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Survey: More Manufacturers, Retailers Adopt RFID for Better Inventory Visibility

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Omnichannel and the ever-connected consumer have shifted the retail landscape, and technology to help companies keep up has become compulsory.

One such technology, radio frequency identification (RFID)—described by some as the enabler of omnichannel—is showing up in more manufacturers’ and retailers’ supply chains.

A new usage survey by information standards organization, GS1, revealed that apparel companies are increasingly using the traceable technology to enhance inventory visibility and respond to consumers’ omnichannel demands.

Nearly half of manufacturers (48.2%) said they are currently implementing Electronic Product Code (EPC)-enabled RFID and another 21.1% expressed plans to put the technology in place in the next 12 months. The survey respondents reported that 40 percent of items made by apparel and general merchandise manufacturers have RFID tags.

For retailers, 57 percent are currently implementing RFID, and another 19.3% plan to within a year. Retail respondents reported that an average 47 percent of items coming from apparel and general merchandise retailers have RFID tags.

“These findings confirm that the retail industry is nearing an RFID adoption and usage tipping point,” according to Dr. Bill Hardgrave, dean of the Harbert College of Business and founder of the RFID Lab, Auburn University. “RFID is no longer just something proven in concept—it is providing tangible results for manufacturers and retailers, and provides the inventory accuracy that omnichannel retailing demands.”

Manufacturers using RFID have seen reinforced authenticity in their supply chains, decreasing inspection costs, reduced shrinkage and enhanced logistics accuracy. For retailers, RFID provides more than 95 percent inventory accuracy, improved sales as a result, less out-of-stocks, increased margins and expedited returns, according to Auburn University research.

George Hoffman, CEO of FineLine Technologies, a ticketing and mobile solutions firm for retailers, suppliers and manufacturers, said, “Virtually all retailers who have adopted RFID have reported significant improvement in product visibility on the floor. This means they have more accurate real time information thereby reducing stock outs and increasing sales. Typical sale increases are anywhere from 3 to 12 percent. A secondary benefit from RFID item tagging has been reduction in labor and resources used to perform store inventory accounts.”

He added, “Retailers with more mature RFID programs are now realizing benefits in their omnichannel fulfillment logistics where accurate real time inventory visibility is critical.”

But Hoffman said he doesn’t think retailers will reach 100 percent adoption anytime soon.

“RFID requires investments of each retailer’s limited cash resources and it competes with their other capital projects such as store renovations or new point of sale systems. So only those retailers who can show an ROI for RFID that exceeds the ROI for other capital projects will implement it,” he explained. “One of the major accelerators for RFID adoption and one that will drive ROIs up will be the decrease in RFID software, hardware and especially the RFID tags itself. As these costs continue to decrease and the resulting ROI’s increase you will see more adoption.”

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