Executive Briefings

Finding the ROI in RFID

With RFID, return on investment derives from automated, accurate, real-time inventory tracking, says McLeod Williamson, RFID business development manager at Zebra Technologies. He provides an update on RFID applications in retail supply chains and describes how other industries are starting to leverage the technology.

"With any technology, ROI is all about the visibility you gain, and that is particularly true with RFID," says Williamson. "If you can see the product and identify where it slows down or is misdirected, then you can make better decisions. You can change your processes to achieve better efficiency and accuracy."

The primary advantages that RFID has over barcoding are that no line of sight is required and multiple tags can be read at the same time, he says. This means products can be counted very quickly and with very little labor, resulting in substantial savings.

These savings are more than enough to make up for the higher upfront costs of RFID vs. barcoding. "Think where retailers used to be in terms of inventory accuracy. If you take inventory counts more often you can push the level of accuracy into the high 90s, but using barcodes and hand-held scanners that process takes several people a lot of hours. With RFID, one person can take an inventory or cycle count in just a few minutes."

There also is a top line impact because better inventory accuracy translates into fewer out-of-stocks, says Williamson. "Retailers are seeing anywhere from a 2-percent to 20-percent uplift in sales because they more often have the right product in the right place. This is also important for manufacturers because more units are being sold."

While retail applications of RFID are the most well known, other verticals are adopting the technology as well, says Williamson. Aerospace is one industry where RFID applications are gaining traction, he says. "RFID is being used to track airplane parts and verify parts that are difficult to access, such as life vests under the seats. These are things that need to be inventoried and you need to know when they were last maintained. You can do that a lot more quickly with RFID."

Another example is asset tracking in data centers, says Williamson. "These data centers have blade servers that all look alike and sometimes are moved around," he says. "RFID allows you to easily track those." Similarly, hospitals have a lot of high-dollar assets as well as controlled substances and lab specimens -- even patients themselves -- that benefit from automated tracking. "We see a tremendous opportunity for growth in healthcare and we expect that sector to really take off in the next few years," he says.

For companies that are just starting with RFID, Williamson warns against trying to boil the ocean by tagging too many assets. "A better way to start is to pick an area where you know you have problem with visibility or inaccuracy or you don't have the velocity you need. Implement RFID there and after you see how it works you can move forward into other areas."

To view the video in its entirety, click here

Keywords: supply chain, it supply chain, rfid, supply chain management, it supply chain management, supply chain management it, supply chain management scm, inventory management, inventory management it, inventory control, logistics management, logistics & supply chain, supply chain solutions,  supply chain systems, wms warehouse management, retail supply chain

"With any technology, ROI is all about the visibility you gain, and that is particularly true with RFID," says Williamson. "If you can see the product and identify where it slows down or is misdirected, then you can make better decisions. You can change your processes to achieve better efficiency and accuracy."

The primary advantages that RFID has over barcoding are that no line of sight is required and multiple tags can be read at the same time, he says. This means products can be counted very quickly and with very little labor, resulting in substantial savings.

These savings are more than enough to make up for the higher upfront costs of RFID vs. barcoding. "Think where retailers used to be in terms of inventory accuracy. If you take inventory counts more often you can push the level of accuracy into the high 90s, but using barcodes and hand-held scanners that process takes several people a lot of hours. With RFID, one person can take an inventory or cycle count in just a few minutes."

There also is a top line impact because better inventory accuracy translates into fewer out-of-stocks, says Williamson. "Retailers are seeing anywhere from a 2-percent to 20-percent uplift in sales because they more often have the right product in the right place. This is also important for manufacturers because more units are being sold."

While retail applications of RFID are the most well known, other verticals are adopting the technology as well, says Williamson. Aerospace is one industry where RFID applications are gaining traction, he says. "RFID is being used to track airplane parts and verify parts that are difficult to access, such as life vests under the seats. These are things that need to be inventoried and you need to know when they were last maintained. You can do that a lot more quickly with RFID."

Another example is asset tracking in data centers, says Williamson. "These data centers have blade servers that all look alike and sometimes are moved around," he says. "RFID allows you to easily track those." Similarly, hospitals have a lot of high-dollar assets as well as controlled substances and lab specimens -- even patients themselves -- that benefit from automated tracking. "We see a tremendous opportunity for growth in healthcare and we expect that sector to really take off in the next few years," he says.

For companies that are just starting with RFID, Williamson warns against trying to boil the ocean by tagging too many assets. "A better way to start is to pick an area where you know you have problem with visibility or inaccuracy or you don't have the velocity you need. Implement RFID there and after you see how it works you can move forward into other areas."

To view the video in its entirety, click here

Keywords: supply chain, it supply chain, rfid, supply chain management, it supply chain management, supply chain management it, supply chain management scm, inventory management, inventory management it, inventory control, logistics management, logistics & supply chain, supply chain solutions,  supply chain systems, wms warehouse management, retail supply chain