4 percent of sales to out-of-stocks. The out-of-stock impact is 50 to 100 percent higher for promotional or high-velocity items. Furthermore, 55 percent of out-of-stocks last one to three or more days (see Retail Out-of-Stocks: A Worldwide Examination of Extent, Causes and Consumer Responses, by Thomas W. Gruen, of the University of Colorado, Colorado Springs; Daniel S. Corsten, University of St. Gallen, Switzerland; and Sundar Bharadwaj, Emory University).

The primary cause is a lack of visibility. The supply chain is all about matching inventory to orders. RFID enables in-store execution and visibility. A greater level of detail can be achieved with interrogators located at various places in the store, combined with other data streams from the retail environment. This increased visibility can be used to create actionable requests for store personnel.

Sharing data between you and your retailer in an open format provides the visibility required to understand why a retailer sells more of a particular product than another. RFID enables enterprise-wide EPC event management for greatly increased visibility. The RFID infrastructure provides better access to real-time data at a more granular level.

While RFID enables companies to achieve basic compliance, it is clear the technology offers much more to companies seeking to increase operational efficiency, reduce costs and strengthen service and customer loyalty. When evaluating the implementation of RFID in your company, be patient and avoid these common pitfalls:

Doing nothing.
Perform pilots in your environment to determine the optimal use of RFID and the necessary operational procedures.

Lack of internal communication.
Make sure marketing, sales and operations are on the same page, and that everyone understand RFID requirements.

Short-term thinking.
A short-term philosophy may be required for compliance, but RFID requirements will only continue to grow. Without proper long-term planning, you can never realize the full benefits it has to offer.

Greg Gilbert is the director of RFID solutions and strategy at supply chain solutions provider Manhattan Associates.

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