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Dillard's, U. of Ark. Study Quantifies RFID's Superiority to Manual Inventory Counts

The results, based on a project carried out in three of the retailer's stores, involved more than 1,000 pairs of men's jeans labeled with EPC Gen 2 RFID tags.
By Claire Swedberg
May 11, 2009The RFID Research Center at the University of Arkansas' Information Technology Research Institute (ITRI) has released a research paper indicating that not only does radio frequency identification improve inventory accuracy, it can also take the place of annual, manual inventory counts. The paper describes the results of the third phase of a pilot studying item-level RFID technology in the retail environment.

The study focused on three Southeastern stores operated by Dillard's, one of the United States' largest apparel retailers, with more than 300 stores in 29 states. The results are based on tests that took place in fall 2008—coincidentally, during one of the stores' prescheduled twice-yearly inventory counts. Bill Hardgrave, executive director of the ITRI and director of the RFID Research Center, presented the study's results at RFID Journal LIVE! 2009, held last month in Orlando, Fla.

Bill Hardgrave
Although Dillard's had scheduled a manual inventory at all of its stores, the University of Arkansas' research team had not anticipated that to occur in the midst of the study. "We had already started the study," Hardgrave says, when the inventory process began. "We decided that could make the results even more interesting."

The study was conducted at three of the retailer's area stores. Initially, four sites were involved—two test stores, each issued fixed and handheld RFID interrogators, as well as two control stores—but one control store was closed during the study. During the research project, a manufacturer of men's denim jeans attached hangtags with EPC Gen 2 RFID inlays to each of its garments, then shipped them to the three stores. In the midst of the study, the retailer conducted its semiannual inventory counts at all three locations, and the study then continued, tracking the benefits of RFID after that semiannual inventory brought all three stores to near-perfect levels of inventory accuracy.

What the researchers found was significant, Hardgrave says. Following the semiannual inventory, the accuracy of the control store's inventory quickly began to decline, while the two RFID test stores improved upon the accuracy established by the semiannual count.

As a result of the study, Hardgrave notes, researchers determined that not only does RFID raise inventory accuracy, it can actually eliminate the need for the disruptive, expensive and time-consuming annual or semiannual inventory check most retailers conduct to improve inventory accuracy, as well as for reporting to accountants or the IRS.

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