Radio Frequency Identification (RFID) is increasingly implemented in supply chain management to improve the efficiency of inventory tracking and management. Advances in technology now mean that brands can protect products at the point of manufacture whilst retaining the integrity of the packaging writes Steve Howells, Merchandise Visibility, Director Solution Sales EMEA at Checkpoint Systems.
Keeping products safe from thieves is a multi-billion pound a year problem for retailers and suppliers, as the recent Global Retail Theft Barometer highlighted. Small goods such as DVDs, CDs and video games have always been seen as targets for shoplifters as they are easy to conceal from store staff. This year, shrinkage accounted for almost 1.5 per cent of sales in the video, music and games software sector this year and whats most worrying is that this figure is increasing each year. However, retailers and suppliers alike are now beginning to open up to and embrace the concept that RFID may go a long way towards improving a retailers bottom line.
In shops around the world, source tagging consistently reduces losses from shoplifting and employee theft. The process of applying a security label during the manufacturing process, source tagging, ensures that items are protected throughout the supply chain and are only deactivated at the point-of-sale. The process not only solves the issue of security for retailers, but it also ensures it is done in a way that does not affect the packaging of the product. Source tagging addresses one of the main obstacles of using RFID, it effectively reduces the cost of applying the labels to zero when it is incorporated into the manufacturing process.
Paper-thin labels can be integrated virtually anywhere onto a product or within the packaging, so as to not detract from the product image or the marketing messages. All too often, staff apply security tags in-store with no regard for where they are placed. Not only can this cover-up legally required information, such as ingredient panels, but it also takes up a great deal of valuable staff selling time, delays the speed-to-market and damages brand integrity.
The technique of source tagging offers retailers and manufacturers invisible and tamper-resistant security labels that deliver uncompromising protection and eliminate labour costs for manual tagging by providing floor-ready secure merchandise. But source tagging can have other benefits too. By integrating RFID technology into the source tags, products are not only protected from theft but can be tracked throughout the supply chain, providing visibility and vital inventory information to retailers.
In a marketplace that competes so fiercely on cost, consumer packaged goods manufacturers and their trading partners must streamline distribution, optimise inventory levels, whilst reducing retail theft and outofstock scenarios. It has become essential to enhance inventory management and supply chain logistics by implementing RFID tagging and labelling to help consumer goods manufacturers, distributors and thirdparty logistics providers comply successfully with RFID mandates, meet consumer expectations, increase inventory visibility and maximise their bottom line.
In supply chains across a variety of industries, RFID is being used to streamline operations, increase efficiency, and enable real-time processes that have historically been manual and labour-intensive. RFID enables retailers to not only know that a theft event has occurred but also what specific merchandise was stolen. This insight gives retailers a far more accurate picture of inventory levels, allowing them to promptly restock shelves improving on-shelf availability, leading to increased sales.
Recently, Checkpoint Systems has been working with METRO Group to deliver standards-compliant, RFID-based Electronic Article Surveillance (EAS) to both reduce loss and improve merchandise management. The effort is in line with METROs RFID strategy to use security tags for multiple purposes along the supply chain. RFID based EAS represents a significant stepping stone to bringing RFID into the supply chain and store operations. As a result, we expect retailers to benefit dramatically from improved visibility, higher customer satisfaction levels, and increased sales.
Consider one supply chain scenario involving the movement of dairy products from the farm to the processing facility, to packaging operations, through distribution, and eventually into stores. In each of these steps, there is movement of goods requiring shipping notification, goods receipt, inventory management, reusable asset tracking, cold chain management, and more. RFID improved each of these processes, integrating with existing enterprise systems to provide real-time insight into the movement of goods, without the need for manual processes that inherently cause latency and inaccuracy.
One additional point that is often overlooked is the environmental effect of RFID. At the RFID Journal Live conference in Florida, one speaker noted the technologys green credentials. More than 24 million people shop in our stores every day, he said. If 100,000 extra trips are avoided by having items in stock, we will save customers 11.4m ($22.8m) a year in petrol and reduce greenhouse emissions by 80,209 metric tons. A statement not to turn a blind eye to, especially in this environmentally conscious age.
According to research, source tagging is the best solution on the market to meet the needs of retailers, as well as that of the brand owners. It effectively protects retail profits and the packaging image afterall, if a product is not on the shelf its not there to buy! The continuing significant threat of shoplifting and subsequent impact on the profitability of a retailer outlines the importance of taking the issue seriously.
By implementing RFID into source tagging, retailers can maximise the speed to shelf and security of a product, whilst maintaining the integrity of its packaging. The technology is fast becoming the first choice due to its integrated benefits along the supply chain in addition to the in-store advantages it delivers.
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