RFID: Better than Barcodes?

An RFID tag used for electronic toll collection

In the next 3 posts or so, I will focus my content to some interesting topics that fascinates me for the last 5 years. The RFID technology. So it is going to be a series of topics. RFID is a very broad subject to write about. But in this case, I will only deal some issues and understanding of the technology as it applies to retail inventory. So, the series shall be as follows:

• RFID: Better than Barcode?
• RFID: Inventory Jobs killer?
• RFID: Does RGIS ready for it?

This post shall be the first of the 3-part series.

What is RFID

Radio Frequency IDentification (RFID) is one of the newer wireless technologies that uses radio wave frequency as a mode of capturing or identifying data. They are smart tags and can be embedded into objects or products which sizes range from that of a credit card to smaller size like a dot. 

It has been around for many years but prior to 2000, RFID tags had been used in the US which include toll road passes, access ID cards, and animal identification. After 2000, its use has been expanded to include applications on smart Credit Cards, drug labellings, military equipment and logistics, the airline industry, automotive, public libraries, and the list goes on. Now, it is being applied in the supply chain. 

Portable RFID reader

Most RFID tags operate at either 13 MHZ or 900 MHz frequencies. To give you a better idea, think of these frequencies as the AM and FM bands from the radio in your car: one is a short-range frequency, and the other is high or ultra frequency. The 900 MHz (UHF) RFID tags operate well for reading multiple tags simultaneously and therefore suitable for inventory purposes. When using with the right RFID reader, the 900 MHz tags can be read from 10 feet away. While the 13MHz tags can only be read roughly within 3 feet distance. RFID tags are categorized as either passive, like the ones I just mentioned, or active (battery-operated which can be detected as far as 300 ft. away) depending on the application. 

Couple of years back, the use of RFID was confined to warehouse and distribution centers where pallets and cases were tagged for faster and efficient supply management. Now, the technology has found a new place at item-level identification. As we know, Walmart, Department of Defense, American Apparel, and thousands of other retailers have applied the technology either as a pilot program, a dry run, or full fledge retail application.

How does it work

In check outs, unlike barcode scanning, with RFID, multiple tags are captured or read simultaneously in one pass. To give you an idea, watch the IBM RFID commercial which captures the very essence of the technology:

Looks futuristic? Not really. The multiple light rays are for emphasis only. The actual capturing does not have. The idea is similar to capturing data using a barcode scanner, but the big difference is HOW data are being captured. Since RFID does NOT use the "line-of-sight" laser technology which the barcode scanning is built into, the RFID reader detects frequencies from smart tags embedded into clothings or products even if those tags are hidden.

For as long as those tags are within the specified range, say within 10-feet, RFID readers can capture multiples of tags almost in an instant with 99.9% accuracy. No 'scanning' is needed and most importantly, no 10-key is required. It reads multiples in one pass while barcode scanning is one barcode per reading. Imagine a 5-hour auto-scan apparel inventory can be done in less than an hour with fewer people using RFID.

To give you a better understanding, please view the following video on how data are captured in retail setup. The RFID application from this video is currently being used by American Apparel in collaboration with Avery and Motorola as solutions providers.

Video duration: Less than 5 minutes

Benefits of RFID in retail inventory

I am not going to compare which technology or standard is better than the other. At this point, I will simply focus more on the benefits of RFID in relation to retail inventory:

Faster inventory and greater accuracy
In barcode scan and 10-key, the term "fast and accurate" is oxymoron. With RFID, it changes that idea. Research shows that RFID-enabled scan is 8 times faster than the traditional barcode-enabled scan. In an actual demo, RFID-enabled scan gets around 8,000 per hour while barcode-enabled scan gets around 1000 per hour or less. RFID accuracy boasts 99.9% while barcode accuracy is less.

SKU checking is the normal way to revalidate missing SKUs or UPCs. But due to lack of material time, manpower, or inefficient computer system, inventory associates and store people simply scan similar item instead with comparable value. Imagine a 4-hour shoe store inventory using auto-scan, with RFID, the inventory will only last about 30 minutes! Retailers who base their statistics on total piece count typically underestimate the variance between POS-driven figures and their actual on-hand positions.  Instead they should be measuring accuracy at the SKU level.  RFID enable retailers to elevate this to 99 percent or better.

Better location visibility
RFID tells you if the electric fan being used by employees should be part of the sales floor  and not for the pantry, or is not in stock room where it should be found. In many cases this shortens the time spent searching for merchandise or eliminates trips to the stock room.

 More efficient receiving
Receiving can be automated, meaning pallets and boxes can be processed in minutes, allowing new shipments to become sellable sooner. RFID can also be used to identify or locate boxes with merchandise that needs to get rushed to the sales floor immediately.

Fewer items sold at markdown or move to clearance area
A surprising number of items never reach the selling floor until they have already hit their first markdown.  Not only is this a lost revenue opportunity, your labor must be devoted to locating and re-ticketing or relabeling of merchandise slated for markdown or clearance.

More efficient sales floor replenishment
With RFID, the sales floor can be quickly scanned and “pick lists” automatically generated, making it easier to keep stores properly stocked.

Shrink can be identified easily and can be addressed immediately.
Employees are sneaking out merchandise from the store? Or dishonest customer activities in fitting rooms and along the isles? In RFID, it lets you spot backward-moving merchandise because each single item gets assigned a unique serial number. Employee theft and shoplifting which considered as top causes of shrinkage can now be reduced significantly.

Retail application of RFID seemed very promising. This is not to say that it is flawless or without issue. There will be changes as the technology evolves into a more mature and agile system. I predict that given the right opportunity, proper implementation, and better standards, RFID will totally change the inventory management landscape in the next few years.

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