Is it Time for RFID to Shine?

To achieve supply chain visibility, retailers are embracing innovative tech like RFID in stores, warehouses and distribution centers.
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Even though RFID has proven its value numerous times, retailer adoption has never truly reached its peak. However, with retailers feeling more pressure to streamline omnichannel fulfillment, supply chain visibility has risen to the top of the priority list. And RFID is key to achieving this visibility.  
“The biggest advantage that comes with [supply chain visibility] is knowing where you have stability in your supply chain,” said Balika Sonthalia, Senior Partner and Head of the Strategic Operations Practice for the Americas at Kearney in an interview with Retail TouchPoints. “How do you want to run the most stable parts of your business, versus where you have more volatility? How do you ensure that your supply chain is fungible enough to absorb the changes, and then pivot on that information? Visibility allows you to innovate, anticipate and see the shock waves coming with just enough advance notice that you can react before getting fully paralyzed by them.” 

In a recent special report, experts outlined why RFID is now part of the critical supply chain visibility toolkit, which also includes predictive demand planning and artificial intelligence (AI).  
“Retailers need to have a single view of their inventory across channels, and then that data has to be up-to-date and accurate,” said Greg Buzek, Founder and President of IHL Group in an interview with Retail TouchPoints. “RFID is the killer app for this for most products, and this can be augmented by the use of computervision.”  
Adoption also is rising because prices are dropping. In 2021, the average cost of an RFID tag was four cents, down 80% from 2011, according to McKinsey. As a result, IDTechEx expects 39.3 billion passive RFID tags to be sold in 2023, up from 33 billion in 2022.  

Turning RFID Technology into Business Value 

According to IHL Group research, retailers already using RFID in 2022 saw 83% higher sales growth and 80% higher profits. A big reason why is because RFID isn’t a solution that stands alone — the information garnered from these tags can be fed into forecasting and other optimization technologies to generate additional efficiencies, according to Buzek. As a result, retailers can optimize their omnichannel experiences and boost bottom-line results. 
For instance, having accurate visibility into inventory counts can help retailers decide when it’s better to ship from a store versus a warehouse. A store may be closer to the customer, which means it has a reduced last mile cost. However, the retailer may see that stock of a particular item is low at the relevant store, and demand planning could confirm that those items are likely to sell out before being replenished if that store handles fulfillment. In this case, the cost of an out-of-stock would outweigh the last mile savings.  
RFID can also be useful for retailers that sell through third-party partners. While leveraging marketplaces and other wholesale partners can boost sales and name recognition, it also adds a whole extra layer of complexity to inventory management. Ensuring every item is properly RFID tagged significantly reduces the manpower necessary to keep track of items that might be going not just to different stores but to entirely different companies.  

“We’re a wholesaler as well, so we ship to a lot of customers,” said Sandeep Baghel, VP of Information Systems at Perry Ellis in an interview with Retail TouchPoints. “We have to ship the correct units, so if I haven’t implemented RFID in a location, figuring out what is going out so I can correctly invoice my customers and doing cycle counts in the warehouses is a big, tedious thing. But if the whole warehouse is RFID-enabled, I always know where everything is sitting.”  
Ultimately, this visibility translates into significant value for shoppers. After all, consumers want to be able to get products whenever and however they want. When retailers can pinpoint product locations and stock levels across the value chain, they can communicate this information to consumers so they can buy products in the best, most efficient way — whether that be in stores or online.  
Download the entire report to learn more about how you can achieve true supply chain visibility to reach your omnichannel goals.  



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