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Item-Tagging's Barriers and Benefits

Drawing on the successful deployments of retailers, VeriSign, Vue Technology and Paxar share what they've learned about how to launch a effective item-level RFID program.
By Claire Swedberg
May 17, 2006Retailers that had planned carefully and taken a "launch and learn" approach have already proven there are real benefits to item-level tagging, according to RFID services provider VeriSign, item-level tagging platform provider Vue Technology and label systems provider Paxar.

RFID experts from the three companies, speaking at an RFID Journal webinar on Tuesday, discussed the benefits of item-level tagging for retailers, the perceived barriers and ways to surmount them, and the best practices of companies that have already piloted or implemented an RFID item-level tagging program at their stores, including Marks & Spencer and VF Corp. (see Marks & Spencer to Extend Trial to 53 Storesand VF Returns to Item-Level Tags).

VeriSign principal consultant Paul MacKinaw
Item-level tagging can offer a return on investment (ROI) for several reasons, says VeriSign principal consultant Paul MacKinaw. For one thing, it reduces out of stocks (OOS)—which, he says, currently cost the global retail market $120 billion each year—while also reducing inventory shrinkage (i.e., theft by staff or outsiders). Item-level tagging also limits excess inventory and offers improved customer service. Based on VeriSign studies of pilots already completed, MacKinaw explains, the technology reduces receiving time by 90 percent, and shrinkage by 20 to 50 percent. This happens through improved inventory visibility. MacKinaw recommends that any business determine the benefits it hopes to derive from RFID, then compare their business goals against their technology infrastructure, form an analysis phase and place the tags on individual items.

Commonalities were found among retailers that have successfully initiated RFID pilots in which individual items were tagged and tracked, the panelists agreed. Among such commonalities were the involvement and support of the retailer's management. Because RFID technology use affects so many different facets of the retail enterprise, the involvement of all the staff, coupled with strong oversight from management, is the only way to deploy it successfully.

"RFID has the tendency to change enterprise mentality," says Richard Bauer, who handles RFID global program development for Paxar. "The return on investment comes from a variety of places, and that is why you need a team approach, as well as support and vision from upper levels of management."

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