Reducing Chargebacks is the ROI for RFID

What is the ROI for RFID? Reducing Chargebacks.

Questioning the ROI potential of RFID tags? That is a query we receive quite often from vendors and distributors since many are unfamiliar with what RFID can do. The answer depends on how much money a company loses in supply chain inaccuracies.

RFID has shown its value to retailers by reducing out of stock issues and improving online order fulfillment. RFID has become  a favorite among retail giants looking to stay ahead of the omnichannel curve. Why? Due to its ability to improve the shopping experience on the sales floor and online. To ensure the right items are on the shelf, retailers rely on RFID tags and software.

RFID’s Benefits in Distribution Centers

Less data exists that can prove the value of RFID adoption in warehouses, distribution centers, and manufacturing plants. Does this mean RFID doesn’t really have a place in the warehouse, or within manufacturing processes? Far from it. RFID is a perfect fit for warehouses and distribution centers. That’s because RFID’s knack for being incredibly accurate from long distances, and even in odd places. For example, if a the barcode of a box is facing inward on a shelf, employees must reach for the box, and scan it. With RFID, employees just need their RFID reader to be in a remotely close proximity to the tag to get a reading.

For manufacturers and suppliers, the benefits of RFID start with reducing chargebacks. It’s truly staggering how much revenue can be lost through shipping errors.

Retailers grade how well orders are fulfilled based on a number of things. Scores are affected due to packing quality, shipping date, or technical issues. Technical issues include tags or barcodes being unreadable as a result of poor printing. There are many hurdles manufacturers and distributors must overcome to avoid costly chargebacks beyond picking/packing errors. Smeared or unreadable barcodes, late shipments, and missing ASN (Advanced Shipping Notices) are all common challenges that factor into a poor fulfillment grade.

RFID tags can pay for themselves by reducing chargebacks

Fixing picking/packing errors with RFID

Thousands of dollars are routinely lost each year by retail brand manufacturers due to errors that are built into their supply chain. Picking/packing errors are the most common. Retail manufacturers and distributors who rely heavily on manual, less sophisticated means of picking and packing are in for a rude awakening. The demand for faster fulfillment provides both amazing opportunities and difficult challenges for brands of all sizes. With RFID tags already on your merchandise and shipping containers, your inventory is ready to remedy this issue. RFID tags are scanned in bunches, unlike barcodes. Barcodes have to be scanned one by one. So, using RFID tags as an inventory management tool of your own improves picking/packing accuracy.

Consumers are choosing to shop online, or buy online and pick up in store. In short, customer behaviors are becoming much more complex. Brands that adapt to these new behaviors and trends are the brands that stay relevant. So relying on a pen and paper, or outdated software system to manage a warehouse’s inventory will end up eating the profits from orders if not fulfilled correctly.

Simple to start with RFID

A simple RFID system can immediately impact any business. Once inventory is tagged, items are easily identified automatically by an RFID reader. RFID takes away all the guess work employees need to do. Mistakes go down exponentially, while order fulfillment times plummet. Barcodes need to be read one by one. Reading RFID tags can be done by the dozen, allowing workers to get accurate inventory counts in seconds, not hours.

Have you already made the investment tagging your items with RFID due to an EPC mandate? Then you’re already halfway there. All you need is to start scanning tags for internal use. That just requires your own readers and internal system. Your efforts can even be automated by putting those readers in strategic locations. Putting readers along conveyor belts and between dock doors improve an accuracy rate to 99.99%.

Imagine how 99.99% shipping accuracy can impact your business as a result of implementing an RFID system? Don’t get hit with another costly chargeback. It’s an unnecessary cost of business that you can avoid with relative ease by adopting RFID tags into your shipping initiatives.