By Reik Read at Robert W. Baird & Co.
Back in September 2008, we wrote about Walgreen's new distribution center and its use of RFID to reduce misshipments. More recently, we have written about Checkpoints Merchandise Visibility Solution, which provides automated visibility for apparel at the item level, and enables automated confirmation of shipped contents. This solution is being employed at European retailer Charles Vogele. We believe RFID solutions to reduce mis-shipments, or catch incorrect shipments early in the process, represents a sizeable market opportunity given the high cost of the problem, and the large volume of goods shipped through the supply chain.
With respect to incorrect shipments (i.e., the wrong goods shipped), consider the large costs-there is the cost of shipping, the cost of returning the goods, excess labor associated with the return and re-stocking process, incremental working capital is tied up in excess inventory and delayed payment. One study by A.T. Kearney indicated it cost nearly $60 to manually correct each invoice error related to incorrect shipments as a result of poor product data. There is also the case of shipping incomplete orders (i.e., missing items in a kit, where the product only works if all the items are included). Here consider that companies incur extra shipping expense, extra labor in acquiring the missing part and incremental customer service expenses. Perhaps the largest hidden cost of all in both cases is customer badwill, which leads to less trust, fewer orders and delayed payments.
Reprinted from RFID Monthly, a regular publication highlighting key industry developments. Please visit www.rfid-monthly.com to learn more.