Retailers Need to Choose RFID Partners Carefully

Leslie Hand, an analyst for IDC Community Insights, says a company's key relationship is with the company providing consulting, integration and software.
Published: September 25, 2012

Paul Prince, RFID Journal‘s executive editor, sent me a link to an interesting column by Leslie Hand, a retail analyst for IDC Community Insights. Hand was in retail before becoming an analyst, so she knows of what she speaks. In the article, titled “RFID for Better Store Level Inventory Replenishment (and other Retail Use Cases),” she makes a strong case for RFID in apparel retailing.

“I have to reiterate that I am convinced that the benefits are real for retailers, particularly for replenishable products, and the fastest path to success is through tagging articles with complex configurations like style/color/size…,” Hand writes. “The bottom line is RFID enables leaner store inventories, without sacrificing sales. Doing physical counts and making sure shelf availability is managed appropriately is no longer primarily an exercise to make our accountants and share holders happy, but an exercise that quite simply enables better customer service!”

She goes on to say that the value of improved shelf availability on top-line revenue “is the best-kept retail secret,” because “very few retailers have uncovered the real value in 97 percent in-stock positions, because very few ever perform this well on an annualized basis.”

The retailers that have used RFID to boost in-stock positions that high tell her the benefits are:

• Up to 30 percent improvements in inventory accuracy

• Up to 50 percent of out-of-stocks eliminated

• A 96 percent reduction in the amount of time required to cycle count, enabling more frequent and more valuable insights into real physical inventory

Hand then discusses the vendor landscape, which is why Paul sent me the article. His note said, “I found the last paragraph interesting.” It’s worth reading the entire story, but I will quote Hand’s final paragraph here in full:

“Again, the retailer’s most important RFID-enabling relationship will ultimately be with the vendor that provides consulting, integration and, most critically, software. These vendors are Tyco Retail Systems, Checkpoint Systems, HP, IBM and Xterprise. That said, some of the vendors that provide hardware, ICs and tags only are incredibly valuable resources for ROI evaluation or process review—particularly Impinj (Store Performance Simulator), Alien Technology, Motorola and Avery Dennison.”

I think Hand is right. In fact, many speakers at our events have reported that “The right partner is critical.” Often, the right partner is a good systems integrator, but sometimes hardware or software companies will also handle integration. Be sure your systems integrator has experience working in your field.

Who is the right partner? There’s no simple answer. I can’t just say, “Work with these guys—they are the best.” There are a lot of good companies that can help you, including all of those Hand mentioned, and others. Here are some suggestions.

Evaluate the solution. If a company is offering software or hardware that does not meet your needs, then, obviously, it needs to be eliminated from the competition. One way to gain insight into what particular solutions do is to attend an RFID event where several vendors are exhibiting. This allows you to do some comparison shopping. You’ll be able to eliminate several players right off the bat, and you should be able to decide which to invite to investigate further.

Ask about customization. Many deployments require changes to the software platform, or custom tags or reader configurations. Is your partner willing to work with you to provide what you need? And what will that cost?

Ask about motivation. I would ask any RFID company you work with how far it is willing to go to make sure your project is a success. Ask for references at companies where the potential partner has deployed a solution similar to the one in which you are interested. Ask how responsive the company was, and how hard it worked to overcome any obstacles during the deployment.

That last question will likely be the one that will make the right partner stand out for you. Some companies will offer discounts to get a deal, but then won’t want to go the extra mile to make it a success, since they aren’t making much money. Other firms will do whatever it takes, because your success will help them succeed. Frankly, the same business might behave differently with two different customers, if one project is opportunistic and the other is core to their strategic objectives. That means you can’t just take someone else’s word that this or that company is a good partner—do your homework and then evaluate how committed a potential partner is to your project’s success.

Mark Roberti is the founder and editor of RFID Journal. If you would like to comment on this article, click on the link below. To read more of Mark’s opinions, visit the RFID Journal Blog, the Editor’s Note archive or RFID Connect.