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Bloomingdale's Tracks Strong Results from RFID Pilot

RFID improved inventory accuracy by 27.2 percent and reduced the time required for inventory cycle counting by 96 percent in an item-level jeans tracking pilot project completed by Bloomingdale's. Researchers said the results were consistent with other pilots and suggest similar benefits would be available to other retailers.
Sep 01, 2009This article was originally published by RFID Update.

September 1, 2009—A pilot program at Bloomingdale's found item-level RFID tracking could improve inventory accuracy 27.2 percent and reduce cycle counting time by 96 percent. The results were released publicly last week by researchers at the RFID Research Center at the University of Arkansas' Information Technology Research Institute (ITRI).

"These results are good news for retailers, who have been struggling with inventory inaccuracy for a long time," Dr. Bill Hardgrave, executive director of the RFID Research Center, told RFID Update. "What's especially exciting for me is that the Bloomingdale's results are extremely consistent with the inventory accuracy and labor reduction possibilities of RFID that we've seen elsewhere. We've done four of these studies now, with four different retailers, and have had consistent results each time."

See RFID Yields 13% Reduction in Understated Inventory and 30% Out-of-stock Reductions from RFID for coverage of previous RFID Research Center retailer studies.

The Bloomingdale's pilot compared inventory accuracy for men's and women's jeans at two similar stores over 13 weeks. Baseline inventory accuracy levels were determined by taking inventory three times a week for five weeks using Bloomingdale's current handheld bar code scanning process. After the baseline was established, the control store did inventory cycle counts twice a week using the bar code process. The test store also measured inventory twice a week with bar code, but also tracked the approximately 10,000 items in stock with handheld RFID readers. Each door in the store was also monitored by fixed-position readers, which were used to collect data for loss prevention analysis, but not to update the inventory data.

After eight weeks, inventory accuracy at the RFID test store had improved 27.2 percent, including a 21 percent reduction in out-of-stocks and a 6.2 percent reduction in overstocks.

Inventory cycle counts were completed 96 percent faster with RFID than with the legacy bar code process. It took 53 hours to manually count 10,489 pairs of jeans by bar code scanning, compared to just two hours doing it with handheld RFID readers.

RFID Research Center researchers commented on this difference in a white paper they released about the project: "With the above example, Bloomingdale's could take inventory counts 26 times with an RFID handheld reader in the amount of time it takes to do one inventory count with a barcode scanner."

"In this case, the process change between taking inventory with a bar code reader and an RFID reader was really minor," said Hardgrave. "That is part of the great news. Just by using RFID to shore up existing processes you can get great results; you don't have to completely change your processes."

Australian telecommunications provider Telstra recently said it reduced inventory time by 50 percent during a cell phone tracking pilot (see Item-Level RFID Pilot Sees Major Benefits, Proves ROI).

The consistent, positive results shown in multiple pilots should give retailers more confidence in RFID's ability to deliver benefits, Hardgrave said. "We've done four studies now, and they've all been consistent. The more success stories that are out there, the more confidence retailers can have. I really expect to see great things happening for item-level tracking in retail in the next 12 to 18 months."

The Bloomingdale's pilot is completed and Hardgrave would not comment on the retailer's future plans or next steps. He noted the RFID Research Center is conducting more tests with other organizations.
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