Why You Should Be Interested in RFID
If you sell to a major retailer, sooner or later you’ll be supplying RFID-tagged merchandise. It’s no secret that retailers with growing omni-channel initiatives see strong benefits with RFID from the DC to the back room and the selling floor. But did you know that every RBO (Retail Brand Owner) can also benefit from this empowering technology?
When leading retailers publish their plans for implementing RFID, they roll it out by category and region. The buyer will send a letter informing you when to begin shipping goods with EPC-compliant RFID tags. Depending on the retailer, and your category, you will have a few choices on how to comply. If the rollout is partial, you can begin by tagging merchandise in your DC. Typically this is done at a VAS (Value Added Station). If the quantities of goods to be tagged represent a major portion of your sales, you may choose to have the products tagged at source.
Tag – You’re It
Too often, this is the minimum effort that suppliers expend to meet their retail customer RFID mandates. Operations folks are simply told to tag the goods and ship them to the correct DC. This “slap and ship” mentality is actually quite shortsighted.
If you’re going to the expense of tagging your merchandise, why not use the technology internally? Why not use it to improve your supply chain processes and improve your profitability?
Retailers are adding product categories and rapidly expanding their RFID compliance mandates. In short, it’s full speed ahead. Some brand owners are shipping goods with EPC-compliant RFID tags, but not taking advantage of any of the benefits the technology offers. Being in that category can cost you thousands.
Most brand owners interested in RFID have some obvious initial questions such as “How do we begin?” and “How do we justify the cost of investing in RFID infrastructure?” It all starts with realizing the ROI of RFID.
ROI Begins With Reducing Chargebacks
To help customers quantify the ROI (Return on Investment) of RFID, we asked the brand representatives if they would share the size of the chargebacks they are assessed. We were amazed at the costs these brands are shouldering. The chargebacks ranged from tens of thousands of dollars to millions of dollars for the largest brand owners.
There are lots of reasons shipments are charged back – merchandising issues, compliance marking errors, etc. – but packing and shipment errors are easily addressed with RFID technology and anything the brand can do to lower the chargebacks directly impacts the bottom line. By implementing an RFID inventory management system, manufacturers on average see an 80% improvement in shipping/picking accuracy.
Just by reducing chargebacks alone, an RFID system will quickly pay for itself.
Start With a Pilot – Then Scale
If only a portion of your stock needs to be tagged, you can begin by tagging merchandise in your DC. Typically this is done at a VAS (Value Added Station). What is the equipment required? An RFID printer can print and encode EPC labels to affix to those products shipping to the mandating customer. Add a mobile computer with RFID and you can start to take advantage of such labor savers as RFID cycle counting and RFID pack and ship validation. This will give you a taste of the benefits of RFID. As you tag more and more merchandise an investment in fixed RFID infrastructure such as dock door portals and RFID-enabled MHE (Material Handling Equipment) will give you even more bang for the buck.
As you roll out more RFID enabled processes, the investment made to comply with your customer mandates will immediately begin to reduce chargebacks, and lower labor costs as you process more shipments with more accuracy in less time.
Benefiting From Your RFID Tagging Mandate
By investing in robust RFID software and infrastructure additional benefits can be reaped. For example, we are helping brand owners track preproduction samples and molds, job tickets and employee applications, reusable pallets and trolleys, and IT assets. Once installed, you’ll find dozens of processes that can be quickly and easily enhanced using RFID. By putting RFID to work inside your four walls, you will reduce the operational costs, and you will be able to pay for the RFID investment with a major reduction in chargebacks.
Validation is one of RFID’s most compelling benefits. Each carton loaded into an outbound trailer passes through an RFID Portal and is checked to confirm it is going on the right truck. In addition, this final validation also acts as a trigger for generating an EPOD (Electronic Proof of Delivery) record.
By investing in RFID portals at outbound dock doors, you can validate each carton loaded into an outbound trailer and confirm it is going on the right truck. RFID validation can automatically “close” a shipment and act as a trigger for generating an EPOD (Electronic Proof of Delivery) record. Validation is one of RFID’s most compelling benefits. Each carton loaded into an outbound trailer passes through an RFID Portal and is checked to confirm it is going on the right truck. In addition, this final validation also acts as a trigger for generating an EPOD record.
For one customer whose goods are tagged at source, fixed RFID readers on inbound conveyors read the tags of every single item in the carton. The system compares the ASN (Advanced Ship Notice) from the factory and confirms that each carton contains exactly what was ordered. This is the first place to put those RFID tags to work for you. We are working with a major brand to improve their inbound processes. Currently, they use fixed barcode scanners to decode the GS1-128 barcode for each carton and update purchase order records. The customer assumes that the barcode label applied at source accurately reflects the carton contents. However, scanning the GS1-128 barcode does not confirm whether or not the correct product is in the carton and whether it is short or not. The customer must audit a fair number of cartons to see if in fact the contents match the purchase order to the factory.
Now that the goods are tagged at the source, here’s how the customer is taking advantage of RFID technology. Fixed RFID readers read the tags of every single item in the carton. The system compares the ASN (Advance Ship Notice) from the factory and confirms that each carton contains exactly what was ordered. This validation is an audit of every single carton arriving from overseas and it happens in real time without any misreads and without slowing down the receiving line.
There’s no need to shut the DC for a few days to conduct physical inventory. A small team armed with mobile RFID readers can count inventory in a fraction of the time compared to traditional barcode based methods. Because it is easier and faster to count, you can cycle count more often with greater accuracy.
This is the next place to put those RFID tags to work. By adding RFID reading to each pack station, operators do not have to scan each barcode as they pack an order. By validating the carton contents in real time, the customer benefits in two ways: the packing process is faster with the reduction in hand barcode scanning and errors are reduced to zero as operators can be signaled instantly if the wrong item is placed in the carton.
By adding fixed RFID readers at each pack station, orders are validated in real time, the packing process is faster with the reduction in product handling and hand barcode scanning, and errors are reduced to zero as operators can be signaled instantly if the wrong item is placed in the carton.
These four areas alone are just the beginning when it comes to internal benefits with RFID. Once your warehouse is filled with tagged items you can cycle count in a fraction of the time compared to traditional methods. Once the infrastructure is in place, RFID helps brand owners track preproduction samples, job tickets, and raw material bundles. Even showroom sales processes can be quickly and easily enhanced using RFID.
By putting RFID to work for your brand, you will reduce the costs of receiving, packing, and shipping goods, and you’ll minimize chargebacks with improved order and shipment validation – with EPOD to back up your claims.