I recently came across an article in The New York Times about a California pistachio company, Touchstone Pistachio, which discovered during a routine audit that it was missing 42,000 pounds of product (see A Truckload of Evidence: 42,000 Pounds of Pistachios Are Stolen in California). It turns out they’d been stolen by a driver for a contract shipping company the nut producer was using. But it does beg the question: how did a company lose 21 tons of product and not notice until a routine audit—by which time most of the stolen goods had already been sold off?
Some might be tempted to blame the incompetence of this particular business, but I can tell you such losses are not uncommon. I once wrote an article about a coffee company that had installed an RFID system because it was losing pallet loads of coffee beans. An airline executive, speaking at RFID Journal LIVE! a few years ago, said his firm had misplaced aircraft engines. A newspaper company I wrote about lost one-ton rolls of newsprint. And the VP of supply chain at a very large consumer product company once told me that at any given time, his firm had $1 billion in inventory that it could not locate. That’s billion—with a B.
CEOs like to think they are hyper-efficient and know everything that’s going on within their organizations. But in fact, many companies have very little visibility into where stuff is located within their facilities—and as a consequence, they spend a lot of money replacing assets that aren’t actually missing. Some airlines spend a million dollars a year or more replacing food carts. Automotive companies replace 8 to 10 percent of their parts bins annually. Hospitals replace equipment like oxygen pumps when they are underutilizing the assets they own.
RFID is perfect for solving these issues, and there are companies that have done so. But many others have refused to accept they have a problem. Many retail CEOs believe they have 95 percent inventory accuracy, when it’s really closer to 60 percent—and even as low as 30 percent in some categories. I was once speaking to a supply chain executive at one of the world’s largest technology companies, who told me his firm was having issues with items disappearing between the warehouse and stores. Later, I spoke with someone further up the chain, who claimed the company didn’t need RFID because it didn’t have any supply chain issues.
So, the first step in solving supply chain or asset-management issues is to admit you have a problem. Once a company does that, it can assess whether RFID or another Internet of Things-based technology can solve that problem. And once you’ve deployed a solution to help you track all of the physical things your company owns, you are on your way toward finding theft issues before 21 tons of product can go missing.
Mark Roberti is the founder and editor of RFID Journal.