What Are the Issues Involved in the RFID-Tracking of Spare Parts Inventories at Dealerships?

The main issue for the automotive industry is that parts are composed of metal. While there are tags that can be placed on metal parts and be read from a reasonable distance (10 feet or more), these tend to be more expensive than a standard ultrahigh-frequency (UHF) RFID smart label. What that means is that the deployment’s cost will be higher than that of tagging, say, shirts or jeans. (And on-metal tags might cost 50 cents to $1 apiece, versus 10 cents to 15 cents for a generic RFID label.) To determine whether there is value in tagging these parts, you would need to conduct a pilot to determine whether the reduction in time required to perform an inventory count, and to locate the necessary parts, would justify the expense.

My guess is that the real value of an RFID solution would be in customer service. Having the proper inventory on hand due to improved tracking ability would mean customers could wait for less time for their cars to be repaired, likely resulting in their becoming more loyal, with regard to both services and purchases. That benefit would be difficult to calculate, unfortunately, because it would be hard to know definitively if a customer had decided to return, rather than go elsewhere, because you had consistently provided great service in the past.

In my view, these decisions sometimes require data and a leap of faith. The data might show you that if you invested, say, $50,000 in an RFID system, you would save 1,000 hours of labor annually. That might not be hard savings, depending on whether you could reduce your head count (many companies redeploy labor to more value-added tasks, so it would not be hard savings). Armed with that information, you would need to determine whether that benefit, plus the improved customer service, would be worth the investment.