Apparel Source Tagging And RFID

By Impinj, Inc.

Inventory management is not a new retail business problem, but in a market where brick and mortar stores compete with online retailers, increasing store inventory accuracy has taken on a new urgency. Customers have options, and product absent from the shelves results in missed opportunities. To better meet customer expectations and with an eye to increase profit and margin, retailers have raised the bar on inventory accuracy—and are looking to RFID to help drive sought-after gains.

Key Retail Driver—Inventory Accuracy
Recent studies by the University of Arkansas have revealed the remarkable improvements that RFID has brought to apparel retailers. The published projects to date have identified several operational advantages from item level RFID, but all of them stem from the same core value: superior inventory accuracy leads to reduction in out of stocks and markdowns, reduced buffer stock and re-order thresholds, reduced shelf space per SKU and better customer service. Studies have identified increased sales due to item level RFID tagging at anywhere from three to eight percent over comparable stores without RFID. Thus better inventory management translates directly to increased sales.

Using RFID, retailers can conduct a physical inventory operation 25 times faster, with less labor investment, and greater accuracy than with manual barcode-based inventory operations. After aggregating results across multiple retailers, studies have shown that the use of RFID for frequent cycle counting can increase the accuracy of the inventory database by more than 30 percentage points, from below 70% on a per-SKU basis to above 90%. Even companies with the best continuous inventory management practices based on barcode technology have seen significant gains after implementing RFID. The level of accuracy RFID provides virtually eliminates preventable out of stocks, as well as hidden or phantom inventory conditions, which leads to improved customer satisfaction.