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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
Many retailers have not yet reached the pilot phase of item-level tagging because of the perceived barriers to RFID, says Jamie Kress, Vue Technology's director of sales and marketing. Kress points to such technical roadblocks as concerns about reader density creating multiple reads, the high cost of tags, end-to-end gaps and hardware management complexities that have kept many retailers from launching their own pilots. While the cost of tags is dropping, he says, even at the current average price of 12 cents per tag, the ROI is there for retailers who choose to use item-level tagging on at least some of their items. He adds that EPCglobal's Gen 2 standard is helping eliminate the multiple standards and interoperability questions, bringing the read rate up to about 99 percent.

Kress suggests companies consider limited deployments, putting a solution in place in one area of a store or one kind of product depending on the needs of the business. This, he says, reduces the amount of tags needed because it focuses on putting tags on the highest-value retail items rather than on every product in the store.

Bauer cites five steps for successful RFID pilots. A company needs to put together a multifunctional RFID team that includes people from operations, IT, purchasing, distribution and finance. They must also have strong support from management to oversee the pilot's implementation, he says, because the technology affects so many aspects of a store's operations. That team then needs to develop a plan to work with company partners to analyze the flow of inventory, calculate the ROI and determine the optimal RFID tagging solution. The team needs to identify the main point of starting, an area where the company needs to see improvement.

Retailers must ultimately launch and learn. If a company has multiple stores, it should start tagging at only two to four location; if it owns only one store, it should start with one area of that store. It should take about two days to tag the items, then get them on the floor and start running the system, he says.

"Quickly implement the tagging over a weekend or a 48-hour period, work to a deadline and move forward," says Bauer, recommending "a review date every two weeks" to assess how well the system is working. Assessment is the final phase, in which retailers take the data back to their ROI calculators and look at the hard information their trial showed. "Conduct a solid management review," Bauer says.

The full webinar, "RFID with a Business Case: the Proven Benefits of Item-Level Tagging in Retail," will be available for on-demand viewing by going to webinar archive.

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