The Myth of Perfect Read Accuracy

By Mark Roberti

Retailers don't need to read every tag, every time, in order to gain business benefits from RFID. Those who think they do are missing the point—and perhaps a big opportunity.


I spoke at the recent U-Connect conference hosted by GS1, offering the audience an overview of radio frequency identification adoption around the world, as well as in different industries. After my presentation, a gentleman from a well-known retailer came up to me and rather sternly asked, “Can you guarantee that I will be able to read every tag, every time?” I told him that I could not, nor could anyone else. “Then this technology is useless in retail,” he said. “How can we manage our business if we are always not accounting for some of our inventory?”

For a moment, I reacted with a stunned look. After recovering, I replied, “But that’s what you’re doing now.” He didn’t understand, so I pointed out that he’s currently not accounting for every item in his store’s inventory. In fact, the inventory counts in his store are probably only about 65 percent accurate. But he continued to insist that RFID needed to be perfect before it could be deployed in a retail setting.

The only time RFID needs to be perfect is when a financial transaction is involved. And in those cases, it is perfect. A few years ago, I visited TransCore‘s test facility in Albuquerque, N.Mex. The company has a test track where cars and vans of difference sizes zip around a track to test the reliability of its toll-collection systems. As far as I know, these systems work flawlessly. Exxon Mobil‘s Speedpass and MasterCard‘s PayPass work perfectly as well.

Reading tags on products or assets, in most cases, is a different matter. RFID doesn’t need to be perfect. It simply has to deliver a return on investment (ROI) that is compelling enough to warrant adoption. Does it do that? American Apparel, Charles Vögele and other retailers have found it does (see Charles Vögele Group Finds RFID Helps It Stay Competitive and American Apparel Makes a Bold Fashion Statement With RFID)—and the reason it does is that retailers have great difficulty keeping track of their stock.

Bill Hardgrave, director of the University of Arkansas’ RFID Research Center, will present aggregated data at our RFID in Fashion 2009 event (being held in New York on Aug. 12-13), illustrating that overall in-store inventory accuracy is off by 35 percent. RFID can help bring that level up to 98 percent or 99 percent—and at the conference, we’ll demonstrate how. Yet, the retailer at U-Connect was more worried about the few items RFID can’t read, rather than the fact that his inventory accuracy is appallingly low today and would be much better with radio frequency identification.

Consider the fact that retailers don’t presently account for stolen goods. The National Retail Security Survey, conducted by the University of Florida, showed that U.S. retailers lost more than $34.3 billion, or 1.4 percent of overall sales, in 2007. Nearly 40 percent of that shrinkage was due to employee theft, 36 percent to shoplifting, 20 percent to administrative error and 6 percent to vendor fraud. These losses are not detected, so companies think their inventory has been stolen, leading to out-of-stocks and lost sales. An RFID system will let you known that these items are not available for sale.

One thing I often hear from folks, like my friend at U-Connect, is that bar codes provide a feedback mechanism—a beep—to let you know you captured data. RFID doesn’t do that, they say, so you never know if you’ve interrogated all of the items to be read. But this isn’t quite accurate. Let’s say you have five items that have a bar code, and five with an RFID tag. You pick up each bar-coded item and scan its bar code, and you get a beep. Now, you read each RFID tag with a handheld interrogator. You can display the serial number on the screen, so you know each was read. And Motorola‘s new fixed interrogator has built-in lights that indicate when an item has been read.

What if you have clothing items on a rounder? How do you know you read the RFID tag on each item? That’s a good question. There might be 24 items on the rounder, and a handheld interrogator might pick up only 23. But let’s say you give an employee a bar-code scanner. How do you know that he or she will not miss an item? People get distracted, and there’s no guarantee someone will count every item by hand, or scan every bar code. One benefit of RFID is that you could read the items on the rounder a second time, in less than two minutes, and possibly pick up any missed items. Going through and scanning every bar code again, or counting the items by hand, would take much longer.

The reality is that RFID greatly enhances data accuracy and inventory visibility. The question is not whether the systems can read every tag, every time. The question is: Does RFID deliver a big enough improvement over current data-capture technologies, and an ROI that is compelling enough to make it worth deploying? The answer is yes, according to retailers that have already deployed the technology, as well as analysts, researchers and trade groups that have studied the issues. Focusing on read reliability misses the point, and those who get hung up on this issue could be missing an opportunity to use RFID to dramatically increase inventory accuracy and increase sales.

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 or click here.