The World Is Different

By Mark Roberti

Efficiencies once unimaginable are now being achieved by companies using radio frequency identification technology.

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Back on Nov. 18, 2002, I wrote an opinion column titled The World Just Changed. RFID Journal had just broken the news that Gillette was purchasing 500 million passive ultrahigh-frequency (UHF) RFID tags from Alien Technology, which, at the time, was the only company offering tags based on the first-generation Electronic Product Code (EPC). In the column, I wrote, “The way I see it, the Gillette announcement is the starter’s gun signaling the beginning of the race to get a competitive edge from using RFID.”

The truth, of course, is that there was not a mad scramble to deploy RFID systems. Most companies were cautious about investing in a new, unproven technology. Adoption has been slow due to a lack of mature solutions, as well as to some external factors, such as the economic collapse in 2008. But I thought about this obscure opinion piece, written more than a decade ago, as I toured the Brascol wholesale children’s outlet last week, when I was in Brazil for our RFID Journal LIVE! Brasil event. Brascol’s CEO, Antonio Almeida, gave me a tour of the outlet before the opening of the event, at which he was a speaker.

Customers come from small and medium store chains around the country and purchase, on average, 500 items to replenish their inventory of children’s clothing, shoes, infant bathtubs, baby bottles and other items. Brascol has tagged 35,000 stock-keeping units (SKUs), some of which cost roughly a dollar. It has been providing tags to its suppliers—who, in January 2015, will begin purchasing tags on their own. The outlet is using 70,000 tags per day. In terms of scale, it is one of the largest passive UHF RFID deployments to date, exceeded perhaps by only Marks & Spencer (see Brazilian Clothing Wholesaler Invests in RFID).

Before deploying RFID, Brascol had 50 stations at which staff members would count the items and total up the cost for each customer. This often took an hour per customer. Brascol installed just 25 RFID-enabled stations and reduced the checkout time to 20 minutes, on average. The number of employees required for checking out customers was cut from 110 to less than half that amount.

Workers receiving goods into inventory at the outlet were previously able to receive 3,000 to 4,000 items daily. Now, they can receive 15,000 to 20,000 a day. With very large orders from suppliers, it used to take too long to count every item, so Brascol had to trust that all goods on the purchase order were delivered. Now it is able to confirm every order within a matter of minutes. On the shipping side, the company has reduced staff levels and doubled the number of products it can ship from the retail outlet, from 35,000 to 70,000.

Brascol has also reduced the amount of goods in its inventory by approximately 35 percent. This is because it knows what it has, and thus does not need to store as much safety stock, which has allowed the retailer to free up space to sell more goods and make a greater amount of money.

In addition, there has been an improvement in sales and a reduction in employee theft and shoplifting. Brascol achieved a return on its investment (ROI) during its first year of using the RFID system, and it doesn’t yet utilize all the RFID data it is collecting to improve its product mix and achieve other potential benefits. Once it does that, Almeida says, the ROI will be even greater.

When I talked about RFID’s potential following the Gillette purchase in 2002, many scoffed. The truth is, many companies in myriad industries are still skeptical of RFID’s potential. They can’t see that the technology is changing the way in which companies worldwide conduct business. Brascol is just one example in the retail industry. The firm reduced the number of employees working on a particular task by 50 percent and also doubled throughput, achieving a 300 percent improvement in productivity. That is real change.

I can point to manufacturers, such as Airbus, which has complete visibility of parts and tools on its aircraft production lines (see Airbus Expands RFID Part Marking Across All of Its Aircraft Families). And to Bechtel, which can track and manage thousands of components of three liquefied natural gas plants that it is building off the coast of eastern Australia (see RFID Helps Bechtel Manage a Megaproject). And to dozens and dozens of hospitals that can locate, within seconds, medical equipment that nurses once had to scour the halls to find. There isn’t time to list all the companies that are enjoying benefits once thought impossible to achieve (you can read about them on our website). But take my word for it—the world has, indeed, changed.

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.