A survey of product manufacturers and retailers by supply chain standards organization GS1 US has found that among those who are aware of radio frequency identification, the technology’s adoption is strong and growing. On average, the research indicates, 40 percent of new items made by manufacturers in that group now have EPC ultrahigh-frequency (UHF) RFID tags attached to them, while 47 percent of the goods received by retailers in that group are tagged.
The subject of RFID adoption was part of a larger survey known as the “2014 GS1 US Standards Usage Survey,” consisting of 801 small and large apparel and general-merchandise companies throughout the United States. The overall survey, carried out last year, focused primarily on the usage of Global Trade Item Numbers (GTINs), electronic data interchange (EDI) and advance shipping notices (ASNS). The survey questions related to RFID use were sent only to the 177 respondents who indicated a familiarity with RFID technology. Most respondents who reported such familiarity comprised those who make or sell apparel and footwear and related accessories, accounting for only 22 percent of the 801 participants, suggesting that RFID adoption by companies that manufacture or sell other types of products still has room for growth.
According to Melanie Nuce, GS1 US’ VP of apparel and general merchandise, the relatively high percentages of adoption and RFID plans among respondents is a sign that retailers are responding to the growth of retail purchases in an omnichannel environment (with many purchases taking place online, she notes, so retailers need to be able to get products to consumers faster, through multiple channels).
“I don’t think you would see more than half of retailers responding that they are implementing RFID without the omnichannel call for action getting louder and louder with each passing year,” Nuce says. “This uptick in RFID usage is indicative of the retail industry’s need to see what product they have and put it into the hands of consumers faster.”
Each RFID-aware respondent was asked two questions. Manufacturers were asked what percentage of their merchandise has an RFID tag attached to it, and what their plans are for implementing the technology. Retailers, meanwhile, were asked what percentage of items they received has an RFID tag attached, as well as what their implementation plans are.
Among those manufacturers asked the above questions, 18.7 percent reported that they tag 61 to 80 percent of the goods they make, while 22 percent indicated they tag between 11 and 20 percent of their merchandise, and 17.9 percent reported no tagging at all. On average, approximately 40 percent of items made by the group are being tagged.
Of the retailers, 78 percent indicated that at least some of the merchandise they receive is RFID-tagged. More specifically, 20.4 percent reported that 41 to 60 percent of their received goods are tagged, 18.6 percent said a total of 61 to 80 percent of their merchandise is tagged, and 8 percent said that all goods are tagged. Conversely, 15 percent reported no tagged goods, and 7 percent said they didn’t know.
The implementation questions yielded similarly positive responses.
Among the RFID-aware manufacturers—including those tagging at least some of their merchandise—48.2 percent said they are in the process of implementing RFID, 21.1 percent reported that they expect to do so during the next 12 months, 18.4 percent have such plans in the next one to two years, and 12.3 percent have no plans for implementation.
Of the RFID-aware retailers—including those already receiving tagged items—57 percent said they are currently implementing RFID, while 19.3 percent reported plans to implement during the next 12 months and 10.5 percent during the next one to two years. Only 13.2 percent denied having plans to implement.
It is important to note, however, that not all of the 177 respondents provided answers to both RFID-related questions.
The 177 RFID-cognizant respondents are primarily members of the apparel, footwear and accessories industry—which, Nuce says, is the subsector most commonly using and testing RFID. Most survey participants were GS1 US members, she adds, but some were not. “All had to be using GS1 standards in some way,” Nuce states.
“Retailers are certainly at the forefront of RFID adoption, because they feel the most pressure to act on what the consumer wants,” Nuce explains, “particularly as it relates to omnichannel engagement.” Manufacturers have been asked by their retailer customers to collaborate on RFID implementations, with a goal of boosting sales opportunities to benefit both parties.
RFID can build stronger relationships between suppliers and retailers, Nuce adds, since they can share data in order to verify shipment accuracy and prevent out-of-stock events. “Manufacturers can also leverage source-tagged items to gain visibility and measure accuracy throughout their supply chain,” she adds, “so while the initial compelling event might be a retailer request, there are significant upstream supply chain benefits suppliers can achieve.”
Nuce speculates that GS1’s release of the Tagged Item Performance Protocol (TIPP) guideline (see GS1 Expects Tagged-Item Performance Protocol Guideline to Boost RFID Adoptions) is helping to fuel RFID technology deployments.
“Tagged-item performance was not previously clearly defined,” she says, “and now that it is, performance can be verified independently by retailers, suppliers or any third party, allowing for more innovation and expansion of RFID programs.”
According to Nuce, her organization now plans to conduct a similar survey annually, in order to document progress for RFID technology in the retail and manufacturing spaces.
“GS1 thought it was important to measure adoption and usage standards, so that we can share the results with our members,” Nuce explains. “Our main goals are to engage the [retailing and manufacturing] industry, encourage them to adopt [adoption] standards and then drive the usage of those standards forward.”