Recent advances in RFID technology could bring numerous time-and cost-saving benefits to retailers' store brand programs.
Radio frequency identification (RFID) technology is by no means new. According to EPCglobal Inc., a nonprofit global organization leading the development of industry-driven electronic product code (EPC) standards in connection with the use of RFID among business partners, the technology traces its roots back to World War II, when it was used to distinguish friendly aircraft from enemy aircraft.
Since that time, RFID's uses have evolved considerably — with many companies relying on the technology for product tracking and tracing purposes. But most retailers still are not taking advantage of all the technology has to offer.
Sahir Anand, vice president and principal analyst for the Aberdeen Group in Boston, notes that RFID can assist retailers with product tracking and automated data collection on the store brand side, while improving inventory accuracy.
"Our data show that the top three areas of focus for private label brands [are] to reduce sourcing costs, improve vendor collaboration and reduce supply chain risks," he says. "Source tagging and item-level tagging of private label merchandise can help improve vendor collaboration and reduce supply chain risks due to improved data integration between retailers and their suppliers."
RFID solutions also can speed data capture throughout production and distribution cycles, and eliminate error-prone paper-based processes that can result in distribution and fulfillment delays, notes Ken Lynch, director of marketing for ThingMagic Inc. of Cambridge, Mass. He says the solutions are most valuable for retailers that procure products from multiple suppliers in various locations.
Smarter cases, pallets
Using RFID, some retailers are keeping a close eye on each case of store brand products destined for delivery to a store. For example, a convenience store might request that all cases coming from the distribution center (DC) be tagged with an RFID label to reduce mis-shipments, automatically confirm product receipt and control inventory levels, notes Dennis Francis, vice president of label business development for the Staples Print Solutions business of Framingham, Mass.-based Staples Inc.
"The value of the product, the number of turns and the prevention of shrinkage are factors to consider when looking to implement RFID," he adds.
Suppliers also could employ the technology to drop-ship the boxes directly to the store, Francis says, bypassing the DC and removing a step in the supply chain.
"When stores receive a shipment, they can upload the collected RFID information off the products received to their inventory system," he says, "and better balance out inventory at the end of the day."
Some retailers are employing RFID to receive pallets into their warehouses more quickly after they receive an advance shipping notice (ASN) from their vendors, adds Rich Peters, label business development manager for Staples Advantage, the business-to-business division of Staples Inc. Francis adds that pallet-level RFID also gives DCs better control of — and visibility into — items being sent to individual stores.
"This detailed asset tracking also prevents DCs from sending a pallet to the wrong store and creating an out-of-stock situation," he says. Speaking of "smarter" pallets, Intelligent Global Pooling Systems Co. (iGPS) of Orlando, Fla., offers manufacturers, suppliers and shippers a rental service that features all-plastic pallets with embedded RFID tags. Lewis Taffer, chief marketing officer for the company, says the embedded tags allow retailers to identify the palletized products when the electronic data interchange (EDI) ASN from the manufacturer also contains the RFID information (the Global Returnable Asset Identifier, or GRAI, a unique industry standard identifier embedded in the EPC Gen 2 tags in each of the pallets).
"If there should be a product recall, and if the product is associated with an iGPS pallet by a distributor or manufacturer, the originating location and 'sent to' location can be easily retrieved from the iGPS online global database," Taffer explains.
He adds that RFID-tagged pallets also can enhance club stores' intermediate storage, distribution center and in-store distribution operations, "using automated data scanning and reporting devices to seamlessly manage inventory, product 'put away'/retrieval and automated resupply and distribution."
The past few years have brought a number of advances in the RFID arena, but maximum benefits are realized when such advances are employed by all suppliers and retailers at all locations, Lynch explains.
"The innovation that has taken place over the last several years in RFID makes the business case more justifiable," he says. "Not only has the cost of tags come down substantially, but more importantly, it is the many ways that RFID readers can be implemented and the advances that have taken place in read range and reader performance."
Those advances include handheld readers, read points integrated into conveyors and other areas on the manufacturing floor, "smart" shelves and other on-floor displays that assist with real-time inventory, and in store point-of-sale and electronic article surveillance systems, Lynch says. Grocers even can use RFID to enhance food safety efforts.
He points to one such system under development by the University of Arizona's School of Plant Sciences. The system employs RFID and GPS to allow farmers and retailers to trace lettuce through the supply chain. At the same time, the technology provides farmers with a better view into the productivity of their fields.
"Individual pallets of lettuce are tagged in the field just after being picked and read from readers installed above conveyers in harvesting machines to track produce from this point," Lynch says. "Fixed readers again read the tags when the pallets arrive in cooling facilities. If a head of lettuce is contaminated, the information from the tags can be used to pinpoint the source of contamination, whether it be from a laborer or machinery used to help pick a particular batch."
Another, still-emerging use on the food safety side is for monitoring the temperature and shelf life of items such as meat, vegetables, medicines and flowers throughout the cold chain to reduce spoilage, Lynch offers. Here, RFID readers placed in portals at shipping and receiving checkpoints and inside transport vehicles and refrigerators interrogate sensors within goods.
And again, RFID now can be an invaluable tool when it comes to recalls. Lynch points to the 2007 Menu Foods recall, which impacted numerous store brand and national brand items, as an example of where such technology potentially could have helped to lessen the scope of the recall (60 million units).
"For a company like this that gets ingredients from a number of suppliers and makes a product sold through a variety of distribution [channels], RFID provides a level of precise control over tracking and tracing and identifying the right products to recall," he says. "RFID would have allowed [Menu Foods] to identify and locate the exact tainted batch as opposed to recalling all product from all retailers."
On the inventory side, Lynch points to "smart shelves" — wireless inventory control systems that use RFID tags and readers to scan shelf and display areas and alert store employees when product levels are running low or when theft is detected. He says retailers even could integrate data feeds from smart shelves into inventory management and supply chain systems to help with overall inventory analysis, determine purchase trends and monitor in-store store brand promotions.
Today, retailers and suppliers can even get down to the item level with RFID. In fact, Walmart began placing such tags on certain garments in 2010, according to numerous sources.
"In the case of a retailer managing branded products sourced from multiple suppliers, item-level RFID delivers staggering efficiencies with a tremendous potential for a very powerful ROI," says Zander Livingston, CEO of Truecount Corp., a new Dorset, Vt., company focused on RFID item-level deployments for the retail industry. "Grocers have the opportunity to tag their branded items at the source of manufacture, establishing efficiencies and data capture as each item travels from the source to the consumer."
The right technology, Livingston says, allows a retailer to see what is happening in regard to each product, in real time, with an accuracy rate exceeding 99 percent. The result on the store brand side? Fewer shrinkage worries, a significant reduction in distortion and more, he says.
"With a clear view into inventory, the average retailer can experience sales lift of up to 15 percent based on 'perfect' stocking of the shelf space," Livingston maintains. "Item-level RFID is revolutionary in the degree of visibility a retailer gains, with all items counted, and accounted for, at all times."
While manual and barcode systems supply only inventory data, he says, RFID also provides data related to workflows, processes and other operational activities directly impacting a retailer's bottom line. Moreover, item-level RFID can slash as much as 90 percent from the time currently spent on inventory and cycle counts, he contends, and takes 96 percent less time than barcodes for similar tasks.
Livingston believes retailers are only a few years away from going completely RFID.
"The existing challenge is how to tag certain less tag-friendly items such as produce," he says. "However, this is being tackled on the tag side by developing better and more grocery compatible tags.... If an item has a label, it can easily be an RFID label."
'Item-level RFID is revolutionary in the degree of visibility a retailer gains, with all items counted, and accounted for, at all times.'